2020 (12) TMI 261 - AT - Income Tax

Tribunal reevaluates unexplained income, remands interest & disallowance issues for thorough review

The Tribunal set aside the addition of share application money and unsecured loan amounts as unexplained income under section 68 of the Act, directing the ... Addition u/s 68 - unsecured loan treating the same as unexplained income - HELD THAT:- No doubt the assessee has filed all the documentary evidences for substantiating the claim in dispute before the AO as well as Ld. CIT(A). Ld. CIT(A) has also sought the Remand Report on the evidences filed by the assessee, but AO has not commented negatively in his Remand Report on the claim of the assessee. We are not commenting upon the merits of the case because this will prejudice the mind of the Ld. CIT(A) and in the interest of justice, we are of the considered view that the issues involved in the present appeal require reconsideration at the level of the Ld. CIT(A). Therefore, in the interest of justice, we are setting aside the issues mentioned in the grounds of appeal to the file of the Ld. CIT(A) with the directions to decide the same afresh, after giving adequate opportunity of being heard to the assessee. Assessee’s Appeal is allowed for statistical purposes. Issues Involved:1. Addition of share application money as unexplained income under section 68 of the Act.2. Addition of unsecured loan amount as unexplained income under section 68 of the Act.3. Addition of interest paid on unsecured loans.4. Addition of cash deposited in the bank as unexplained.5. Disallowance under section 14A of the Act.Analysis:Issue 1: Addition of Share Application MoneyThe Assessing Officer (AO) made an addition of Rs. 10,77,00,000 as share application money, considering it unexplained income under section 68 of the Act due to the inability of the assessee to prove the identity and creditworthiness of the creditor. The AO found that the amount was credited in the books without proper explanation. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this addition. However, the Tribunal noted that the authorities did not adequately consider the documentary evidence submitted by the assessee. The Tribunal set aside this issue for reconsideration by the CIT(A) with directions to provide a fair opportunity for the assessee.Issue 2: Addition of Unsecured Loan AmountSimilarly, an addition of Rs. 57,72,41,461 as unsecured loan amount was made by the AO under section 68 of the Act, citing lack of proof regarding the creditor's identity and transaction genuineness. The CIT(A) affirmed this addition. The Tribunal observed that the AO did not provide negative comments on the assessee's claims in the remand report. Hence, the Tribunal directed a fresh consideration of this issue by the CIT(A to ensure justice and proper examination of evidence.Issue 3: Addition of Interest on Unsecured LoansThe AO added Rs. 1,55,15,178 as interest paid on unsecured loans, alleging diversion of funds for non-business purposes without proper utilization proof. The Tribunal found that the AO's justification lacked detailed examination of the assessee's submissions. Therefore, the Tribunal remanded this issue to the CIT(A) for a thorough review based on the documentary evidence.Issue 4: Addition of Cash Deposited in BankAn addition of Rs. 13,00,000 for cash deposited in the bank was made by the AO under section 68 of the Act, as the source was unexplained. The Tribunal noted the lack of detailed examination by the authorities and directed a reevaluation by the CIT(A) to ensure a fair assessment.Issue 5: Disallowance under Section 14ARegarding the disallowance of Rs. 6,88,872 under section 14A of the Act for not showing expenses related to dividend income, the Tribunal noted the necessity of considering the expenses incurred to earn such income. The CIT(A) was directed to calculate the disallowance under Rule 8D. The Tribunal allowed the appeal for statistical purposes, emphasizing the need for a fair and thorough reconsideration of all issues by the CIT(A) to uphold the principles of justice.