HGL BUILDER AND DEVELOPER,MUMBAI vs. ITO 42(1)(2), MUMBAI

आदेश / ORDER

PER PAVAN KUMAR GADALE - JM:

1. The Ld CIT(A) erred in upholding the reopening the assessment u/s 147 of the Act by issue of notice u/s. 148 dt. 05/08/2015 without appreciating that notice was issued merely on the basis of Information received from the Pr. DGIT (Inv) - 1 Mumbai

Mafatlal Harkchandji Bothra, Mumbai thus there was no independent application of mind by the A.O in fact several discrepancies were noted in the notice itself. It is based on borrowed satisfaction of some other authority; hence the reopening is bad in law and is liable to be quashed.

2. The Learned CIT(A) failed to appreciate the fact that the notice u/s. 148 dtd. 05/08/2015 was issued on the basis of third party's statement recorded by the dept wherein he has admitted that he was not doing any genuine business activity only providing accommodation entries, without discussing how the same is relevant to the assessee's case, the reopening merely for making routing inquiry is bad in law and is liable to be quashed.

ON MERITS:

Mafatlal Harkchandji Bothra, Mumbai

The Appellant craves leave to add, amend, alter vary and / or withdraw any or all the above grounds of Appeal.,

Mafatlal Harkchandji Bothra, Mumbai 3.The AO on perusal of the financial statements found that the assessee has obtained unsecured loan from M/s Rajat Diamond Exim Pvt Ltd and paid interest of Rs.73,168/- and further the assessee also paid interest of Rs.1,73,386/- to M/s Frontline Diamond P Ltd and both aggregating to Rs.2,46,554/-. Further the A.O has issued show cause notice referred at Para 5.2 of the order to prove the genuineness and creditworthiness of the unsecured loan creditors. Whereas the assessee has filed the explanations along with the evidences to substantiate the unsecured loans dealt at Para 6 of the order. Further The AO has issued the notice u/s 133(6) of the Act on the parties and there was no proper compliance. Finally the AO has issued show cause notice and also further information was called and the A.O has dealt at page 6 to 8 of the order and disallowed the claim of interest expenditure treated as unexplained cash credit u/s 68 of the Act and assessed the total income of Rs.2,46,550/- and passed the order u/s 143(3) r.w.s 147 of the Act dated 28.07.2016.

4. Aggrieved by the order, the assessee has filed an appeal before the CIT(A), whereas the CIT(A) considered the grounds of appeal, submissions of the assessee and findings of the assessee and confirmed the action of the AO and dismissed the assessee appeal. Aggrieved by the CIT(A)order,

Mafatlal Harkchandji Bothra, Mumbai the assessee has filed an appeal before the Honble Tribunal.

5. At the time of hearing, the Ld. AR submitted that the assessee CIT(A) has erred in not considering the facts that the assessee has paid interest and it was subject to TDS and claimed in profit and loss account and the AO has not doubted the genuineness of the loan transactions but doubted the transaction of payment of interest. The Ld. AR submitted that the similar issue for earlier assessment year is pending before the CIT(A) and supported the submissions with the factual paper book and prayed for allowing the appeal. Contra, the Ld. DR relied on the order of the CIT(A).

6. Heard the rival submissions and perused the material on record. The sole matrix of the disputed issue as envisaged by the Ld.AR that the CIT(A) has erred in sustaining the addition of interest payment made to parties subject to TDS and the assessee has obtained the loan in earlier year and current year and the Ld. AR has referred to page 16 to 45 of the paper book substantiating the creditworthiness and the genuineness of unsecured loan. Further the Ld.AR emphasized that similar issue in the assessee’s own case for the A.Y 2012-13 is pending before the CIT(A) and has barring on the current assessment year. Therefore considering the facts, circumstances and the submissions of the Ld. AR, the order of the CIT(A) is set-aside and remit the entire disputed

Mafatlal Harkchandji Bothra, Mumbai issues to the file of the CIT(A) to adjudicate afresh and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information for early disposal of the appeal. Accordingly, allow the grounds of appeal of the assessee for statistical purposes.

7. In the result, the appeal filed by assessee is allowed for statistical purposes.