AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 535
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.... consideration the assessee company was engaged in Real Estate business (i.e. sale and purchase of property/under construction property), property developers, investment business, civil construction and real estate agent business investment. During the year under consideration, assessee company has shown interest expenses of Rs. 1,75,267/- and Rs. 22,02,566/- paid to M/s Rajnigandha Management Private Limited and M/s Ranisati Management Private Limited respectively on the respective outstanding unsecured loans of Rs. 1.57 lakhs and Rs. 2.50 crore for AY 2016-17 under appeal. The assessee was asked to file complete details of the outstanding loans along with documentary evidences of loan agreement/sanction of loan along with past business history and any other relevant evidence to prove genuineness of the interest expenses shown to have been paid to these entities in assessment year under appeal. The assessee submitted ledger account of both these loaners along with their addresses. The assessee company explained that it has availed loans on the mutual understanding of interest rate prevailing in the market with some personal relation with the Director of the company and it has util....
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....l Infrastructure Pvt. Ltd. with whom assessee has a business activity. The investments made by assessee for business purpose have provided more business to the assessee and financial status of the assessee have enhanced. It was submitted that assessee is following mercantile system of accounting, therefore, even if actual interest is paid or not is not relevant. The assessee also requested that in case both the parties have not responded to the notices u/s 133(6) of the IT Act, summons u/s 131 of the Act may be issued against these two parties for their production and assessee may be given opportunity to crossexamine the directions to these companies. 5. The AO, however, did not accept the contention of the assessee because the parties did not make any compliance to the notice u/s 133(6) and further it was noted that utilization of the funds borrowed from these two parties is secondary issue because the assessee shall have to prove the genuineness of the unsecured loans. The AO also noted that assessee did not prove the terms of the loan through documentary evidence because only verbal agreement was claimed for loan and payment of the interest. The AO also noted that both the abov....
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....fore, AO should not have applied provisions of section 37(1) of the IT Act which is a general section. He has submitted that in view of the above, since no appeal of assessee was pending before Ld. CIT(A) for preceding assessment years in which loan was taken, there was no need for the Ld. CIT(A) to issue any direction to the AO for taking any remedial action in the matter. In support of the contention, he has relied upon the order of ITAT 'Indore Bench' in the group cases of ACIT Vs. Mukesh Sharma etc. IT(SS)A No. 88/Indore/2013 dated 04.06.2019 in which it was held that the Ld. CIT(A) has exceeded jurisdiction in giving direction to the AO to reopen the assessment for other years i.e. 2010-11 which is not within the powers of the Ld. CIT(A) as he was dealing with the appeals for AY 2009-10 only, therefore, there was no need to issue any direction in the matter. 8. On the other hand, Ld. DR relied upon the orders of the authorities below and submitted that addresses of the loaner were not correct and they have not replied to the notice u/s 133(6) of the IT Act. No actual interest has been paid, therefore, authorities below were justified in disallowing the interest claimed by ass....
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....he assessee. This finding during the previous years is the very basis of the deductions permitted during the past years, whether a specific finding was recorded or not. A departure from that finding in respect of the said amounts advanced during the previous year would result in a contradictory finding; it will not be equitable to permit the Revenue to take a different stand now in respect of the amounts which were the subject-matter of previous years' assessments; consistency and definiteness of approach by the Revenue is necessary in the matter of recognizing the nature of an account maintained by the assessee so that the basis of a concluded assessment would not be ignored without actually reopening the assessment. The principle is similar to the cases where it has been held that a debt which had been treated by the Revenue as a good debt in a particular year cannot subsequently be held by it to have become bad prior to that year. Sri K.R. Prasad, Ld. Counsel for the assessee, referred to a decision of this court in Bit Tul (P) Ltd. Vs. CIT (ITRC 141 of 1977 dated 29.07.1980) wherein it was held that there should be material to justify the conclusion that any borrowed money by....