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Facts
The revenue filed appeals against the CIT(A)'s order deleting the penalty. The assessee had taken a loan which was considered a bogus loan, and the interest paid on it was disallowed under Section 69C of the Act. However, the CIT(A) deleted the penalty on the grounds that no addition was made by the AO on account of the loan itself.
Held
The Tribunal held that the CIT(A) had not properly appreciated the facts of the case. The Tribunal set aside the CIT(A)'s order and restored the matter back to the file of the CIT(A) to decide on merits, considering all facts and providing an opportunity of hearing.
Key Issues
Whether the CIT(A) erred in deleting the penalty when interest on a bogus loan was disallowed, despite no addition being made on the loan itself? Whether the appeal should be restored to the CIT(A) for a decision on merits?
Sections Cited
250, 68, 69C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SANDEEP GOSAIN & SHRI PRABHASH SHANKAR
Date of Hearing 13.08.2025 Date of Pronouncement 03.11.2025 ORDER Per: SHRI. SANDEEP GOSAIN, J.M.:
The present appeals have been filed by the revenue challenging the impugned order dt. 24.03.2025 passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre (NFAC) / CIT(A) for the assessment year 2015-16 & 2016-17.
Since all the issues involved in these two appeals are common and identical, therefore, they have been clubbed, heard together and consolidated order is being passed for A.Y 2015-16 as lead case and facts narrated therein.
None appeared on behalf of the assessee either physically or virtually when the case was called repeatedly. On the contrary, Ld. DR present in the court is ready with the arguments, therefore I have decided to proceed with the hearing of the case ex-parte.
We have heard the counsels for both the parties, perused the material placed on record, judgements cited before us and also the orders passed by the revenue authorities .
From the records we noticed that Ld. CIT(A) set aside the penalty levied by AO on the ground that as per the facts of the case no additions were made on account of bogus loan u/s 68 of the Act and thus when AO has not doubted the loans and has not made any addition on account of loan under any section. On the other hand made addition on consequential interest on account of such loans. Thus concluded that the penalty on such interest income is incorrect.
Where is in our view the Ld. CIT(A) has not properly appreciated the facts of the case, because in the present case, the assessee had taken loan of Rs.2,00,00,000/- from M/s. Zeus Housing and Construction Ltd, which was & 3894/Mum/2025 Shree Ratan Mangal Jewels Pvt Ltd, Mumbai. managed and controlled by Akhil B Doshi as managing director, and who was an accommodation entries provider and had accepted to have provided such entry as loan to Mangal Royal Jewels Private Limited. The loan taken in F.Y 2014–15 was returned back on 29.03.2017 and 30.03.2017. Since the accommodation entries had been accepted, therefore, the interest paid of Rs. 14,73,288/- on the bogus loan was disallowed u/s 69C of the Act. Apart the transaction cost borne by the assessee was worked out at 2% and the same was also added to the total income.
Therefore Ld. CIT(A) in the impugned order wrongly deleted the penalty by concluding that no addition on account of loan was ever made by the AO
Be that as it may, without going into the merits of the case, we set aside the order passed by Ld. CIT(A) and restore the matter back to the file of Ld. CIT(A) to decide the same on merits after considering the complete facts of the case as narrated by us above and after providing opportunity of hearing to the parties.
Before parting we make it clear that our decision to restore the matter back to the file of the Ld. CIT(A) shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the Ld. CIT(A) independently in accordance with law.
In the result, the appeal filed by the revenue stands allowed for statistical purposes.
As the facts and circumstances in these appeals are identical to A.Y 2015-16 (except variance in figures) and the decision rendered in above paragraph would apply mutatis mutandis for this appeal also. Accordingly, the grounds of appeal of the present appeal also stands allowed for statistical purposes.
In the result, both the appeals filed by the revenue are allowed for statistical purposes.
Order pronounced in the open court on 03/11/2025