2025 (6) TMI 287

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....peal before it against the order dated 28.12.2019 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as 'the Act') by the ACIT, Circle-3(2) Delhi (hereinafter referred to as the Ld. AO). 2. The assessee is a private limited company and is engaged in providing micro and small business loan registered with the RBI. The return of income for the year was filed at a loss of Rs. 5,45,62,060/- which was revised declaring a loss of Rs. 5,22,42,666/- and the case of the assessee was picked up for complete scrutiny for the following reasons:- 1. Expenses debited to P&L Account for earning exempt income as per schedule BP of ITR if significantly lower as compared to investments made to earn exempt income. 2. High value receipt of....

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....bad in law and against the facts and circumstances of the case and the same is not sustainable on various legal and factual grounds. 3. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other." 4. The case of the assessee is that the AO has failed to understand that the customers of the assessee are in unorganized sector and most of them do not have PAN or VAT or service tax or excise registrations and for that reason, they are paying high interest of around 26-28% per annum. It was submitted by the ld. counsel that these small and marginal labourers who borrow, make repayments in cash and the same were deposite....

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....he details as physical files are not available with the assessee company. As per the provisions of Companies Act, 1956, the books of accounts should be kept at the registered office of the assessee company or at the business premises. Under no circumstances, the assessee company should keep the important documents with the other company leading to failure on part of the assessee company to submit evidences in support of its submissions. 5. The assessee company has requested for additional working days to compile the details vide letter dated 19.12.2019. The first such notice u/s 142(1) asking for details of cash deposit was sent on 24.05.2019 and after that further notices were also issued. The cash deposit was made during November-Decem....

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....g relevant documents for their banking transactions so as to make repayment of loan only by banking mode. It is quite reasonable and prudent explanation that these borrowers of the assessee may be having the demonetized currency notes and which instead of being deposited with the banks were deposited with the assessee for repayment of the outstanding amounts. Even if the outstanding amounts of loan have been deposited in advance, that cannot be considered a suspicious activity. 9. Nothing is alleged by the ld. tax authorities on the basis of facts and evidences that the loans themselves were fictitious. We find that the assessee had sought opportunity before AO for providing details on the basis of the record which was not immediately avai....