LATE SHRI BHIMRAJ P. GUPTA(THROUGH LEGAL HEIR ),VADODARA vs. THE ITO, WARD-1(2)(1), VADODARA

आदेश/O R D E R

PER P.M. JAGTAP, VICE-PRESIDENT :

“1. On the facts and in the circumstances of your Appellant’s case and in law, the Honorable CIT(A)-5, Vadodara has erred by confirming the addition made by ld. AO of an amount of Rs.2,40,000/- u/s 68 of the Act, on the ground that appellant has not proved the identity and creditworthiness of the depositor and genuineness of transaction of the loan taken.

2. On the facts and in the circumstances of your Appellant’s case and in law, the Honorable CIT(A)-5, Vadodara has erred by confirming disallowance made by ld. AO of Rs.43,017/- u/s 40(a)(ia) of the Act, on the ground that tax deductible is not deducted u/s 194J of the Act.

Late Shri Bhimraj P. Gupta Vs. ITO AY : 2012-13 2 are utilized for advancing interest-free loans to the said parties and the appellant has not furnished any explanation with regard to business expediency of advancing the said loans.”

3. As regards the issue involved in Ground No.3 relating to the disallowance of Rs.25,23,060/- made by the Assessing Officer and confirmed by the learned CIT(A) on account of interest allegedly attributable to the loans of Rs.2,10,25,500/- given to five parties for non-business purpose, the learned Counsel for the assessee has invited our attention to the balance-sheet of the assessee as on 31.03.2012 to submit that sufficient own funds in the form of partners’ capital as well as interest free loans were available with the assessee for giving interest free loans to the concerned five parties. He has contended that the said loans thus were given by the assessee from his own funds as well as interest free loans and since the interest bearing loans were not utilized for giving the said loans, the disallowance of interest made by the Assessing Officer and confirmed by the learned CIT(A) is not sustainable. The learned DR, on the other hand, has submitted that this explanation regarding the availability of own funds and interest free funds to give interest free loans now being offered before the Tribunal was never offered by the assessee either during the course of assessment proceedings before the Assessing Officer or during the course of appellate proceedings before the learned CIT(A) inspite of sufficient opportunity afforded to him. He has contended that this matter may, therefore, be sent back to the Assessing Officer for giving him an opportunity to verify the claim of the assessee. We find merit in this contention of the learned DR. We, therefore, set aside the impugned order of learned CIT(A) on this issue and restore the matter to the file of the Assessing Officer for deciding the same afresh after verifying the claim of Late Shri Bhimraj P. Gupta Vs. ITO AY : 2012-13 3 the assessee that the interest free loans to the concerned five parties were given from his own funds and interest free loans as available at the relevant time.

Order pronounced in the open Court on 20th July, 2022 at Ahmedabad.