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Facts
The assessee appealed against the order of the CIT(A) confirming an addition of ₹1,70,607/- made by the AO as interest on a loan paid to M/s Chordia Trade Credits Pvt. Ltd. The AO considered the interest bogus, as the company was stated to be a shell company. The assessee had taken loans in earlier years which were accepted, and the interest paid was also not disputed.
Held
The Tribunal held that since the loans and advances, as well as the unsecured loan taken in the preceding assessment years, were accepted by the Revenue, and the interest paid was not disputed in earlier years, the same cannot be disputed in the current year. Therefore, the addition made by the AO was deleted.
Key Issues
Whether interest paid on loans, which were accepted in earlier years, can be added as income in the current year if no incriminating material was found during search proceedings?
Sections Cited
139(1), 132(1), 270A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRI SONJOY SARMA, JM
O R D E R Per Rajesh Kumar, AM:
These are appeals preferred by the assessee against the orders of the Commissioner of Income-tax (Appeals), Kolkata-27 (hereinafter referred to as the “Ld. CIT(A)”] even dated 15.03.2024 for the AY 2019-20 & 2021-22.
At the outset, we note that there is delay of 174 days for which condonation petition along with affidavit was filed, explaining the reasons for delay. It was stated in the affidavit that the appellate orders passed ex-parte and unaware of the impugned ex-parte of the order as not received any notice of hearing vide email, which is general mode of communication. It was only come to notice while updating list of pending appeal for the purpose of finalization of accounts. It was only after the fact was noticed from the portal qua
The ld. DR on the other hand strongly opposed the condonation of delay on the ground that the delay is not properly explained.
After hearing the rival contentions and perusing the materials available on record, we find that the reasons for delay appear to be sufficient and bonafide and accordingly, the delay is condoned.
2203/KOL/2024 for A.Y. 2021-22
The only issue raised by the assessee is against the order of ld. CIT (A) confirming the addition of ₹1,70,607/- as made by the ld. AO on account of interest on loan paid to M/s Chordia Trade Credits Private Limited.
The facts in brief are that the assessee filed the return of income u/s 139(1) of the Act on 04.02.2022, declaring total income of Nil and current liabilities of ₹1,73,512/-. A search action u/s 132(1) of the Act was conducted on assessee on 05.10.2021 and accordingly, notices were issued and served upon the assessee. During the course of assessment proceedings, the ld. AO has debited ₹1,70,607/- by way of interest which according to the ld. AO was bogus as the same was paid to a shell company M/s Chordia Trade Credits Pvt. ltd. as included in the data base by the DIT(Inv), Kolkata. Accordingly, the same was treated as non-genuine and added to the income of the assessee.
In the appellate proceedings, the ld. CIT (A) on his order dismissing the appeal of the assessee by observing and holding as under:-
2204/KOL/2024 for A.Y. 2019-20
The issue raised in this appeal is similar to one as decided by us in ITA No. 2203/KOL/2024. Accordingly, our decision would apply mutatis
In the result, both the appeals of the assessee are allowed.
Order pronounced in the open court on 04.03.2025.