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Facts
The Revenue filed an appeal against the CIT(A)'s order deleting additions made by the Assessing Officer for assessment year 2013-14. The AO had made additions under Section 68 for unsecured loans and disallowed interest expenses. The assessee, an individual, had filed his return declaring an income of Rs. 2,92,610/-, but the assessment was completed at Rs. 8,71,07,220/-.
Held
The Tribunal held that the assessee had discharged the initial onus to prove the identity, creditworthiness, and genuineness of the unsecured loans by furnishing necessary documents. The AO had not made any adverse comments in the remand report. Regarding interest disallowance, the Tribunal noted that while the expenditure might be excessive, it was incurred for commercial expediency. The appeal was restored to the AO for de novo consideration.
Key Issues
Whether the additions made by the AO under Section 68 for unexplained unsecured loans were justified, and whether the disallowance of interest expenditure was correct.
Sections Cited
68, 143(2), 271(1)(c), 57, 194, 36(1)(iii)
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)