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Income Tax Appellate Tribunal, PANAJI BENCH, PANAJI
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
ORDER Per Anikesh Banerjee, JM:
The instant appeal was filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), Belagavi [in brevity the CIT(A)], bearing dated 01.08.2018 passed u/s 250(6) of the Income Tax Act, 1961 (in brevity the Act), for Assessment Year 2013-14. The impugned order was originated from the order of the Ld. Income Tax Officer,
Mahendrakumar Rikabchand Shah v. ITO Ward -1, Gokak dated 26.12.2017 passed u/s 143(3) r.w.s 263 of the Income Tax Act, 1961.
Brief fact of the case is that the addition was made disallowance of interest total amount of Rs.3,950/-. The Ld. AO disallowed the interest paid to two unsecured lenders on sum of Rs. 20,00,000/-, accordingly the interest rate was calculated @ of 12% on that basis the amount was disallowed Rs.3,950/-. The assessee paid interest related to its loan of Rs. 40,00,000/- related to other unsecured loans. In both the interest paid Rs.2,630/- to Mr. Mayur Shah and Mr. Tushar Shah and the interest of Rs.1,315/- to Smt. Karunabai Shah and Smt.
Champabai Shah both the interest was disallowed by the ld. AO. The assessee filed appeal before the ld CIT(A). Accordingly, the Ld. CIT(A) upheld the order of the Ld. AO. Aggrieved assessee filed an appeal before us.
The assessee paid interest on an unsecured loan of Rs. 40,00,000/- in respect of different person. The extracted from the appellate order in page nos. 3 & 4 are as follows:
“6. It is a fact that the assessee had made gifts of Rs.40 lakhs to his family members. The details of gifts made are as under:
SI. No. Name of the person to whom gifted Amount 1 Champabai 10,00,000 2 Karuna Shah 10,00,000 3 Mayur Shah 5,00,000
Mahendrakumar Rikabchand Shah v. ITO 4 Tushar Shah 5,00,000 5 Nitin Shah 5,00,000 6 Pushpak Shah 5,00,000
The assessee had been made these above gifts from bank account maintained with Belgaum Industrial Co-op Bank Ltd, Gokak Branch, Gokak and the same had been taken as loans from them and again utilized the loan amount for gifting to other persons.
6.1 The assessee had paid interest on these unsecured loans of Rs.40 lakhs in respect of above persons during the year. Accordingly, the assessee had paid the interest at the rate of 12% on the loans obtained from Shri. Mayur Shah and Shri. Tushar Shah on 24/03/2009 which works out to Rs.2,630/-. Further the assessee had paid the interest at the rate of 12% on the loans obtained from Smt. Karunabai Shah and Smt. Champabai Shah on 30/09/2009 which works out to Rs.1,315/-. As the assessee not submitted any evidence before A.O during the assessment, the A.O has disallowed these amount and added to the return income of the assessee.
The AR of the Appellant submitted the details of the assessee before undersigned which were already submitted before A.O. As per the directions of Pr. CIT, Belagavi, the A.O has clearly verified the details and came to the conclusion that the interest paid by the assessee of Rs.3,950/- is not an eligible deductions and the same was not for the purpose of business, which was elaborately discussed in his Assessment order in para 4. During the appellate proceedings AR of the appellant has not furnished any further evidence in support of assessee's claim except these facts which were already stated before A.O and Pr. CIT.”
We considered the documents available in the record. Both the revenue authorities, the assessee was unable to produce the confirmation and to proof related two payments of interest amount of Rs.3,950/-. The issue was agitated by the Pr. CIT in the order u/s 263. Considering the above facts, we are inclining to the order of Ld. CIT(A). Accordingly, the appeal of the assessee is dismissed.
Mahendrakumar Rikabchand Shah v. ITO 5. In the result, the appeal of the assessee is dismissed.