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Facts
The assessee claimed deduction for interest on unsecured loans. The Assessing Officer disallowed the interest, considering the loans as bogus, in Assessment Year 2012-2013. For Assessment Year 2013-2014, the interest claim was also disallowed as consequential.
Held
The Tribunal held that the additions for Assessment Year 2013-2014 were consequential to the additions made for Assessment Year 2012-2013. The appeals were directed to be adjudicated afresh after considering the decision for the prior year.
Key Issues
Whether the disallowance of interest on unsecured loans for AY 2013-2014 is consequential to the disallowance of the principal loans for AY 2012-2013, and whether the appeal should be adjudicated afresh pending decision on the prior year's appeal.
Sections Cited
250, 143(3), 133(6), 194A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “H (SMC
(Assessment Year:2013-2014) Chetan Stone Crusher 402, Regency Apartment, New Link Road, Kandarpada, Dahisar West, Mumbai - 400068 Maharashtra. [PAN:AAHFC4018M] …………. Appellant Vs Income Tax Officer Ward 42(1)(1) Mumbai Kautilya Bhavan, Bandra East Mumbai – 400051. Maharashtra …………. Respondent Appearance For the Appellant/Assessee : Shri C. S. Biradar For the Respondent/Department : Shri Pravin Salunkhe Date Conclusion of hearing : 22.07.2025 Pronouncement of order : 28.07.2025
O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. The present appeal preferred by the Assessee is directed against the order, dated 31/03/2025, passed by the Additional/Joint Commissioner of Income Tax (Appeals) – 2, Gurugram [hereinafter referred to as ‘the CIT(A)’] under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] whereby the Ld. CIT(A) had dismissed the appeal against the Assessment Order, dated 12/02/2016, passed under Section 143(3) of the Act for the Assessment Year 2013-2014.
2. The Assessee has raised following grounds of appeal :
1. Ld. Addl/JCIT has not considered the details submitted such as Loan Confirmation a/c, Copy of Bank Statements, Audited Balance Sheet, Profit & Loss A/c and Audit Report of loan creditors.
The loan creditors have already submitted to the I.T.O. all the above mentioned documents in response to Notice u/s.133(6) of the I.T.Act, 1961.
The interest on loan was paid by RTGS/NEFT after deducting the TDS on interest u/s.194A of the I.T.Act, 1961. 4. „A‟ prays that additions of Rs.7,69,248/- may please be deleted.”
3. We have heard both the sides and have perused the material on record. The solitary issue raised in the present appeal pertains, to disallowance of interest of INR.7,69,248/- claimed by the Assessee as deduction in the return of income for the Assessment Year 2013- 2014. The Assessing Officer denied deduction of the aforesaid amount on the ground that the unsecured loans in respect of which such interest was paid were held by the Assessing Officer to be bogus in the assessment proceedings for the Assessment Year 2012- 2013. In appeal preferred by the Assessee against the disallowance of deduction claimed by the Assessee for the Assessment Year 2013- 2014, the CIT(A) confirmed the disallowance made by the Assessing Officer. Therefore, being aggrieved the Assessee has preferred the present appeal before the Tribunal on the grounds reproduced at Paragraph 2 above.
During the course of hearing Learned Authorized Representative submitted that the Assessee had taken unsecured loans from M/s. Laxmi Trading Co. and M/s. Sonam Gems (P.) Ltd. as on 31/03/2012 the outstanding balance of the aforesaid unsecured loans stood at INR.45,97,143/- and INR.51,81,973/-, respectively. During the assessment proceedings for the Assessment Year 2012-2013 the Assessing Officer concluded that the aforesaid entities were operated and managed by Shri Bhanwarlal Jain and its associates; and the unsecured loans were taken from them were in the nature of bogus
accommodation entries. Therefore, additions in respect of the unsecured loan taken from the aforesaid entities was made in the hands of the Assessee for the Assessment Year 2012-2013. The Appeal preferred by the Assessee before the first appellate authority for the Assessment Year 2012-2013 was pending adjudication. For the Assessment Year 2013-2014, the Assessing Officer disallowed interest of INR.3,62,148/- and INR.4,07,104/- paid to M/s. Laxmi Trading Co. and Sonam Gems, respectively. The Assessee had challenged the aforesaid disallowance of interest in appeal preferred by the Assessee for the Assessment Year 2013-2014 before the CIT(A). Thus, appeal for the Assessment Year 2012-2013 and Assessment Year 2013-2014 were pending before the CIT(A). While the CIT(A) has dismissed the appeal for the Assessment Year 2013- 2014 dealing with the consequential disallowance of interest, the appeal for the Assessment Year 2012-2013 wherein the primary issue of unsecured loans having been treated as bogus was not disposed off and is still pending before the CIT(A).
Taking into consideration the above facts, which have not been disputed by the Revenue, we are of the view that additions made for the Assessment Year 2013-2014 are consequential upon the additions on account of unsecured loan made for the Assessment Year 2012-2013. Therefore, we set aside the impugned order, dated 31/03/2025, passed by the CIT(A) with the directions to the CIT(A) to adjudicate the appeal afresh after taking into consideration the decision in appeal preferred by the Assessee for the Assessment Year 2012-2013 [Appeal Reference No.: CIT(A), Mumbai – 44/10582/2016-17]. Alternatively, the Revenue may consider consolidation the appeals preferred by the Assessee for the Assessment Year 2012-2013 and 2013-2014 so that the same can be adjudicated together by the Learned CIT(A) since the issues are connected/consequential. In terms of aforesaid Ground No.4 raised
by the Assessee is allowed for statistical purpose while Ground No.1 to 3 raised by the Assessee are dismissed is having been rendered infructuous.
In result the appeal preferred by the Assessee is allowed for statistical purpose.
Order pronounced on 28.07.2025.