TaxTMI 
TaxTMI 
2015 (5) TMI 1216
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....circumstances of the case the ld. CIT(A) erred in deleting the addition of Rs. 486734/- made by the AO u/s 68 of the 1. T. Act because the creditworthiness of the loan providers and the genuineness of the transaction was not established. 2.1 While holding so the ld. CIT(A) erred in banking upon additional and corroborative evidence product by the assessee during appellate proceedings in the form of affidavits of Sh. Rahul Jain and Sh. Kamlesh Panchal and the bank statement of Sh. Anand Jain without confronting it to the AO as per provisions of Rule 46A of the I. T. Rules. 2.2. While holding so the Id. CIT(A) failed to appreciate that the cash was deposited in the accounts of the loan creditors just before clearing the loan amount and the bank passbook was showing negligible balance before and after clearing of the loan cheques. 3. On the facts and the circumstances of the case the Id. CIT(A) erred in deleting the addition of Rs. 405448/- made by the AO u/s 41 (1) of the 1. T. Act in consonance with provisions of limitation Act when there was no movement of fund/transaction with the sundry creditors for the last 03 years and when assessee failed to produce....
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....(a)(ia) of the Act, on the ground that no TDS has been made by the assessee. The AO has verified the confirmation with reference to unsecured loans taken during the year. The assessee has not submitted the income tax return acknowledgement of the depositors. The assessee has accepted the loan from the four persons, which are as under :- 1. Shri Kamlesh Panchal Rs. 1,00,000/- 2. Shri Rahul Jain Rs. 1,93,000/- 3. Shri Anand Jain Rs. 1,70,000/- 4. Shri Gulab Chand Parekh Rs. 23,734/- 5. The AO was of the view that the assessee has accepted the loans in cash which has been deposited just before clearing the loan amount cheque. Further, the Bank pass book showing negligible balance before and after clearing of loan cheque. Therefore, the AO has disallowed Rs. 4,86,734/- as non business expenditure. 6. The matter carried to CIT(A) and the ld. CIT(A) has deleted the addition of Rs. 4,22,604/- on account of processing charges and disallowed the interest payment of Rs. 25,26,377/- which is aggregate of the concerns, namely, India Bulls Financial Services Limited and Reliance Capital Limited u/s 40(a)(ia) of the Act. "4.3 I have considere....
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....iture as business expenditure, but when the home loan is taken for construction of the house, it cannot be treated as business of the assessee. The assessee is in gold business, therefore, when the house is constructed for residence, it cannot be at all connected with the business of the assessee. 9. The Ld. Senior D.R. further submitted that the assessee has taken loans from Indiabulls Housing Finance and Reliance Capital. These two loans are as stated in the assessment order, are housing loans and any interest paid on this housing loan cannot be termed as business expenditure. The ld. CIT(A) has rightly disallowed the interest paid to this company and held that it attracts the provisions of Section 40(a)(ia) of the Income-tax Act, 1961. 10. The assessee is in appeal before us for confirming the disallowance of Rs. 25,26,377/-. 11. The Ld. Senior D.R. submitted before us that the assessee has taken loan from HDFC Bank and Indiabulls Housing Finance. The assessee has taken this loan as home loan and the assessee has paid the processing charges for taking these home loan, which is nowhere connected with the business loss, therefore, whatever amount was paid for processing c....
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....oduced by finance act 2012 which is as under: Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso of section (1) of section 201, then, for the purpose of this sub clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return 'of income by the resident payee referred to in said proviso. Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such residenti. i. has furnished his return of income under section 139; ii. has taken into account such sum for computing income in such return of income; and iii. has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to th....
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....at the assessee has taken this housing loan for which housing loans are given for business purpose, then processing charges and interest payment should be decided accordingly. The AO is directed to verify whether section 40a(ia) is applicable to it or not. 14. In the result, Departmental appeal and assessee's Cross objection are allowed for statistical purposes. 15. Regarding second ground of department's appeal, the brief facts of the case that the assessee has taken loan from four parties ,namely, 1) Shri Kamlesh Panchal - Rs. 1,00,000/-, 2) Shri Rahul Jain - Rs. 1,93,000/-, 3) Shri Anand Jain - Rs. 1,70,000/- and Shri Gulab Chand Parekh - Rs. 23,734/- . The AO found that the assessee has not submitted any evidence regarding the creditworthiness of the creditors, income tax returns and other documents have not been filed. He has also held that in two cases, the cash has been deposited in the account and the cheque has been given to the assessee. Therefore, the AO has made the addition u/s 68 of the Income-tax Act, 1961. 16. The matter travelled to CIT(A. The ld. CIT(A) deleted the additions observing as under in paragraphs 5.3 :- "5.3 I have considered the AO's ....
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....der :- "7.3 I have considered the AO's order as well as the appellant's submission. Having considered both, I find that in the said case there may not be any transaction during the year but it is not the case that liabi8lity has been denied of payment of such claim by either party. Taking note of the Apex Court decision in the case of Sugauli Sugars reported in 236 ITR 518 and the jurisdictional High Court decision in the case of CIT vs. Combined Transport reported in 174 ITR 528, the addition so made by the Assessing Officer is deleted." 23. We have heard the rival contentions of both the parties. Looking to the facts and circumstances of the case, we find that the assessee has submitted the balance sheet and list of sundry creditors. The accounts of the two borrowers show that there was no movement in the accounts of the two parties. The borrowing amount was not paid since last three years, therefore, the AO has held that liability is ceased. Therefore, he has added it u/s 41(1) of the Act. We find that Hon'ble Supreme Court in the case of Sugauli Sugars reported in 236 ITR 518, wherein it is clearly held that if any liability which the assessee wanted to pay this....