
The Income Tax Appellate Tribunal ( ITAT ), Mumbai Bench has held that income tax liability won’t arise for unsecured loan transactions done by group entities.
The Assessing Officer received information from the investigation wing during the course of search action on M/s. Evergreen Enterprises group cases,a cash loan of Rs.3.92 crores for which the name of assessee, Mr. Vipul Dilipbhai Shah was recorded as contact person and his mobile number was also available in connected seized documents.
The AO reopened and completed the assessment u/s 147 r.w.s. 143(3) of the Act, after making the addition of Rs.3.92 crores as an unexplained loan in terms of section 69A of the Act. On further appeal, CIT(A) deleted the additions. Aggrieved revenue filed appeal before ITAT.
The Coram of Mr. Sanjay Garg (Judicial Member) and Mr. Om Prakash Kant (Accountant Member) has observed that the recipient of the loans was M/s. Greenbird (Rs.50 lacs) and M/s. P.D. Constructions (R$.3.42 crs.) and not the assessee. The assessee’s name was appearing only as contact person and for the simple reason that he was to be a partner/director of the said concerns and both Greenbird and P.D. Constructions were his group entities. The assessee could not be held liable for unsecured loan transactions done by his group entities.
The Tribunal has held that “we do not find any error in the order of the CIT(A) on the issue-in-dispute and accordingly, we uphold the same. The grounds raised by the Revenue are accordingly dismissed”.
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