M/S GUJARAT ENTERPRISES ,MUMBAI vs. INCOME TAX OFFICER-32(1)(5), MUMBAI
Facts
The assessee filed its return for A.Y. 2013-14, which resulted in an addition of Rs. 2,15,014/- for interest paid on an alleged bogus unsecured loan from M/s Duke Business Pvt Ltd. The CIT(A) upheld this disallowance, citing a prior ITAT ruling that M/s Duke Business Pvt Ltd provides accommodation entries.
Held
The Tribunal noted that the unsecured loan was received in A.Y. 2012-13, and the department had not questioned its genuineness or made any addition regarding this loan in that year, with the returned income being accepted. Consequently, the Tribunal ruled that the disallowance of interest on the loan in the current year (A.Y. 2013-14) is not justified since the loan was not treated as bogus/non-genuine in the preceding year. The addition of Rs. 2,15,014/- was therefore deleted.
Key Issues
Whether disallowance of interest on an unsecured loan, treated as bogus in the current assessment year, is justified when its genuineness was not questioned in the preceding assessment year in which it was received.
Sections Cited
Section 250, Section 234C, Section 143(3)
AI-generated summary — verify with the full judgment below
IN THE INCOME-TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER & SMT. RENU JAUHRI, ACCOUNTANT MEMBER ITA No. 4204/Mum/2023 (A.Y. 2013-14) M/s Gujarat Enterprises Vs. ITO-32(1)(5) Shop No. 6, Ground Floor, Kautilya Bhavan, Bandra Rachana CHS, Opp MCF, Kurla Complex, Jogurs Park, Eksar Road, Mumbai-400051 Borivali West, Mumbai-400092 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AADFG0916G Appellant .. Respondent
Appellant by : Shri Anuj Kisnadwala Respondent by : Shri Himanshu Kumar Date of Hearing 15.05.2024 Date of Pronouncement 28.06.2024 आदेश / O R D E R PER RENU JAUHRI [A.M.] :-
This appeal is filed by the assessee against the order of the Learned Commissioner of Income-tax (Appeals), Pune-11 [hereinafter referred to as “CIT(A)”] dated 27.09.2023 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for the relevant Assessment Year [A.Y.] 2013- 14.
The assessee has raised following grounds of appeal:
P a g e | 2 ITA No. 4204/Mum/2023 AY 2013-14 M/s. Gujrat Enterprices, Mumbai 1.The learned CIT(A) has erred in law and on facts in upholding the disallowance of the interest amounting to Rs. 2,15,014/ on the alleged accommodation loan taken by the appellant without appreciating the fact that in AY 2012-13, the said loan taken by the assessee is considered as genuine. 2.The learned CIT(A) has erred in law and on faets by charging interest u/s 234C of the Act. 3. The appellant craves leave to add to, amend, alter or delete all or any of the foregoing grounds of appeal. 3. Brief facts of the case are that the return of income was filed on 29.09.2013 declaring total income of Rs. 15,74,590/-. The assessment was completed u/s 143(3) of the Act by making an addition of Rs. 2,15,014/- on account of interest paid on bogus unsecured loan. The Ld. CIT(A) vide his order dated 27.09.2023 has upheld the disallowance on the ground that the Hon’ble ITAT, Mumbai bench in the case of Shri Praveen Kumar Jain had held that unsecured loans provided by various shell entities (including M/s Duke Business Pvt Ltd. from whom this unsecured loan had been taken) are nothing but accommodation entries. Following these findings of the co-ordinate bench, the Ld. CIT(A) observed that the unsecured loans received from M/s Duke Business Pvt. Ltd. by the assessee is not genuine and interest paid on the same was rightly disallowed by the AO. 4. Before us, the Ld. AR submitted that the unsecured loan was received in the preceding year relevant to AY 2012-13 and the department has not made any addition on account of this loan. Copy of the assessment order u/s 143(3)
P a g e | 3 ITA No. 4204/Mum/2023 AY 2013-14 M/s. Gujrat Enterprices, Mumbai for AY 2012-13 dated 07.11.2014 has also been filed in which the returned income has been accepted. 5. We have heard the rival submissions. A clarification was sought from the Ld. DR regarding status of proceedings for re-opening, if any, for AY 2012- 13. As clarified by the Ld. DR, no action has been taken, with regard to the loan in question, during the assessment year 2012-13. Since, the loan has not been treated as bogus/non-genuine, the disallowance of interest thereon in this year is not justified. The addition of Rs. 2,15,014/- on this account is accordingly deleted. 6. In the result, the appeal of the assessee is allowed.
Order Pronounced in Open Court on 28.06.2024
Sd/- Sd/- (NARENDER KUMAR CHOUDHRY) (RENU JAUHRI) JUDICIAL MEMBER ACCOUNTANT MEMBER Place: Mumbai Date 28.06.2024 ANIKET SINGH RAJPUT/STENO आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. आयकर आयुक्त / CIT 3. 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file.
सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER,
P a g e | 4 ITA No. 4204/Mum/2023 AY 2013-14 M/s. Gujrat Enterprices, Mumbai
उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अतिकरण/ ITAT, Bench, Mumbai.
