2019 (1) TMI 1656 - AT - Income Tax

Interest payable to bank - assessee has mentioned in the profit and loss account - HELD THAT - The revenue authorities have noticed that a loan (liability) of ₹ 1,11,73,554/- against which the assessee has claimed interest of ₹ 20,38,472/- and the Assessee has further given interest free loan to his daughter Ms. Mehak Gandhi to the tune of ₹ 1,57,26,728 meaning thereby that assessee has claimed interest expenses of borrowed capitals and by giving interest free advances to his daughter. This not for business purposes. Assessee has claimed before the revenue authorities by not filing any documentary evidence, therefore, fully agree with the reasons mentioned by the revenue authorities especially the Ld. First Appellate Authority for confirming the addition of ₹ 20,38,472/- on account of interest on loan of ₹ 1,11,73,554/-. Hence, no interference is called for in the well reasoned order of the Ld. CIT(A) - Decided against assessee Credit card payment - nature of expenditure - revenue or capital expenditure - HELD THAT - Expenses on ICICI Credit Card and the credit facility from Phoenix ARC Pvt. Ltd. was transferred by the assessee to his capital account. Since the assessee has himself capitalized these amounts by transferring the same to his capital account without crediting the same in the profit and loss account. In my view and keeping in view of the orders of the revenue authorities, especially the impugned order passed by the Ld. First Appellate Authority, AO has rightly made the addition in dispute and Ld. CIT(A) has confirmed the same on the basis of the documentary evidences produced by the assessee. - Decided against assessee

Summary

Issues:
1. Rejection of appeal by CIT(A) on interest payable to bank and credit card payment.
2. Addition of unexplained cash credit and interest on loan.
3. Disallowance of expenses on fixed assets.

Analysis:

Issue 1: Rejection of appeal by CIT(A) on interest payable to bank and credit card payment
The appeal was filed against the CIT(A)'s order which rejected the assessee's claim related to interest payable to the bank and credit card payments. The assessee failed to appear for hearings despite notices sent. The tribunal decided the appeal ex parte due to non-appearance. The assessee had claimed interest payable to the bank, which was rejected by the CIT(A) as not for business purposes. The tribunal upheld the CIT(A)'s decision, stating that the assessee did not provide documentary evidence to support the claim, leading to the rejection of the appeal.

Issue 2: Addition of unexplained cash credit and interest on loan
The assessment involved scrutiny of the assessee's income tax return, where discrepancies were found regarding capital receipts and loans. The AO made additions to the income based on unexplained cash credits and interest on loans. The assessee agreed to an addition of a specific amount, which was duly considered. Additionally, the AO added amounts related to credit card payments and interest-free loans given to the daughter of the assessee. The tribunal upheld the additions, stating that the assessee had not credited these amounts in the profit and loss account, leading to the rejection of the appeal.

Issue 3: Disallowance of expenses on fixed assets
The AO disallowed expenses related to fixed assets, specifically computer bills, which were deemed as bogus. The tribunal found discrepancies in the bills produced by the assessee, leading to disallowance of the expenses and depreciation claimed on the assets. Penalty proceedings were initiated for violations of tax regulations. The appeal before the CIT(A) was dismissed, and the tribunal upheld the decision, resulting in the dismissal of the assessee's appeal.

In conclusion, the tribunal dismissed the appeal of the assessee, upholding the decisions made by the revenue authorities regarding the various issues raised in the assessment. The tribunal provided the assessee with the option to move an application for restoring the appeal if aggrieved by the decision. The order was pronounced on 07-11-2019.