TASC CHEMICAL INDUSTRIES PRIVATE LIMITED ,MUMBAI vs. ACIT RANG 14(3), MUMBAI

The solitary ground raised by the assessee relates to challenging the order of the Ld. CIT(A) in confirming the addition of Rs. 181,78,147/- made by the AO.

We have heard the counsel for both the parties, perused the material placed on record, the judgments cited before us, and also the orders passed by the Revenue Authorities. From the records, we noticed that during the course of assessment, the AO observed that the assessee had shown unsecured loans of Rs. 181,78,147/- as on 31.03.2021, which had been repaid by the assessee during the period relevant to the assessment year under consideration. Accordingly, a notice under Section 142(1) of the Act was issued, asking the assessee to provide the names, PANs, and correct

Apart from this, the assessee was also asked to furnish loan confirmation letters from the lenders and establish their identity, creditworthiness, and the genuineness of the loan transactions, along with copies of their returns of income and bank account statements highlighting the loan transactions and the sources thereof. In reply, the assessee submitted confirmations from some of the lenders. However, it did not furnish the returns of income or bank account statements highlighting the unsecured loans received from the lenders and the repayment of the loans to them.

Since the assessee could not provide any documentary evidence in respect of the nature and source of the funds through which the unsecured loans were repaid, the amount of Rs. 181,78,147/- was added to the total income of the assessee. Aggrieved by the said addition, the assessee filed an appeal before the Ld. CIT(A).

The assessee made written submissions before Ld. CIT(A), which are mentioned in Para No. 5 of the order and the same is reproduced herein below:

After considering the documents filed on record by the assessee, the Ld. CIT(A) dismissed the appeal by holding that the assessee could not discharge its statutory onus and, thus, the addition made by the AO was founded on factual findings derived from the assessee's own non- compliance and the absence of evidence.

After considering the entire facts of the present case, we find that the assessee had categorically taken a stand by filing its reply and by raising a ground of appeal wherein it was specifically mentioned that the amount of Rs. 181,78,147/- does not represent an unsecured loan. The said amount exactly resembles the amount of secured loan sanctioned by OBC as a

Although the Ld. CIT(A) rejected the contention of the assessee by holding that the assessee had taken a new stand but failed to prove the credibility of the same, and that the explanation offered at this stage was an afterthought and unsupported by records, as contained in Para 5.7 of the order and the same is reproduced herein below:

After considering the entire facts of the present case, we find that the entire stand of the assessee revolves around the point that the amount of

It was further submitted that the assessee had not repaid the said facility during the year under consideration and had continued to enjoy the said facility during AY 2013-14. In support thereof, the assessee placed on record the bank statement as on 31.03.2013 along with bank reconciliation statements (Exhibit C) and, therefore, contested the said addition on account of unsecured loans.

We find that this aspect/stand of the assessee was not even looked into or verified by the AO or the Ld. CIT(A) at any stage whatsoever. The Ld. CIT(A) dismissed the grounds raised by the assessee only by holding that the assessee had, at the earlier stages, consistently referred to unsecured loan confirmations from individual lenders and had indulged in unnecessary and irrelevant discussions with regard to unsecured loans.

Be that as it may, without commenting upon the merits of the claim/stand taken by the assessee, the Bench is of the view that once a specific stand has been taken by the assessee, supported by Exhibits A, B, and C, the AO, being both the adjudicator and the investigator, is duty- bound to verify the said stand and the documents supporting the claim and to adjudicate the issue afresh in a de novo proceeding.

Accordingly, we restore the matter to the file of the AO for this purpose.

Before parting, we make it clear that our decision to restore the matter to the file of the AO shall in no way be construed as having any bearing upon or expressing any opinion on the merits of the dispute, which shall be adjudicated independently by the AO in accordance with law.

Needless to mention, the AO shall provide adequate opportunity of hearing to the assessee. The assessee shall not seek any adjournment on frivolous grounds and shall remain cooperative during the course of the proceedings.

Since we have already remitted the quantum appeal, concerning the additions made by the AO and confirmed by the Ld. CIT(A), to the file of

In the result, both the appeals filed by the assessee is allowed for statistical purposes.