AKS HOMES & INFRASTRUCTURE PVT. LTD.,NEW DELHI vs. ITO WARD - 2(1), NEW DELHI

This appeal filed by the assessee against the impugned order dated 29.03.2019 passed by the Ld. CIT(Appeals)-32, New Delhi in relation to assessment year 2013-14 on the following grounds:

1. That on the facts and circumstances of the case, the Commissioner of Income-tax (Appeals)-32, New Delhi grossly erred in partly upholding the action of the Assessing Officer in making various additions/disallowances to the returned income of the appellant.

2. That on the facts and in the circumstances of the case and in law, the CIT(A) grossly erred in confirming the action of the Assessing Officer in making an addition of Rs. 4,90,000/- on account of unsecured loan, without appreciating that the same was properly explained and recorded in books of accounts. 2.1 That the CIT(A) grossly erred on facts and in law in confirming the aforesaid addition made by the Assessing Officer without appreciating that confirmation in respect of unsecured lender, viz., Ms. Asha Rani was duly submitted before the Assessing Officer/CIT(A). 2.2 That the CIT(A) grossly erred on facts and in law in confirming the aforesaid addition made by the Assessing Officer without appreciating that the above mentioned unsecured lender had granted loan to appellant out of savings made over a number of years. 2.3 That the CIT(A) grossly erred on facts and in law in confirming the aforesaid addition made by the Assessing Officer without appreciating that the above mentioned unsecured lender was not required to file tax return, since, her taxable income was less than the basic tax exemption limit.

3. That on the facts and in the circumstances of the case and in law, the CIT(A) grossly erred in confirming the action of the Assessing Officer in making a disallowance of Rs. 2,50,000/- on account of interest on unsecured loan under the provisions of section 36(1)(iii) of the Income Tax Act, 1961. 3.1 That the CIT(A) grossly erred on facts and in law in confirming the aforesaid disallowance made by the Assessing Officer without appreciating that the appellant had sufficient interest free/own funds available to grant loan to directors while interest bearing funds were not utilized for doing so.

The appellant craves leave to add, amend or vary the above grounds of appeal on or before the date of hearing.”

2. I have heard the both parties and perused the orders passed by the Revenue Authority along with the documentary evidence filed by the assessee counsel in the shape of Paper Book in which the assessee counsel has attached copy of the acknowledgement of return of income of the appellant along with computation of taxable income for the relevant assessment year, copy of audited financial statements of the appellant for the relevant assessment year, copy of confirmation of Ms. Asha Rani, copy of broad submissions filed before the CIT(A) and copy of the decision of Delhi High Court in the case of CIT vs. Modi Rubber Ltd. : 378 ITR 128.

3. After hearing the both parties, I find that assessee filed its return of income of Rs. 7,13,334/- on 30.09.2013 which was processed by the Assessing Officer u/s 143(1) of the Income Tax Act, 1961. Later on AO issued notice u/s 143(2) to the assessee, in compliance of the same, authorized Representative of the assessee appeared and filed documentary evidence in support of the claim. After considering the documentary evidence filed by the assessee the AO made various additions in the assessment order including the additions in dispute in this appeal and completed the assessment u/s 143(3) of the Act on 26.03.2016.

4. Aggrieved by the same, the assessee filed an appeal before the Ld. First Appellate Authority who vide impugned order dated 29.03.2019 partly allowed the appeal filed by the assessee and deleted the various additions mentioned in the impugned order but sustained the addition in dispute in the present appeal.

5. I am of the view that as regard to the addition of Rs. 4,90,000/- the assessee has taken the unsecured loan from Ms. Asha Rani, but assessee has only filed confirmation from her. According to the order of the Revenue Authorities Ms. Asha Rani was not filing any Income tax Return and was not having taxable income. Therefore, in my view the Ld. First Appellate Authority has rightly uphold the addition of Rs. 4,90,000/- on account of unsecured loan from Ms. Asha Rani. In my view no interference is called for in the well reasoned order passed by the Ld. First Appellate Authority for sustaining the addition of Rs. 4,90,000/- on account of unsecured loan from Ms. Asha Rani because Ms. Asha Rani was not having creditworthiness to advance loan to the assessee company . I uphold the order on this issue. As regard to the other addition of Rs. 2,50,000/- on account of interest on unsecured loan under the provision of section 36(1)(iii) of the Income Tax Act, 1961. After hearing the both parties and perusing the relevant record available with me. I am of the view that a sum of Rs. 2,50,000/- was paid as interest on account of unsecured loan taken from one Shri Shashi Aggarwal and assessee has also forwarded loans and advances to the tune of Rs. 78,68,496/- which includes loan being forwarded to the Directors Sh. Arun Sehgal and Ms. Neeru Sehgal during the year under consideration. The assessee could not establish before the Revenue Authority about the payment of Rs. 2,50,000/- on account of interest on unsecured loans under the provisions of section 36(1)(iii) of the Act, though reasons mentioned by the Ld. First Appellate Authority in the para nos. 6.4 and 6.4.1 at pages 13 & 14 in the impugned order. In my view no interference is called for in the well reasoned orders passed by the Ld. First Appellate Authority for sustaining the addition of Rs. 2,50,000/-.