The Income Tax Appellate Tribunal’s decision in ITA No. 7/Del/2021 deals with a significant dispute between the Income Tax Officer (ITO) from Ward 34(1), New Delhi, and Ravi Kumar Vaid regarding unsecured loan transactions recorded during the assessment year 2013-14. The core issue involves the nature of these transactions and whether they should be treated as accommodation entries, which are typically used to inflate expenses or revenues without actual economic transactions.
The Revenue challenged the Commissioner of Income Tax Appeals’ decision, which partially deleted an addition of Rs. 1,36,67,500 under Section 68 of the Income Tax Act. The challenge focused on the treatment of these entries and the application of the Peak Credit method, questioning the authenticity of the recorded transactions and corresponding deposits.
The Tribunal, upon review, found that the Revenue’s appeal did not meet the monetary threshold for maintainability as prescribed by the CBDT Circular No. 17/2019, leading to the dismissal of the appeal. This decision underscores the need for clear evidence and proper documentation in claiming financial transactions as genuine, particularly when large sums are involved and tax implications are significant.
The judgment, pronounced on August 30, 2023, reinforces the procedural thresholds set by the CBDT and clarifies the handling of disputes over unsecured loan transactions in tax assessments.
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