ITAT held that repayment of short-term deposits through banking channels cannot be treated as unexplained cash credit under Section 68.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench deleted the addition of ₹26 crore, holding that the amount received by the assessee was merely a repayment of short-term deposit and not an unsecured loan eligible to addition under Section 68 of the Income tax Act, 1961.
The assessee Sunanda Polymers LLP indulged in the business of refining and dealing in precious metals and had been involved in financial dealings with Gogia Leasing Ltd.a duly registered NBFC. In the concerned assessment year, the assessee made a short-term deposit of ₹26 crore to the lending party which was returned by the latter in the same year through proper banking procedures.
However, the Assessing officer [AO] added ₹26 crore under Section 68 as an unexplained unsecured loan on account of non-compliance of all three conditions laid down under Section 68. The Commissioner of Income Tax [Appeals] CIT(A) affirmed the addition stating that the three requirements of Section 68 were not fulfilled.
The assessee’s stated that the transaction was not a loan but merely the depositing of money for some time period that had been duly booked and processed through the account holder banks. It was contended that repaying of its own money cannot be deemed income.
Further,in support of its claims the assessee placed before the Tribunal certain documents and bank statements to prove the authenticity of the transaction.The Revenue depended upon the deficiency in documentation and notice served under Section 133(6).
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