INCOME TAX OFFICER-20(1)(4), MUMBAI vs. DIMPLE Y. VASARIA, MUMBAI

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ITA 4785/MUM/2017Status: DisposedITAT Mumbai18 June 2019AY 2013-144 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal restored the matter back to the AO for fresh examination. This was because the CIT(A) had disposed of the appeal cryptically without allowing sufficient time for the AO to conduct detailed inquiries into the creditworthiness of lenders and genuineness of transactions, despite the AO requesting more time.

What were the facts?

The Assessing Officer (AO) added Rs. 10,63,75,000/- as unexplained unsecured loans and Rs. 1,65,33,000/- as deemed interest. The assessee had received significant credits in her bank account which were not properly explained, and she was not maintaining books of accounts.

What were the issues?

Whether the CIT(A) erred in deleting the additions made by the AO for unexplained unsecured loans and deemed interest without proper inquiry. The primary issue is the AO's failure to conduct adequate investigation and the CIT(A)'s premature disposal of the appeal.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI

Before: SHRI C.N. PRASAD & SHRI RAJESH KUMAR

For Appellant: Shri Mandar Vaidhya, A.R
For Respondent: Shri Rajeshwar Yadav, D.R
Hearing: 10.06.2019Pronounced: 18.06.2019

Per Rajesh Kumar, Accountant Member:

1.

The present appeal has been preferred by the Revenue against the order dated 31.03.2017 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2013-14.

2.

The issue raised in ground No.1 & 2 is against the deletion of addition of Rs.10,63,75,000/- by Ld. CIT(A) as made by the AO on account of non genuine unexplained unsecured loans which were not explained by the assessee and issue challenged in Ground No.3 & 4 is against the deletion of addition of Rs.1,65,33,000/- by Ld. CIT(A) as made by the AO towards deemed interest on the said unsecured loans.

2 Ms. Dimple Y. Vasaria 3. The assessee filed the return of income on 31.07.2013 declaring the income of Rs.12,60,890/-. Thereafter, the case of the assessee was selected under CASS and statutory notices were duly issued and served upon the assessee. During the course of assessment proceedings, the AO observed that Rs.13,35,75,000/- were credited in the bank account of the assessee which were stated to be on account of receipts against sundry debtors, routine business deposits/advances etc. Pertinent to mention that assessee was not maintaining any books of accounts qua the business. During the course of assessment proceedings assessee filed a very cryptic reply of 5 lines stating same to be receipts on account of business deposits, retention money ,trade advances received back during the year without furnishing any proof of such receipts. The AO added the same to the income of the assessee under section 68 by treating the same as non genuine and unexplained. However, while making the net addition of Rs.10,08,75,000/-, the AO allowed the deduction of Rs.3,27,50,000/- towards loan repaid on account of loans received/loans repayment.

4.

In the appellate proceedings, the Ld. CIT(A) allowed the appeal of the assessee by passing a very cryptic order without referring to any material furnished by the assessee. However, a remand report was called by the Ld. CIT(A) from the AO which was filed by the AO and requested first appellate authority for four to five weeks are required in order to carry out a detailed enquiry with respect to creditworthiness of the lenders and genuineness of the transactions which may be allowed. However, Ld. CIT(A) without allowing the time to the assessee

5.

After hearing both the parties and perusing the material on record including the impugned order and remand report of the AO, we observe that in this case the AO has not conducted any enquiry as the assessee has not cooperated during the assessment proceedings. Thereafter, during the remand proceedings also the AO has sought 6-8 weeks in order to carry out detail enquiry into the creditworthiness of the persons who advanced money to the assessee. However, the Ld. CIT(A) proceeded to dispose of the appeal without allowing time to the AO to Carry out such investigation/enquiries into the genuineness of these credits. Under these circumstances, we are left with no choice but to restore the matter back to the file of the AO to examine the whole issue afresh after giving reasonable opportunity to the assessee and decide the case as per facts and in law denovo. Accordingly, issue is set aside to the file of the AO.

6.

In the result, the appeal of the Revenue is allowed for statistical purposes. Order pronounced in the open court on 18.06.2019.

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