2026 (4) TMI 967

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....re-payment details despite opportunity given by the AO repeatedly beginning from notice dated 12.09.2023 u/s 142(1) and also proposed to be added as per Para 3.4 of the Show-cause notice dated 12.03.2024. 2. Whether Ld. CIT(A) was justified in deleting the interest expenses even though the AO treated it as not being utilized wholly and exclusively for business purposes. 3. Whether Ld. CIT(A) was justified in deleting the addition of miscellaneous expenses, interest on LIC and interest on TDS/TCS being not allowable u/s 37 of Income Tax Act, 1961. 4. Appellant craves right to add, delete, amend any ground at any time during the appellate proceedings. It is prayed that the order of Ld. CIT(A) is contrary to the facts on record and the settled position of law, and the order of the AO deserves to be restored." 3. Heard and perused the record and we find that there is a material observation of ld. CIT(A) giving relief to the assessee whereby it has been held that there is violation of provision of Section 144B(1)(xii) of the Act while proposing the alleged additions/disallowances made and for completeness we reproduce the relevant part of the impug....

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....ould not be completed as below: Total Income (As declared in 139(1)): Rs. 8,72,33, 330/- Add: Difference amount of income charged @ 8% and income declared as per ITR: Rs. 49,39,21, 763/- Proposed Assessed Income: Rs. 58,11,55,093/- (Proposed Addition of Rs. 49,39,21, 763/-)", 8.2.1 On perusal of DAO cited supra, it is evident that the AO originally proposed the adhoc addition of 8% of the total turnover to the returned income, however, upon submission of the written arguments/objections to the proposed addition on 14.03.2024, 15.03.2024, 16.03.2024 and 18.03.2024 (para 3.4 of the assessment order), the AO proceeded to complete the assessment proceedings on 25/03/2024 by making following additions/disallowances: - (a) Unsecured Loan u/s 68 - Rs. 22,86,64,515/- (b) Disallowance of interest expenses u/s 37 - Rs. 1,53,98,940/- (c) Disallowances of other expenses u/s 37 - -Rs.6,36,860/- Thus, from this fact, it is observed that the AO has deviated from the DAO and has made completely separate additions/disallowances which had not been intimated to the appellant to put forth its further arguments, which breached the pri....

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.... Calcutta High Court in the case of Vishal Jhajharia Vs. Assessment Unit, Income-tax Department Faceless Assessment Centre reported in [2024] 164 taxmann.com 781 (HC - Cal.), wherein, Hon'ble court has held the judgment in favor of the assessee stating that where revenue issued a show cause notice to assessee for adding back amount in question as 'unexplained cash credits' under section 68, it could not pass final order by adding said amount as 'unexplained money' under section 69A without giving assessee an opportunity to explain. 8.2.2 Thus, considering the facts of the issue, discussions made above and also respectfully relying on the judgments cited supra, it is held that the AO has not followed the provisions of section 144B(1)(xii) of the Act and principles of natural justice as well in not issuing further show cause notice proposing the alleged additions/disallowances made. In view of this, the alleged additions/disallowance made are dismissed on this legal issue also." 4. At the time of arguments ld. DR had relied the assessment order with regard to the merits of the additions which was deleted by the ld. CIT(A) by concluding that additions u....

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....ugh Credit/ Debit Card. Also, the assessee submitted break-up of the unsecured loans taken during the year of. consideration. However, the assessee was specifically asked to furnish the documentary. evidences that could establish the transactions i.e account copies of loan creditors in books of account, documents establishing the credit worhtines of the lenders i.e confirmation letter from the parties, ITR of the third parties for the relevant assessment year along with any relevant details that could establish the unsecured loans which the assessee clearly failed to do so. Also, with regard to details submitted w.r.t sundry debtors the assessee has simply. furnished a list of mere names of third parties which could not be ascertained and verified. Also, the details submitted w.r.t all the details requested i.e loans/ advances given, current liabilities, sundry debtors, advance receivables the assessee has submitted list of the third parties merely with names listed and the details submitted by the assessee could not be ascertained / verified. In the reply submitted by the assessee, even after provided with ample opportunities and sufficient time, the ass....