INCOME TAX OFFICER-1(5), KANPUR vs. SHRI VIVEK BENARA, KANPUR

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ITA 182/LKW/2018Status: DisposedITAT Lucknow15 May 2025AY 2013-14Bench: SHRI KUL BHARAT (Vice President), SHRI ANADEE NATH MISSHRA (Accountant Member)15 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the Revenue's representative contended that the assessee's written submissions contained factual aspects requiring verification by the Assessing Officer. The Revenue requested that the issues be restored to the Assessing Officer for a de novo order. The Tribunal agreed with this submission. Consequently, the impugned appellate order of the CIT(A) was set aside, and the issues concerning the additions made in the assessment order were restored to the file of the Assessing Officer. The AO was directed to pass a de novo order in accordance with the law after providing a reasonable opportunity to the assessee. The Tribunal did not decide the merits of the additions or disallowances but remanded the matter for fresh adjudication.

What were the facts?

The Revenue has appealed against the order of the CIT(A) for Assessment Year 2013-14. The assessee, an individual, initially declared a total income of Rs. 2,92,610. The Assessing Officer (AO) completed the assessment at Rs. 8,71,07,220, making additions of Rs. 8,46,24,793 under Section 68 and Rs. 21,98,819 for disallowance of interest, bank charges, and legal expenses. The CIT(A) deleted these additions entirely. The Revenue's appeal challenges this deletion. The assessee, represented by written submissions, argued that the loans were raised to fund a company, and the lenders preferred dealing with the individual. The AO had initially disallowed the loans for lack of confirmation, creditworthiness, PANs, and bank statements.

What were the issues?

1. Whether the addition of Rs. 8,46,24,793 on account of alleged "fresh unsecured loans" raised by the assessee is sustainable in law, considering the documentation and explanation provided by the assessee? 2. Whether the disallowance of Rs. 21,98,819 on account of interest, bank charges, and legal expenses is justified, particularly in relation to funds lent to a company? Assessee's Contentions: - The unsecured loans were raised from individuals who preferred lending to the assessee rather than directly to the company. - The assessee acted as an intermediary, receiving funds from depositors and immediately transferring them to the company for its business needs. - The interest paid on these loans should be allowable as expenditure under Section 57 of the Income Tax Act, 1961, as it was incurred for earning interest income. - The CIT(A)'s deletion of additions was based on the AO's remand report, which considered the genuineness of the unsecured loans based on information and documents provided. Revenue's Contentions: - The written submissions from the assessee contain factual aspects requiring verification by the Assessing Officer. - The issues in dispute regarding additions made in the assessment order should be restored to the Assessing Officer for a de novo assessment.

Which sections of the Income-tax Act were involved?

Section 68,Section 57,Section 36(1),Section 271(1)(c),Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, LUCKNOW BENCH ‘B’, LUCKNOW

Before: SHRI KUL BHARAT & SHRI ANADEE NATH MISSHRA

Revenue for assessment year 2013-14 against impugned appellate order dated 16/11/2017 passed by learned Commissioner of Income Tax (Appeals) [“CIT(A)” for short].

(A.1) The facts of the case, in brief, are that the assessee is an individual and filed his return of income on 31/03/2014 declaring total income of Rs.2,92,610/-. The case was selected for scrutiny through CASS and assessment was completed at a total income of Rs.8,71,07,220/- by making addition of Rs.8,46,24,793/- under section 68 and Rs.21,98,819/- on account of disallowance of interest, bank charges and legal expenses.

Aggrieved, the assessee carried the matter in appeal before the learned CIT(A), who entirely deleted the disallowances made by the Assessing Officer and allowed the appeal of the assessee. Now Revenue is in appeal before the Income Tax Appellate Tribunal challenging the deletion of addition by learned CIT(A).

(B) During the course of hearing before us, the assessee was represented by none. However, in letter dated 15/04/2025, submitted from the assessee’s side, it has been communicated that the written submissions filed on 10/02/2025 may be considered for deciding the appeal. The written submissions filed by the assessee are reproduced below:

(B.1) On the other hand, learned Departmental Representative contended that the aforesaid written submissions filed from the assessee’s side contains many factual aspects, which need verification at the end of the Assessing Officer. He further submitted that the issues in dispute in the present appeal regarding additions made in the assessment order may be restored back to the file of the Assessing Officer with the direction to pass de novo order in accordance with law after due verification and after providing reasonable opportunity to the assessee. We are in agreement with this submission made by the learned CIT D.R. Accordingly, the impugned appellate order dated 16/11/2017 of learned CIT(A) is set aside and the issues in dispute in the present appeal before us regarding additions made in the assessment order are restored back to the file of the Assessing Officer with the direction to pass de novo order in accordance with law after providing reasonable opportunity to the assessee.

(C) In the result, the appeal of the assessee stands allowed for statistical purposes.

(Order pronounced in the open court on 15/05/2025)

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