TaxTMI 
TaxTMI 
2026 (9) TMI 1716
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....00), and the refusal to admit additional evidence under Rule 46A of the Income-tax Rules, 1962. Ground no. 2 assails the disallowance of interest of Rs 36,83,043 paid on those loans. Ground no. 3 is general and ground no. 4 is a prayer for cost. There is no delay in filing this appeal. 3. Briefly stated, the facts of the case are that the assessee, a company engaged in the business of real estate, filed its return of income on 29.01.2018 declaring total income of Rs NIL and a loss of Rs 1,46,39,235, and the AO completed the assessment on 24.12.2019 at a total income of Rs 2,69,99,000, reducing the business loss carried forward to Rs 91,30,609. The assessee had taken loans from 21 parties based at West Bengal, Gujarat, Rajasthan and Maharashtra and had furnished their confirmations, the particulars of the brokers through whom the loans were arranged and the ledger accounts of those brokers. Enquiry letters under section 133(6) of the Act were issued to some of the creditors on a random basis and, in the table in paragraph 3.3 of the assessment order, the outcome in respect of the two parties named above was recorded as "No reply received". The AO then observed in paragraph 3.6 as....
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....e circumstance of companies existence before the insolvency authorities but the source of money advanced to this appellant could not have been explained by it", and that no case was made out of the circumstances stipulated under Rule 46A. The Rejoinder of the assessee, reproduced in that paragraph, states: "... the only additional evidence is Novation Agreement. All other evidences were filed before the AO. This agreement came into our knowledge after assessment and it is only a circumstance evidence in support of already filed evidence. ... it is requested to again call remand report if required for decide the case on the basis of evidences filed and available on record." 7. Relying on Sumati Dayal v. CIT [1995] 214 ITR 801 (SC), the learned CIT(A) dismissed the grounds relating to the addition of Rs 2,69,99,000 and the interest of Rs 36,83,043. On the interest of Rs 18,24,864, however, he held in paragraph 5.4.3 that "the amount which has not been claimed for deduction cannot be disallowed u/s 37 to begin with", and directed its deletion. He also granted relief on the rate of tax under section 115BBE of the Act. 8. The learned Authorised Representative (hereinafter....
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....lled for again if required. A document which came into the knowledge of a party only after the completion of the assessment, and which relates to a creditor undergoing insolvency proceedings, squarely attracts clause (c) of subrule (1) of Rule 46A of the Income-tax Rules, 1962, the powers of the first appellate authority being co-extensive with those of the AO, as held by the Hon'ble Supreme Court in Jute Corporation of India Ltd. v. CIT [1991] 187 ITR 688 (SC). We may add that the learned CIT(A) has himself gone on to weigh the worth of the very document he refused to admit, which is not a course that can be supported. We accordingly hold that the Novation Agreement ought to have been admitted, and we admit it. Since the AO has already commented upon it in his remand report dated 17.04.2025, no prejudice whatsoever is caused to the Revenue by its consideration, and the material on record is sufficient for us to decide the issue ourselves rather than to remit it. 11. Turning to the merits, the finding in paragraph 5.3.2 extracted above records that the identity of both creditors is established, and that the receipt of the money through banking channels, the filing of returns of ....
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....o information was called for from the bankers of the creditors, and no enquiry of any kind was carried further. The contrast with the AO's own treatment of Dunstan Goods Pvt. Ltd., Trilochana DealtradePvt. Ltd. and JN Fiscal Services Pvt. Ltd. in paragraph 5.1 is instructive; there he had positive material from the assessment for A.Y. 2016-17 to hold those entities to be jamakharchi companies, whereas against these two creditors he had nothing beyond their silence. The failure of a creditor to respond to a notice under section 133(6) of the Act cannot by itself be conclusive against the assessee, as held by the Hon'ble Supreme Court in CIT v. Orissa Corporation (P.) Ltd. [1986] 159 ITR 78 (SC), wherein it was held that where the assessee has furnished the particulars of its creditors, the Revenue cannot draw an adverse inference from their non-appearance without pursuing an enquiry of its own. Nothing has been placed before the Bench to show that this judgment has been reversed or overruled. 14. Examining the two credits separately, in the case of M/s Akshit Impex Pvt. Ltd. the assessee has filed the confirmation, the return of income and the financial statements of the creditor....