Tribunal upholds CIT(A)'s decision on unsecured loans, mosque donation, and personal expenses disallowance.

The Tribunal upheld the decisions of the CIT(A) in dismissing the appeal of the assessee on all grounds. This included confirming the addition under Section 68 for unsecured loans, disallowing Rs. 1,00,000/- paid to the mosque for free lunch, and disallowing Rs. 32,386/- (20% of traveling expenses) due to personal use. The order was pronounced on 11/05/2022.

---

---

Issues Involved:
1. Addition under Section 68 of the Income Tax Act for unsecured loan.
2. Disallowance of Rs. 1,00,000/- paid to mosque for providing free lunch.
3. Disallowance of Rs. 32,386/- being 20% of traveling expense on grounds of personal use.

Issue-wise Detailed Analysis:

1. Addition under Section 68 of the Income Tax Act for Unsecured Loan:
The assessee contested the confirmation of an addition under Section 68 for an unsecured loan received from his ex-wife, Mrs. Firdos Mondal. The assessee argued that he had provided necessary documents, including a divorce letter and dissolution of marriage, but could not furnish her current address due to the divorce. The Assessing Officer (AO) made an addition for the closing balance in the ledger account of Mrs. Firdos Mondal, while the Commissioner of Income-Tax (Appeals) [CIT(A)] directed to take peak credit in the said ledger account. The Tribunal noted that the AO had added Rs. 52,66,833/- as unexplained cash credit but restricted the addition to the loan from Mrs. Firdos Mondal due to the assessee's failure to provide her address. The Tribunal upheld the CIT(A)'s decision to treat the peak credit as unexplained cash credit, as the assessee did not discharge his onus to prove the genuineness of the transaction. Therefore, the Tribunal dismissed the assessee's ground on this issue.

2. Disallowance of Rs. 1,00,000/- Paid to Mosque for Providing Free Lunch:
The assessee claimed that Rs. 1,00,000/- paid to a mosque for providing free lunch to his employees should be allowed as a business expense under Section 37(1). The CIT(A) dismissed this claim, stating that no corroborating evidence was provided to substantiate the expenditure. The Tribunal noted that the mosque provided free lunch to laborers in the area, not exclusively to the assessee's employees. Since the payment was not a quid pro quo for the free lunch facility, it could not be treated as wholly and exclusively for the business purpose. Consequently, the Tribunal upheld the CIT(A)'s disallowance and dismissed the assessee's ground on this issue.

3. Disallowance of Rs. 32,386/- Being 20% of Traveling Expense on Grounds of Personal Use:
The assessee challenged the disallowance of Rs. 32,386/- out of traveling expenses on the ground of personal use. The CIT(A) sustained the disallowance, noting the element of personal use in traveling and petrol expenses. The Tribunal observed that the assessee failed to substantiate that there was no personal use in the traveling expenses. Therefore, the Tribunal upheld the CIT(A)'s decision to disallow 20% of the traveling expenses for personal use under Section 37(1) and dismissed the assessee's ground on this issue.

Conclusion:
The Tribunal dismissed the appeal of the assessee on all grounds, upholding the decisions of the CIT(A) regarding the addition under Section 68 for unsecured loans, disallowance of Rs. 1,00,000/- paid to the mosque, and disallowance of Rs. 32,386/- being 20% of traveling expenses on grounds of personal use. The order was pronounced in the open Court on 11/05/2022.

---