DY. COMMISSIONER OF INCOME TAX, CIRCLE-5(2)(1), MUMBAI, MUMBAI vs. MERIDIAN CHEM BOND PRIVATE LIMITED, MUMBAI

In the appeal filed by the Revenue, the quantum addition challenged is of Rs.16,40,316/- which is on account of disallowance of interest paid on loan which earlier was treated as bogus loan. The tax effect on the disputed amount is only Rs.5,06,858/-. The Revenue in the grounds have stated that even though the tax effect involved is much below the prescribed limited but the case of the assessee falls under the exception clause of para 3(h) of CBDT Circular No. 5 of 2024 dated 15/03/2024. From the perusal of the facts it is stated that here the addition is on account of disallowance of interest on a loan taken in the earlier year. Moreover, earlier the addition on account of loan was made on the basis of some search conducted by the Income Tax department in Bhanwarlal Jain. Even in those years addition was not made on the basis of any information or enquiry by any external agency as stated in clause ‘h’ para 3 of CBDT Circular. Hence, it is not covered by any exceptional clause. Thus, appeal of the Revenue is dismissed on account of low tax effect being below prescribed monetary limit of Rs.60,00,000/-.

In the result, appeal of the Revenue and cross objection filed by the assessee are dismissed.