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Facts
The assessee filed an ITR declaring income at Rs. 11,30,500. During scrutiny for AY 2018-19 and 2019-20, the AO noted a substantial increase in unsecured loans and taxed the difference of Rs. 3,74,94,893. The AO also disallowed interest on these loans and deductions under sections 54 and 54B. The CIT(A) partly allowed the appeal, upholding an addition of Rs. 1,13,81,727.
Held
The Tribunal set aside the impugned order and remitted the matter back to the CIT(A) to decide the issue after providing the remand report to the assessee and offering an adequate opportunity of being heard. This was done without commenting on the merits of the case.
Key Issues
Whether the CIT(A) erred in confirming an addition without confronting the assessee with the remand report, thereby violating the principle of natural justice.
Sections Cited
68, 54, 54B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘E’: NEW DELHI
Before: SHRI YOGESH KUMAR U.S. & SHRI AVDHESH KUMAR MISHRA
A.Y. 2019-20 Ram Darshan Agarwal, Income Tax Officer, J-3, Geeta Nagari, Ward 3(3), Bijnore 246701 Vs. Income Tax Office, Bijnore, Uttar Pradesh Bijnore (UP) PAN: AAQPA6807M (Appellant) (Respondent) Appellant by Sh. Alok Kumar Gupta, CA Respondent by Sh. Dheeraj Kumar Jain, Sr. DR Date of Hearing 20/08/2025 Date of Pronouncement 22/08/2025 ORDER
PER AVDHESH KUMAR MISHRA, AM
This appeal for the Assessment Year (‘AY’) 2019-20 filed by the assessee is directed against the order dated 26.12.2024 of the Commissioner of Income Tax (Appeals), NFAC, New Delhi [‘CIT (A)’].
Following grounds are raised in this appeal: -
“1. The ld CIT(A) erred in confirming the addition of Rs 11381727 for unexplained cash credit and further erred in not confronting the remand report submitted by the Id Assessing Officer to the appellant before confirming the addition of Rs 1,13,81,727. 2. The appellant craves leave to add, amend, alter, delete and modify any grounds of appeal before/during the hearing of the appeal and all the above grounds are without prejudice to each other.”
Ram Darshan Agarwal 3. The relevant facts giving rise to this appeal are that the appellant assessee filed his Income Tax Return (‘ITR’) on 05.02.2020 declaring income at Rs.11,30,500/-. The case was selected for scrutiny. During the course of assessment proceedings, on verification of the ITR for AY 2018- 19 and 2019-20, the AO noticed that there was substantial increase in the unsecured loan. It was Rs.4,30,99,565/- as per the ITR of AY 2018-19 and Rs.8,05,94,458/- as per the ITR for AY 2019-20. The assessee was required to explain but he did not ensure any compliance. Therefore, the AO taxed the unsecured loan of Rs.3,74,94,893/- (Rs.8,05,94,458/- minus Rs.4,30,99,565/-). Further, the AO disallowed the interest payable on the said unsecured loans. The AO also disallowed the claim of deduction under section 54 and 54B of the Act. The assessment order was passed at income Rs. 5,16,76,870/-. Aggrieved, the assessee filed appeal before the Ld. CIT(A), who partly allowed the appeal. The disputed issue before us is taxability of the unsecured loan of Rs.1,13,81,727/- upheld by the Ld. CIT(A) as under:
“7.3 Appellate findings: On perusal of the submission made by the appellant as well as Remand Report furnished by the AO on 13.02.2024, the following findings have been taken as under: (i) In respect of Addition of Rs.3,74,94,893/- u/s 68 of the IT Act, 1961. As the Ld. AO has verified the amount of Rs.6,92,12,731/- out of total unsecured loan amount Rs.8,05,94,458/- in the favour of the appellant, the balance amount of Rs.1,13,81,727/- remains unverified in the hands of the appellant. Hence, the addition of Rs.3,74,94,893/- is hereby reduced to Rs. 1,13,81,727/-.
Ram Darshan Agarwal (ii) In respect of Addition of Rs.6,96,008/- on account of disallowance of interest paid on unsecured loans- As the Ld. AO has verified the amount of Rs.6,96,008/- which was paid to a party namely M/s Krishna Sugar Factory (PAN-AAHFK4876F), the same is held verified and ruled in favour of appellant. (iii) In respect of Addition of Rs. 3,99,692/- on account of disallowance of housing interest- As the Ld. AO has verified the amount of R 3,99,692/- in the favour of the appellant. The same is held verified and ruled in favour of appellant. (iv) In respect of Addition of Rs.87,31,918/- on account of disallowance of claim of deduction u/s 54 & 54B of the IT Act, 1961- As the Ld. AO has verified the said amount in the favour of the appellant. The same is held verified and ruled in favour of appellant. (v) In respect of Addition of Rs.16,65,839/- on account of Income from Other Sources- As the Ld. AO has verified the said amount in the favour of the appellant. the same is held verified and ruled in favour of appellant. (vi)In respect of Addition of Rs.15,58,020/- on account of disallowance of Interest Paid outside India- On perusal of the Income Tax Return, it has seen that the same has already been shown by the appellant. Further, the Ld. AO has also verified the same. The same is held verified and ruled in favour of appellant.”
The Ld. Authorized Representative (‘AR’) submitted that the Ld. CIT(A) erred in confirming the addition of Rs.1,13,81,727/- without confronting the remand report submitted by the Ld. AO to the appellant assessee. Thus, there was violation of the principle of natural justice, contended the Ld. AR.
In view the above, without offering any comment on merit of the case, we deem it fit to set aside the impugned order and remit the matter back to the file of the Ld. CIT(A) for deciding the issue in dispute after providing the copy of the remand report to the appellant assessee, in accordance with law, after providing adequate opportunity of being heard to the appellant assessee. Ordered accordingly. The appellant assessee, no doubt, shall cooperate in remitted appellate proceedings.
In the result, the appeal of the assessee is allowed for statistical purposes.