ASST. COMMISSIONER OF INCOME TAX- 27(1),MUMBAI, MUMBAI vs. DEEPAK CHANDERBHAN SUDHIJA, MUMBAI

PER PRASHANT MAHARISHI, AM:

ITA No.3688/Mum/2023 is filed by the Asst. Commissioner of 01. Income Tax, 27(1), Mumbai, [ the Ld AO] for A.Y. 2014-15, against the appellate order passed by the NFAC [ The Ld CIT (A)] dated 18th August, 2023, wherein the appeal filed by the assessee against the assessment order passed under Section 143(3) read with section 147 of the Income tax Act, 1961 [ the ACT] dated 30th December,

Therefore, the learned Assessing Officer is aggrieved and have 02. raised following grounds of appeal:-

“1. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in allowing the appeal of the assesse without deciding the issue emanating from the order u/s 143(3) r.w.s 147 of the Act dated 29.12.2017.

Brief facts of the case shows that the assessee is an individual who 03. filed his return of income on 27th April, 2015, at a total income of ₹2,77,340/-. Assessment under Section 143(3) of the Income-tax Act, 1961 (the Act) was completed on 28th December, 2015, at the total income of ₹88,26,923/-. Subsequently, based on information received from the investigation wing on 8th March 2017, that assessee has carried out high value credit transaction of ₹6 crores. Accordingly, notice under Section 148 of the Act was issued on 31st March 2017. Assessee requested for the reason of reopening which were provided to the assessee-raised objection, which were disposed off by the speaking order dated 20th December 2017. The learned Assessing Officer asked about the details. It was found that assessee has taken unsecured loan from various parties, which are reflected as credit entries in its bank statements. The assessee was requested to furnish the evidence in support of genuineness of loan and therefore, the assessee was asked to furnish the details such as confirmation of bank statement of the lender and income tax return, etc. On 14th December 2017, he was also asked to produce the parties from whom the assessee has obtained this unsecured loans. The assessee failed to prove the genuineness of the loan, however, sent email on 22nd December,2017, showing the narration of the entries in the bank statement, on the basis of such narration entries provided , name of the parties mentioned, the learned Assessing Officer issued notice under Section 133(6) of the Act to some of the parties as assessee failed to submit necessary details. The assessee was further asked to show cause why the addition under Section 68 of the Act should not

The learned CIT (A) allowed the appeal of the assessee by order 04. dated 29th December 2017. Therefore, the learned Assessing Officer is aggrieved and is in appeal.

The learned Departmental Representative submitted that the 05. statement of facts in form no.35 stated by the assessee is different and the details in the appellate order are different. It was submitted that CIT (A) has captioned one order but has stated something in order which is absolutely irrelevant to the matter

Assessee was issued notice, however, none appeared and therefore 06. issue is decided on the merits of the case as per information available on record.

The ld AO has passed assessment order for the impugned 08. assessment year u/s 143(3) r.w.s.147 of the I.T. Act, 1961 on :29.12.2017. The ld CIT (A) in caption has mentioned this order, but in First Para of the order he mentioned as under :-

"The appeal was instituted on 25.01.2017 against the 143(3) order u/s dated 30.12.2016 for the AY 2014-15 passed by the Ward 28(1)(3), Mumbai (hereinafter referred to as the “AO”)."

The ld CIT (A) records following Grounds of appeal :- 09.

i. Because, order passed under Section 143(3) is wholly without jurisdiction and is bad in law

ii. Because, Ld. AO erred in law and on facts in exceeding the authority given under the Act, read with CBDT instructions for Limited Scrutiny

iii. Because, Ld. AO erred in law and on facts in not obtaining the approval of the Principal CIT while completing assessment and the order passed is void-ab-initio Cases.

iv. Because, Ld. AO erred in law and on facts in not following Principle of Consistency when in

v. Because Ld. AO erred in law and on facts in applying the provisions of Section 44AB of the Income Tax Act

vi. Because, Ld. AO erred in law and on facts in applying in provisions of section 40(a)(ia) for making disallowance of interest expense to the tune of Rs. 85,49,579/- for nondeduction of TDS

vii. Because, Ld. AO erred in law and on facts in not ppreciating the fact that the provisions of section 194A are not applicable to the Assessee

viii. Because, Ld. AO erred in law and on facts in disallowing interest expense amounting to Rs. 74,07,353/- on the ground that assessee has failed to establish claim of interest expenditure

ix. Because Ld. AO erred in law and on facts in disallowing interest expense amounting to Rs. 85,49,579/- even though the fact that the recipients has already shown in their return of income and therefore there is no loss of revenue to the Department

x. Because, Ld. AO erred in law and on facts in applying different method of accounting for

xi. Because, Ld. AO erred in law and on facts in initiating penalty under section 271(1) (c) of the Income Tax Act, 1961

xii. Because, Ld. AO erred in law and on facts in initiating penalty under section 271B of the Income Tax Act, 1961

xiii. The appellant individual craves to leave to add, alter, modify or delete any of the ground

i. Because, the order passed u/s 147 is wholly without jurisdiction, illegal, void-ab-initio and is null and void.

ii. Because, the order passed is in complete defiance to the principle of natural justice and with out affording adequate opportunity to the Appellant to put his case

iii. )Because, the Ld. AO has erred in recording reasons for the reopening as mere recording of satisfaction in the absence of independent inquiry, which cannot be a substitute for recording reasons required for issue of notice u/s 148

v. Because, the assessment has been done on th e basis of alleged information collected at the back of the Appellant and without providing cop ies thereof so as to allow opportunity to Appellant to rebut the said information

vi. Because, the order passed on the basis of assumption of jurisdiction u/s 148 on reason recorded without having any evidence of failure on the part of appellant to disclose fully and truly the information to the Department as required under law.

vii. Because, Ld. AO erred in law and on facts in treating the credits in the bank account of the appellant to the tune of Rs.2,46,92,401/- as unexplained cash credit u/s 68

viii. )Because, Ld. AO erred in law and on facts i n adding Rs. 2,46,92,401/- without appreciating the documentary evidence submitted by the appellant in the course of the assessment proceedings.

ix. Because, Ld. AO erred in law and on facts the Ld. AO was not justified in stating that the appellant has failed to offer creditable explanation in respect of Rs. 2,46,92,401/- credited in th e bank accounts.

xi. Because, the Ld. AO erred in law and on fact s in not giving benefit for advance given in con sequence to unsecured loan which have become bad and unrecoverable

xii. Because the Learned AO erred in initiating pe nalty proceedings u/s 271(1)(c) of The Income Tax Act, 1961.

xiii. Because Ld. AO erred in levying interest u/s 2 34B and 234C and the same ought to be deleted

"3. BRIEF FACTS: The assessee E filed his return of income on 26/04/2015 for the Assessment Year 2014-2015 declaring total income of Rs. 2,77,340/- The case was selected for scrutiny under CASS for limited scrutiny. The assessee is doing Business of Weighing Bridge Activities under the name and style of Star computerised weigh bridge and Chirag enterprise from Vashi, Navi Mumbai. In the present case assessee is liable for tax audit under section 44AB under Income Tax Act, 1961 which the assessee failed to do so. The Assessing Officer assessed the interest Income on net basis. A Show Cause Notice was issued asking for disallowance on account of interest expense amounting to Rs. 85,49,579/-. During the assessment proceedings, the assessee in his reply to the Assessing

The Appellant is an individual Operating Business of Weighing Bridge Activities under the name and style of Star computerised weigh bridge and Chirag enterprise from Vashi, Navi Mumbai.

Appellant E filed his return of income on 26/04/2015 for the Assessment Year 2014-2015 declaring total income of Rs. 2,77,340/- The case was selected for scrutiny under CASS for limited scrutiny as per para 4.1 of assessment order. Accordingly notice dated 29/07/2016 under section 143(2) of the I.T. Act, 1961 was issued and duly served on the Appellant. Thereafter, the Appellant received notice under section 142(1) dated 22/08/2016 conveying the reasons for selection under CASS (Limited Scrutiny via E- Mail). During the course of Assessment Proceeding the Appellant duly placed on record order passed under section 143(3) by Ld DCIT 22(3) for A.Y. 2011-2012 wherein the interest Income stands assessed on net basis. However Ld AO for the captioned assessment year contended that the appellant is liable for tax audit under section 44AB under Income Tax Act, 1961 which the Appellant failed

I have considered the assessment order , the grounds of Appeal and also the written submissions of the assessee .Since all the grounds of appeal are inter-related, they are taken up together. I notice from the assessment order, The Assessing officer went ahead with the presumption that the assessee is in the business of money lending since the amount of interest income earned and the amount of interest expenditure expended are high and accordingly proceeded to compare the turnovers, and decided that the turnover from business income and the interest income combined are exceeding the limit for which a 44AB report is mandatory. However, I am of the opinion that for determining whether someone is in the business of money lending depends on various factors beyond just high interest income and corresponding expenditure. Considerations include the frequency and regularity of lending activities, the intention to make a profit, organizational structure, advertising, and more. High interest income alone may not be sufficient to establish a money lending business.

b) Facts stated in assessment order are not at all facts mentioned by the ld CIT (A). Both are strangely different.

c) Statement of facts reproduced by the ld CIT (A) in appellate order is not the statement of facts submitted before us by the ld. AO.

d) Grounds of appeal of the assessee before ld CIT (A) are different then grounds of appeal reproduced by the ld CIT (A)in body of appellate order is different

Order pronounced in the open court on 21.05.2024.

Sd/- Sd/- (SUNIL KUMAR SINGH) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 21.05.2024 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, True Copy//

Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai