AHK BROKING PVT. LTD.,AHMEDABAD vs. THE ITO, WRAD-1(1)(1), AHMEDABAD

The captioned appeal has been filed at the instance of the assessee against the order of the Learned Commissioner of Income Tax (Appeals)-1, Ahmedabad [Ld. CIT(A) in short], dated 25/10/2017 arising in the matter of assessment order passed under s. 143(3) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") dated 25/02/2016 relevant to Assessment Year (A.Y) 2013-14.

The only issue raised by the assessee is that the learned CIT (A) erred in confirming the disallowance made by the AO on account of interest expenses on the unsecured loan by treating the same as bogus. Page 1 of 3 2.1 The facts in brief are that the assessee in the present case is a private limited company and engaged in the business of property dealing and investment in shares. The AO during the assessment proceedings found that the assessee has claimed interest expenses on unsecured loan from certain parties. However in the immediate previous year 2011-12 corresponding to assessment year 2012-13, while framing the assessment under section 143(3) of the Act, the AO has treated such unsecured loan as bogus in nature and therefore added the same to the total income of the assessee under section 68 of the Act.

Aggrieved assessee preferred an appeal to the learned CIT (A) who also confirmed the order of the AO.

The learned AR before us filed a paper book running from pages 1 to 86 and submitted that the assessee has preferred an appeal to the Hon’ble ITAT for the assessment year 2012-13 against the addition made by the AO for treating the amount of such loan as unexplained cash credit under section 68 of the Act. The Hon’ble ITAT vide order dated 1st November 2018 in ITA number 1071/AHD/2016 was pleased to set aside the issue to the file of the AO for fresh adjudication. However the AO in the consequential order has again confirmed the amount of impugned unsecured loan as unexplained cash credit and therefore the same was disallowed by the AO. Against that order of the AO, an appeal was preferred before the learned CIT (A) which is pending for further adjudication as of now. Accordingly the learned AR for the assessee contended that the matter in the present case needs Page 2 of 3 to be set aside to the file of the learned CIT (A) for fresh adjudication as the dispute on hand depends upon the outcome of the appeal which is pending before the learned CIT (A) for the assessment year 2012-13.

On the other hand, the learned DR did not raise any objection if the matter is set aside to the file of the AO for fresh adjudication as per the provisions of law.

We have heard the rival contentions of both the parties and perused the materials available on record. There is no ambiguity to the fact that the amount of interest expense on the unexplained cash credit is not allowable as deduction. As such interest expenses represents the bogus claim of the assessee. However we note that the issue whether the impugned amount of unsecured loan represents unexplained cash credit is subject matter of litigation which is pending before the learned CIT (A). Thus we are of the considered view that the issue on hand depends upon the outcome of the appeal which is pending before the learned CIT (A) for the assessment year 2012-13. Accordingly, we find force in the argument of the learned AR for the assessee that the matter on hand needs to be set aside to the file of the learned CIT (A) for fresh adjudication as per the provisions of law and after considering the order of the learned CIT (A) for the assessment year 2012-13. Hence the ground of appeal of the assessee is allowed for the statistical purposes.

In the result the appeal of the assessee is allowed for the statistical purposes.