2020 (5) TMI 297 - AT - Income Tax

Tribunal partially allows assessee's appeals, remands for further verification.

Trimurti Coal Trading Co., M/s. Shah Khandelwal Jain & Associates Versus The Dy. Commissioner of Income Tax, Circle – 9, Pune

The Tribunal partly allowed all three appeals of the assessee for statistical purposes, remanding the matter to the Assessing Officer for further ... Unexplained cash credit u/s 68 - Assessee claimed taking loan and payment of interest thereon - HELD THAT:- Explanation of assessee should be acceptable so far as first instalment loan of ₹ 20 lakhs is concerned and to that extent, the loan of ₹ 20 lakhs stands explained. Regarding second credit of ₹ 20 lakhs, we find that to the extent of ₹ 9 lakhs received from Vishal Transport, the explanation should be acceptable. Cash deposit of ₹ 11 lakhs (₹ 8 lakhs + ₹ 3 lakhs), there is requirement of investigation into the source of cash deposits in the bank account of Shri Dinkar Shankar Kumbhar, Prop. Shri Swami Bricks. Accordingly, we are of the opinion that the matter should be remanded to the file of Assessing Officer for verification of assessee’s arguments i.e. cash withdrawals from the account of the assessee constitutes source of cash of ₹ 11 lakhs. The Assessing Officer shall give reasonable opportunity of hearing to the assessee and in case the assessee files any evidences, explanations, etc. should accept the same and make re-assessment on this issue. Thus, grounds raised by assessee are partly allowed for statistical purposes. Issues:Allowability of loan and interest claimed by the assessee for Assessment Years 2008-09, 2009-10, and 2010-11.Analysis:Issue 1: Allowability of Loan and Interest for A.Y. 2008-09- The assessee received a loan of Rs. 40 lakhs from Shri Dinkar Shankar Kumbhar and Smt. Sunita Kumbhar, with the source of funds explained as proceeds from land sale transactions.- The Assessing Officer treated the transaction as non-genuine due to the absence of income tax returns filed by the lenders.- The CIT(A) upheld the decision, leading to the appeal before the Tribunal.- The assessee argued that the lenders were creditworthy, and the loan was sourced from legitimate transactions.- The Tribunal found the first installment of Rs. 20 lakhs to be explained, along with Rs. 9 lakhs received from Vishal Transport.- However, a cash deposit of Rs. 11 lakhs required further investigation into its source, leading to a remand to the Assessing Officer for verification.- The Tribunal partly allowed the grounds raised by the assessee for statistical purposes.Issue 2: Application of Decision to Other Appeals- The Tribunal applied the decision in A.Y. 2008-09 to similar facts and issues in appeals for A.Y. 2009-10 and 2010-11, allowing the appeals partly for statistical purposes.Issue 3: Examination of Interest Claims- The Tribunal directed the Assessing Officer to re-examine the interest claims in light of the observations made regarding the loan source.- The AO was instructed to provide a fair opportunity for the assessee to present their case, adhering to principles of natural justice.- Relevant grounds in all three appeals were allowed for statistical purposes.Conclusion- The Tribunal partly allowed all three appeals of the assessee for statistical purposes, remanding the matter to the Assessing Officer for further verification and re-assessment based on the findings related to the loan source and interest claims.This detailed analysis covers the issues of the allowability of the loan and interest claimed by the assessee for multiple assessment years, providing a comprehensive understanding of the judgment delivered by the Appellate Tribunal ITAT Pune.