PRAVINKUMAR MOHANLAL KOTHARI,SOLAPUR vs. INCOME TAX OFFICER WARD 1(1),SOLAPUR, SOLAPUR

At the outset, ld. Counsel for the assessee has not pressed the Ground No.1 challenging the validity of notice u/s.148 of the Act and therefore the same is dismissed as ‘not pressed’.

Ground No.2 relating to addition for interest income of Rs.14,02,994/-.

We have heard the rival submissions and perused the record placed before us. We have gone through the financial statements filed by the assessee and observe that during the year the assessee has received interest amounting to Rs.14,02,994/- and has paid the interest amount of Rs.14,24,450/-. (towards bank interest at Rs.4,20,919/-, LIC loan interest at Rs.1,07,991/- and interest paid on unsecured loans at Rs.8,95,540/-). The excess interest paid is Rs.24,456/-. We have verified from the financial statements that assessee has only debited the expenses of interest paid at Rs.24,456/- in its profit and loss account, i.e. NET of interest paid and interest received and therefore the alleged interest income of Rs.14,02,994/- already stands accounted for in the books of account. Therefore, no addition deserves to be made. Finding of ld.CIT(A) is reversed and addition of Rs.14,02,994/- is hereby deleted. Ground No.2 raised by the assessee is allowed.

Grounds of appeal No.3 and 4 relates to addition for unexplained cash credit at Rs.1,27,47,060/- and also interest paid on such unsecured loans at Rs.8,98,540/- has also been disallowed.

Facts in brief are that the assessee who is an individual has filed the return of income on 16.01.2021 for A.Y.2020-21 declaring income of Rs.4,91,880/-. Based on the information available the financial transactions appearing on the insight portal, case of the assessee selected for scrutiny followed by validly serving statutory notices, ld. Assessing Officer observed that there are certain unsecured loans appearing in the balance sheet and for that more details were called for. In reply, the assessee has filed the list showing all the unsecured loans have been received on 01.04.2019 but thereafter could not furnish proper details resulting into addition u/s.68 of the Act at Rs.1,27,47,060/- and also interest paid on such unsecured loans at Rs.8,98,540/- has also been disallowed.

Assessee carried the matter before ld.CIT(A) and contended that no fresh loans were taken during the year and inadvertently the date 01.04.2019 was mentioned in the list of loans filed before the Assessing Officer. It was submitted that all the confirmation letters from the parties have been filed which clearly shows that all the alleged unsecured loans are brought forward from the preceding years except of Rs.49,000/- loan taken from Mr. Daksham Sachin Kothari. However, ld.CIT(A) did not give any relief to the assessee. Now the assessee has approached this Tribunal.

Ld. Counsel for the assessee reiterated the submissions filed before ld.CIT(A) and also referring to the paper book running into 95 pages and also filed application for admission of additional evidences regarding the financial statements of the assessee’s business concerns for F.Y. 2018-19 and income tax return copy and also summary of outstanding unsecured loans as on 31.03.2019. 9. On the other hand, ld. DR supported the order of ld.CIT(A).

We have heard the rival submissions and perused the record placed before us. We have gone through the details and note that before the Assessing Officer, assessee has filed confirmation letters as appearing at pages 34 to 92 of the paper book. The controversy has arisen because the assessee has submitted letter to the Assessing Officer wherein the date of loan received is mentioned as 01.04.2019 for all the cash creditors except for Mr. Daksham Sachin Kothari from whom the alleged loan of Rs.49,000/- was received on 17.05.2019. Though the assessee has filed application for admission of additional evidences but then it only contains the financial statement of Kothari Fabrics of the assessee’s proprietorship concern which clearly provide the name of the alleged cash creditors appearing in the list of loans liability as on 31.03.2019, i.e. at the close of F.Y. 2018-19. The assessee is claiming to have filed the details before the Assessing Officer to prove that out of the alleged sum, unsecured loans of Rs.1,17,63,924/- were taken in preceding years from various parties and all these loans have been brought forward from the preceding year and during the year, fresh loan of only Rs.49,000/- has been taken from Mr. Daksham Sachin Kothari that too has opening balance of Rs.82,234/-. Further, assessee has furnished relevant details including confirmation, computation of income, income tax return of Mr. Daksham Sachin Kothari to explain the Identity and creditworthiness of the cash creditor and genuineness of the transaction. We also note that the impugned addition of Rs.1,27,47,060/- inter alia includes opening balance as on 01.04.2019 at Rs.1,17,60,974/-, loan taken during the year at Rs.49,000/-, interest paid/credited at Rs.10,06,531/- and TDS deducted at Rs.73,165/- which shows the interest paid at Rs.10,65,531/- includes the disallowance of interest made by the Assessing Officer at Rs.8,98, 540/- and therefore there is a double addition of Rs.8,98,540/- which deserve to be deleted.

However, considering the fact that both the lower authorities have not dealt with the facts extracted above regarding the opening balance of the unsecured loans and that out of the alleged unsecured loans except fresh loan of Rs.49,000/- the remaining amount is brought forward from the preceding year, we therefore deem it proper to restore this issue to the file of ld. Jurisdictional Assessing Officer for the limited purpose of verification of the assesee’s claim and if the same is found to be correct, then no addition deserves to be made for the opening balance of unsecured loans of Rs.1,17,63,974/- brought forward from the preceding year. As regards the loan of Rs.49,000/- raised during the year from Mr. Daksham Sachin Kothari, ld. Assessing Officer shall examine the documents and duly considering the fact that there is an opening balance of loan of Rs.80,234/- taken from this cash creditor, shall decide in accordance with law. Similarly, the interest incurred on the unsecured loans brought forward from the preceding year will also not call for any disallowance if the unsecured loans are found to be from the preceding years. Thus, grounds of appeal No.3 and 4 raised by the assessee are accordingly partly allowed for statistical purposes.

In the result, the appeal of the assessee is partly allowed for statistical purposes as per the terms indicated hereinabove.

The Pr. CIT concerned. विभ गीय प्रतितनधि, आयकर अपीलीय अधिकरण, “B” बेंच, 4. पुणे / DR, ITAT, “B” Bench, Pune. ग र्ड फ़ इल / Guard File. 5. आिेश नुस र / BY ORDER,