2019 (4) TMI 1980 - AT - Income Tax

Unexplained credit u/s 68 - HELD THAT - By filing copy of the bank statement of the assessee for the period from 01.04.2011 to 31.03.2012, the assessee prayed for deleting the addition made towards short term borrowings. Since the assessee has not furnished the bank statements and supporting evidence, the AO treated the same as unexplained credit and brought to tax u/s 68. We remit the matter back to the file of the AO to examine the details as furnished before the Tribunal and decide the issue in accordance with law by affording an opportunity of being heard to the assessee. Disallowance of finance cost - HELD THAT - We find force in assessee argument that as per loan agreement, the assessee is liable to pay interest @ 14.25% for the loan obtained from M/s. Great Meera Finlease Pvt. Ltd. and paid interest and moreover, the assessee has deducted TDS. We direct the Assessing Officer to verify bank account of the assessee as well as accounts of M/s. Great Meera Finlease Pvt. Ltd., loan agreement, etc. and decide the issue on merits. Disallowance of other expenses - HELD THAT - As assessee has submitted that the claim includes vessel handling expenses and the balance pertaining to various expenses such as travelling conveyances, labour charges, secretarial expenses, postage and courier, etc. - HELD THAT - As the assessee has not filed any detailed supporting evidence for the above claim. Moreover, by considering the quantum of business of the assessee, the AO has allowed relief of 50% of the total claim and disallowed the balance amount in the absence of supporting evidences. The assessee has not filed any detailed statement of expenditure with supporting evidence before the Tribunal. We find no merits in the arguments of the ld. Counsel. 50% of the addition confirmed by the ld. CIT(A) stands sustained. Thus, the ground raised by the assessee stands dismissed.

Summary

Issues Involved:
Appeal against order of Ld. Commissioner of Income Tax (Appeals) regarding various additions made by the Assessing Officer for the assessment year 2012-13.

Analysis:
1. Confirmation of Various Additions by Assessing Officer:
The assessee challenged the confirmation of various additions made by the Assessing Officer in the appeal. The Assessing Officer completed the assessment under section 144 of the Income Tax Act, 1961 due to the assessee's failure to provide necessary details like copy of bank account, proof for expenses, break up for borrowings and advances, exchange rate differences, etc. The ld. CIT(A) confirmed some additions while giving partial relief for short term borrowings.

2. Short Term Borrowings Issue:
The ld. CIT(A) observed a discrepancy in the balance sheet regarding short term borrowings and provided partial relief. The assessee claimed that certain amounts were advanced to them by other entities, supported by ledger accounts and confirmation letters. The Tribunal remitted the matter back to the Assessing Officer to examine the details provided and decide the issue accordingly.

3. Disallowance of Finance Cost:
Regarding the disallowance of finance cost, the ld. Counsel argued that interest was paid as per the loan agreement and TDS was deducted. The Tribunal directed the Assessing Officer to verify bank accounts, loan agreements, etc., to make a decision based on merit.

4. Disallowance of Other Expenses:
The disallowance of other expenses was contested by the assessee, claiming that vessel handling expenses and other costs were legitimate business expenses. However, the Assessing Officer disallowed a portion due to lack of supporting evidence. The Tribunal upheld 50% of the disallowed amount, as the detailed statement of expenditure was not provided.

5. Conclusion:
The Tribunal partly allowed the appeal for statistical purposes, providing relief on certain issues while upholding the decisions on others. The matter was pronounced in Chennai on 26th April 2019.