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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI N. V. VASUDEVAN & SHRI A. K. GARODIA
IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH : BANGALORE BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENT AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER Assessment year : 2004-05 M/s. Mahalakshmi Flour Mills, The Asst. Commissioner of Income Tax, No.T-64, Gundopanth Street, Circle – 5[2][1], Bengaluru – 560 002. vs. Bengaluru. PAN : AAFFS 3315 K APPELLANT RESPONDENT Assessee by : Smt. Prathibha, Advocate Revenue by : Shri. S. Sundar Rajan, Additional CIT (DR)(ITAT) Date of hearing : 26.08.2020 Date of Pronouncement : 28.08.2020 O R D E R Per A. K. Garodia, Accountant Member:
This appeal is filed by the assessee and the same is directed against the order of learned CIT(A)-5, Bengaluru, dated 12.10.2017 for Assessment Year 2004-05.
The grounds raised by the assessee are as under:
The learned CIT(A) grossly erred in passing the order in the manner he did. On the facts and in the circumstances of the case, the learned 2. CIT(A) ought to have appreciated that the outstanding loans in others' name to the tune of Rs.70,31,001/- was the opening balance carried forward from the previous years and other balance were continued to be outstanding and carried forward to the next year; none of the loans in the past have been held to be not genuine and no impugned addition in this regard was made in the preceding years and thus the disallowance confirmed by the CIT(A) is uncalled for and liable to be deleted.
On the facts, the learned CIT(A) ought to have appreciated that 3. relevant documents pertaining to the loan obtained by the Appellant were produced before the CIT (Appeals) and also the Tribunal. Further, the Tribunal remanded the matter back to the assessing officer only to re-do the assessment to delete the additions after satisfaction that the amounts outstanding represented only the opening balances for which details were available on record and accordingly the learned assessing officer ought to have refrained from making the impugned addition. Thus, the addition confirmed by the learned CIT(A) is liable to be deleted. The learned CIT(A) erred in confirming that the assessment order 4. dated 15.09.2006 passed under Section 144 holds good, without considering the observation of the Tribunal arid also the documents furnished by the Appellant before the Tribunal (in the form of Paper Book) and the order dated 31.03.2015 passed by him is liable to be set aside. The learned CIT(A) ought not to have disallowed the interest on the 5. loans to the extent of Rs.5,47,898/-. The additions as confirmed by the learned CIP,A) are not sustainable 6. in the eye of law as the same was confirmed without any basis whatsoever. Without prejudice, the disallowances/addition as confirmed by the 7. learned assessing officer are arbitrary, excessive and ought to be deleted in toto. The learned CIT(A) erred in confirming the levy of interest under 8. Sections 234B, 234C and 234D of the Act. For these and such other grounds that may be urged at the time of 9. hearing, the Appellant prays that the appeal may be allowed.
In the course of hearing, it was submitted by learned AR of the assessee that although various grounds are raised by the assessee but only two issues are involved i.e., regarding addition made by the AO of Rs.70,31,001/- under section 68 of the Income Tax Act, 1961 (hereafter called ‘the Act) in respect of outstanding loans and disallowance of Rs.457,898/- claimed by the assessee as interest on these loans.
In the course of hearing, it was also submitted by learned AR of the assessee that on pages 7 to 10 of the Paper Book, the assessee has submitted the complete details of these loans of Rs.70,31,001.50/- from various persons along with their details of PAN and their addresses and the date of receipt and the amount of loan received. It was submitted that from these details, it can be seen that the amount was received in earlier years not in the present year and therefore, no addition can be made under section 68 of the Act in the present year in respect of these loans which were received by the assessee in earlier years and since the addition on loan cannot be made under these facts, interest claimed on such loan is also cannot be disallowed. At this juncture, this was the query of the Bench that the details available on pages 7 to 10 of the Paper Book is a typed statement by the assessee and that in respect of some loans, date of receipt is not mentioned and the veracity of this statement is also to be examined at to whether in fact the loans were received by the assessee in earlier years or were received in the present year because there is no finding of any of the authorities below on this aspect and therefore, the matter has to be restored back to the file of AO for a fresh decision after examining this aspect. In reply, it was submitted by learned AR of the assessee that the issue may be restored back to the file of AO with suitable directions. Learned DR of the Revenue supported the orders of authorities below.
We have considered the rival submissions. We find that in the statement of facts filed by the assessee before CIT(A), it is stated by the assessee that these loans were opening balances and there was no fresh loan in the present year. As per ground No.2 raised by the assessee before CIT(A) also, this was the contention raised by the assessee before CIT(A) that this amount of loan of Rs.70,31,001/- was the opening balance carried forward from the previous years and the same was carried forward in the present year to the next year but on this aspect, there is no finding of any of the authorities below as to whether loan in question was received by the assessee in the present year or in any earlier year. Before us also, the assessee has not submitted the copy of loan confirmation of various parties or even a copy of ledger accounts of these parties in the books of the assessee to establish that loan in question was not received in the present year but was received in earlier years. Hence, we set aside the order of CIT(A) on this issue and restore the matter back to the file of the AO for a fresh decision with the direction that the AO should examine this aspect of the matter as to whether the loan in question was received by the assessee in the present year or in an earlier year and we direct the assessee that the necessary evidences should be produced before the AO in this regard and the AO should pass a speaking and reasoned order after considering the evidences if any brought on record by the assessee before him regarding the date of receipt of loan in question. If it is found that the loan in question was received in an earlier year, then obviously no addition can be made in the present year under section 68 of the Act regarding such loan but if the loan in question was received in the present year, then obviously the addition can be made if the assessee is not able to establish the three ingredients i.e., identity of the creditor, credit worthiness of the creditor and genuineness of the transaction. Regarding the interest aspect also, issue should be decided afresh on the basis of the decision in respect of acceptability of the loan and if the loan is accepted as explained, then no addition can be made regarding interest payable on such loan because there is no other reason given to make disallowance of interest apart from this that when the loan is not accepted as explained, interest on such loan cannot be allowed. Accordingly, on both issues, the appeal of the assessee is allowed for statistical purposes.
In the result, assessee’s appeal is allowed for statistical purposes. Pronounced in the open court on the date mentioned on the caption page.