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2019 (11) TMI 931 - AT - Income TaxAddition u/s 68 - principal amount received as unsecured loan (plus interest due thereon) from M/s Matribhumi Fincap India Limited on the ground that the same is a shell company and is having criminal/ prosecution case U/s 220(1) (2) of Companies Act by Chief Judicial Magistrate, Shillong - HELD THAT - Before going into the merits of the case, we calculated as to why the assessee has still not changed the name in the HDFC bank till date of hearing and still he is doing transactions through this bank account. This transaction needs to be examined by the AO. We also noted that the loan amount of ₹ 1 crores taken in two instalments as stated supra has also been credited in this bank account. These facts need to be examined at the level of AO. Therefore, we think it appropriate to send back the disputed issue to the file of AO for examining of actual ownership of this bank account and why the assessee has not changed the name of the account in the name of M/s Pasa Resources Pvt. Ltd. in place of M/s Pasa Sales and Marketing Ltd. even after merging w.e.f. 01.04.2014. Needless to say, the assessee shall be given reasonable opportunity of hearing and the assessee is directed to cooperate with the AO for early disposal of the case. This ground is allowed for statistical purposes.
Issues Involved:
1. Addition of ?1,00,36,986/- under Section 68 for unsecured loan and interest. 2. Addition of ?88,745/- for sundry creditors. 3. Charging of interest under Sections 234A and 234B. Issue-wise Detailed Analysis: 1. Addition of ?1,00,36,986/- under Section 68 for unsecured loan and interest: The assessee contested the confirmation of the addition of ?1,00,36,986/- by the CIT(A), which included the principal amount received as an unsecured loan and the interest due from M/s Matribhumi Fincap India Limited. The authorities below sustained the addition on the grounds that the lender company was declared a shell company and had a criminal prosecution case under Sections 220(1) & 220(2) of the Companies Act. The assessee argued that complete details justifying the three limbs mentioned under Section 68 were furnished, and the loan was duly returned with interest in the subsequent year. The assessee provided ITR, audited accounts, bank statements, and loan confirmations. Despite this, the CIT(A) confirmed the addition, citing the shell company status and criminal case against the lender. The Tribunal noted the need for the AO to examine the actual ownership and transactions of the bank account in question, as it was still under the name of M/s Pasa Sales and Marketing Ltd. The issue was sent back to the AO for further examination and verification of the bank account ownership and transactions. 2. Addition of ?88,745/- for sundry creditors: The assessee challenged the addition of ?88,745/- for sundry creditors, which included ?74,713/- for M/s Eastern Trading Agency and ?14,032/- for M/s Annapurna Trading. The assessee provided ledgers and demonstrated that these were regular business concerns, with transactions recorded and repaid in subsequent years. The CIT(A) failed to adjudicate this ground of appeal. The Tribunal directed the AO to verify the genuineness of the creditors and provide the assessee with a reasonable opportunity of hearing. This issue was also sent back to the AO for verification. 3. Charging of interest under Sections 234A and 234B: The assessee argued that interest under Sections 234A and 234B could only be charged on the returned income and not on the assessed income, following the decision of the Hon'ble Jharkhand High Court. The Tribunal directed the AO to address this issue accordingly, as it was consequential in nature. Conclusion: The Tribunal allowed the appeal of the assessee for statistical purposes, directing the AO to re-examine the ownership and transactions of the bank account related to the unsecured loan and to verify the genuineness of the sundry creditors. The AO was also instructed to address the issue of interest under Sections 234A and 234B as per the assessee's argument. The order was pronounced on 18/11/2019 at Ranchi.
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