TaxTMI 
TaxTMI 
2021 (10) TMI 781
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.... opportunity of being heard as per law." 3. Brief facts of the case are, the assessment under section 143(3) read with section 147 read with section 144A of the Income Tax Act, 1961 (in short 'Act') was completed on 31.03.2005 determining the income at Rs. 49.5 lacs and the addition was made of Rs. 49.5 lacs on account of the hawala loans and interest on such hawala loans claimed by the assessee. Aggrieved with the above order assessee preferred the appeal before CIT(A) and learned CIT(A), vide his order dated 15.02.2006 dismissed the appeal. Aggrieved, assessee preferred the appeal before ITAT and ITAT remitted the issue back to the file of the Assessing Officer vide order dated 23.07.2008. 4. In the second proceedings, the Assessing Officer sent several notices to Mr. Surendera Khander but he did not appear before the Assessing Officer and once again the Assessing Officer considered the above loan transaction as bogus and sustained the addition as unexplained cash credit under section 68 of the Act. Aggrieved, assessee preferred the appeal before CIT(A) and CIT(A) sustained the addition made by the Assessing Officer. Aggrieved, assessee preferred the appeal before ITAT and ....
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....e during the last twenty years at the AO level, CIT (A) and ITAT level respectively. The loan of 45,00,000/- was not repaid by A/c Payee cheque but it was not paid in cash either. As our Firm was passing through financial crisis, and our senior Partner, Shri Vailabhdas C Ramnani who was handling the matter with the CREDITORS since the beginning, expired on 03/05/1999 and matter took a turn for the worse. The Creditors started pressurizing us for the Return of their loans but since we had no liquid funds to clear their loans, Rights in the movie "Trishakti", to the following concerns:- Sr. No. Party Name Amount 13. Vikash Sales Corporation 5,00,000 14. Kartik Trading Company 5,00,000 15. Shital International 5,00,000 16. Prabhavee 2,50,000 17. Shreeji Corporation 5,00,000 18. Gayatri Enterprises 2,50,000 19. Vipco Sales Corporation 5,00,000 20. Ray Engineering 4,00,000 21. Gayatri Enterprises 4,00,000 22. Raj Enterprises 2,50,000 23. Kartik Trading Company 2,50,000 24. Gayatri Enterprises 2,50,000 We made an earnest plea that the loan taken from them of 45 La....
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....the letter is not acknowledged by the lender. Therefore, this mode of payment is under dark clouds. Further, the assessee states that loan taken amounting to Rs.45,00,000/- were squared off by converting into an investment and the Hundi paper on the same were duly discharged. The documentary evidence on the same is not submitted during the proceedings. Therefore, not acceptable. The Hon'ble ITAT set aside this issue with a direction to verify the fact of repayment of loan but the Assessing Officer failed to do so before finalizing the assessment. To this extent, assessment order is erroneous and prejudicial to the interest of the Revenue and the Assessing Officer is directed to decide the issue a fresh after giving an opportunity of being heard to the assessee. 9. After considering the submissions of the assessee and relying on the explanation 2 to section 263 of the Act learned PCIT observed that the order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the Revenue and further he observed that the Assessing Officer should have applied his mind as to whether loan repaid has claimed by the assessee is at all allowable. Obviously, Ass....
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.... case Ambuja Cements Ltd. vs. CIT LTU, wherein it is submitted that the order passed under section 263 is bad in law. 11. On the other hand, the learned DR brought to our notice page 20 of the paper book to submit that the assessee has submitted that it has given confirmation with PAN of the firms from whom loan were borrowed in the form of Hundi Papers and refunded as per terms of Hundi of Hundi / Promissory note. The nature of transaction is fully valid and legal as money has been given and paid by account payee cheques and not by way of cash. He submitted that the above observation was made by Hon'ble ITAT in the first round of appeal and he submitted that whether the payment was paid by account payee cheques or not is the issue. Further, he brought to our notice at page-23 of the paper book, the various observation of the ITAT and submitted that ITAT has given direction to verify the repayment by cheque but in actual the assessee has settled based on pro note basis. And further, he submitted that assessee has not filed any MA to clear the above said details. 12. In rejoinder, the learned AR submitted that the above observation of the learned DR is not the finding of the P....
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..... AR contentions are that the main partner of the assessee firm, who was looking after the creditors payments and unsecured loans has expired. Due to which the assessee firm was in financial crisis and was not in a position to repay the loans. Subsequently, because of mutual understanding between the loan creditors on certain terms and conditions the loan amount was treated as investments of the creditors with profit sharing. The A.O. in order dated 30.06.2017 passed u/sec143(3) r.w,s 254 of the Act has relied on the submissions. We find the main crux of the issue that, the Pr.CIT is of the opinion that the A.O. order is erroneous and prejudicial to the interest of the revenue and was set aside for fresh adjudication. On perusal of the Pr.CIT order we found that the Pr. CIT has only verified the facts of loan and the assessee firm is in the litigation before the Hon'ble Tribunal for the third time and the Pr.CIT has not pointed out any specific error in the A.O. order and emphasized only on the status of repayment of loan by account payee cheques and has relied on the observations of the A.O. duly endorsed by the Range Head at page 4 of the Revision order as under: "The de....