SRI SOWBAGYA FINANCIERS,KARUR vs. ITO, WARD-1, , KARUR

आदेश / O R D E R PER AMITABH SHUKLA, A.M :

2.0 The assesse has raised some 10 grounds of appeal contesting the disturbance made by the Ld. AO to its return of income and its consequent confirmation by the Ld. CIT(A). Ground of appeal No.1 and 10 had been found general in nature and hence bereft of any adjudication. 3.0 The first issue raised by the assessee through grounds of appeal Nos 2 to 5 are regarding the confirmation by the Ld. CIT(A) of the action of the Ld. AO in treatment of the amount of Rs.7,99,325/- as interest income falling under the domain of section 57 of the act as against assessees’ claim of the same being a business income offered u/s 44AD of the act. The Ld. Counsel for the assessee submitted that the assessee has been engaged in the business of giving commercial loans to small farmers etc. It was submitted that the assessee is a partnership firm engaged in money lending business. The appellant had reportedly obtained license to carry on the finances business, intimation of which was also given to local police authorities. The appellant was procuring loans and also advancing the same. Both procurement and advancing entailed a charge of receipt or payment of interest. As the appellant was into the financing business the excess of interest receipts over payments was offered as business income. As the assessee was not maintaining any regular books of account, the impugned income was offered on presumptive business income u/s 44AD of the act. The appellant had reportedly filed copies of partnership deeds, ledger accounts of interest receipts, returns of income filed for AY-2016-17, 2017-18, 2019-20 and 2020-21 etc, copies of which have been provided in the paper book filed during the present proceedings in support of its contentions. The Ld. AO on page-4 of his order held that the submissions of the assessee are without any documentary support and hence rejected. The Ld. AR of the assessee argued that the view taken is against consistent history of the case and that the observation of assessee not providing requisite details is not correct as it had provided all the details to the Ld. AO as well as Ld. CIT(A). The Ld. DR would like to make us believe upon the correctness of the order of the Ld. CIT(A). 4.0 We have heard the rival submissions in the light of material available on records. At the outset, we have noted that the order passed by the Ld. AO appears to have been passed in reckless haste without any application of mind. We have noted that in second para on page-3 of his order the Ld. AO has indicated that that “….in response of the same the assessee furnished return submissions along with copy of computation of income with comprehensive details of income from business and profession. The scanned copy of the same is reproduced hereunder….” We have noted that no submissions of the assessee have been reproduced by the Ld. AO except for above observations. In the following para the Ld. AO proceeds to conclude the contradictions and deficiencies noted in assessee’s reply compelling him to assess the impugned receipts as interest income as against the claim of business receipts. We have also noted that the Ld. AO has not even cared to make the customary computation of total income towards the end of the assessment order which includes final income after making due additions to the returned income. The approach of the Ld. AO has been found to be highly unsatisfactory and unwarranted. The order of Ld. CIT(A) also consequently becomes suspect because he has merely confirmed without any analysis, Ld. AO’s findings as evident from para 7.3 of his order. 5.0 The assessee through its paper book has filed detailed evidences indicating that in AY-2016-17, 2017-18, 2019-20 and 2020- 21 it has consistently offered its interest receipts as income from business and profession and that the disturbance now is unwarranted more so because there has been no change in facts. We have noted that the orders of lower authorities do not allude as to how they have been able to controvert this hypothesis of the assessee. The assessee has filed before us evidence comprising its returns of income which indicate that it has been consistently filing the impugned interest receipts as business income. The lower authorities have not been able to allude any change in facts of the case for the present year so as to warrant a different conclusion. Principles of consistency demand Identical treatment unless there is change of facts. Accordingly, we set aside the order of the lower authorities and direct the Ld. AO to delete the impugned addition of Rs.7,99,325/-. Accordingly, the grounds of appeal Nos 2 to 5 are allowed. 6.0 The next issue raised through ground of appeal No.6 to 8 are regarding the addition of Rs.64,14,209/- u/s 68 of the act as unexplained cash credits. Further through the ground of appeal No. 9 the appellant has contended that as Rs.64,14,209/- was cumulative figure of earlier years and during the year only Rs.16 lakhs were procured only that much ought to have been added. The Ld. Counsel for the assessee informed that the assessee is in regular business of obtaining interest bearing loans which are then advanced as interest bearing loans to prospective customers. It was submitted that the Ld. AO made the impugned addition on the premise that details of only 20 persons out of total 349 persons were provided and which also comprised stereo typed confirmation. The Ld. AO noted that the loans were in cash below Rs.20,000/- possibly with an intent to avoid provisions prohibiting receipt of cash loans as well as to avoid routing through banking channels. Thus, the Ld. AO concluded that the assessee had failed to prove the troika of identity, genuineness and credit worthiness and proceeded to make the additions. On the issue of earlier years loans he observed that assessee had not provided anything except one page of ITR of AY-2017-18 showing amount of Rs. 47, 47,070/- as sundry creditors and proceeded to reject the assessee’s claim. The Ld. CIT(A) also chose to toe the line of Ld. AO qua non-submission of details. He contended that the primary onus u/s 68 is cast upon a taxpayer to, inter-a-alia, prove the credentials of lender and transactions thereof. He therefore proceeded to sustain the order of the Ld. AO holding that the assessee had failed in the discharge of its primary responsibility. The Ld. AR argued that the lower authorities have ignored the basic facts of the case and make erroneous addition. The Ld. DR vehemently argued that the assessee had not provided sufficient evidences, before the lower authorities, to prove the three conditions mandated u/s 68 and therefore no relief can be given to the assessee.