2020 (9) TMI 188 - AT - Income Tax

Rejection of the books of account - HELD THAT - CIT(A) has observed that the assessee did not filed the books of account whereas the books of account has filed lies at page no. 264-265 of the paper book. Anyhow taking into account all the facts and circumstances, we are of the view that each and every explanation is liable to be considered while accepting or rejecting the books of account, hence, we set aside the finding of the CIT(A) on this issue and restore the issue before the AO to decide the matter of controversy afresh specifically in view of the explanation given by assessee in view of the letter dated 20.02.2015. Accordingly, we decide this issue in favour of the assessee against the revenue. Unexplained investment - addition on the basis of scrips - as per assessee AO nowhere provided company letter of scrips before addition, therefore, in the interest of justice, the company letter/material should be given before raising the addition in accordance with law, hence addition is not liable to be sustainable - HELD THAT - Addition is liable to be examined once again by the necessary documents/opportunity to the assessee in accordance with law. Addition of unexplained deposits - HELD THAT - Since this addition are required to be confirmed, therefore, we set aside the finding of the CIT(A) on this issue and restore the issue before the AO to decide the matter of controversy afresh in the light of evidence mentioned above in accordance with law. Accordingly, this issue is decided in favour of the assessee against the revenue. Addition of share of profit from partnership firm - HELD THAT - As specifically argued that the final figure is not on record, therefore, the issue is liable to be restored to the file of the AO to decide the matter of controversy afresh to adopt the final figure of profit determined in case of M/s. Sunrise Enterprises in the hands of the assessee. Anyhow when the profit figure has been taken from the M/s. Sunrise Enterprises, therefore, it is necessary to determine the matter of controversy on the basis of the final figure of profit determined in the case of M/s. Sunrise Enterprises - direct the AO to decide the matter of controversy afresh, after obtaining the final figure of the profit determining in the case of M/s. Sunrise Enterprises. Disallowance u/s 14A - Disallowance of interest expenditure - HELD THAT - Since the assessee had not earned any exempt income during the year relevant to the assessment year under consideration, we direct the AO to allow the deduction in respect of interest accrued and calculate @ 12% per annum in terms of the order passed by the coordinate Bench in the case of Sudhir Mehta vs. DCIT 2017 (12) TMI 1668 - ITAT MUMBAI . Unexplained investment in shares - discrepancies has been explained after due verification of the claim and CIT-A deleted addition - HELD THAT - Nothing came into noticed that which scrips has not been explained by assessee. The transaction has been explained satisfactorily. Since the CIT(A) has allowed the claim of the assessee on the basis of satisfactorily explanation of the assessee in connection with the transaction in question, therefore, we nowhere found any ground to interfere with the finding of the CIT(A) in question. Accordingly, we decide this issue in favour of the assessee against the revenue.

Summary

Issues Involved:
1. Taxation of income from attached assets.
2. Rejection of books of accounts.
3. Addition of unexplained investment.
4. Addition of unexplained deposits in bank account.
5. Addition of share of profit from partnership firm.
6. Disallowance of interest expenditure.
7. Deduction under Section 80L of the Income Tax Act.
8. Levy of interest under Sections 234A, 234B, and 234C of the Income Tax Act.
9. Tax Deducted at Source (TDS) applicability on assessed income.

Issue-wise Detailed Analysis:

Issue No. 1: Taxation of income from attached assets
The issue was not pressed by the representative of the assessee; therefore, it was decided in favor of the revenue against the assessee.

Issue No. 2: Rejection of books of accounts
The assessee challenged the rejection of the books of account by the AO, which was confirmed by CIT(A). The case had gone through multiple rounds of appeals. The assessee argued that the rejection was based on findings in the case of Late Shri Harshad Mehta, a broker, which should not apply to the assessee. The assessee provided detailed explanations for accepting the books of account, which were not considered by the AO. The Tribunal found that the AO did not address each explanation provided by the assessee and noted that the case of the assessee is different from that of Shri Harshad Mehta. The Tribunal set aside the CIT(A)'s findings on this issue and restored it to the AO for fresh consideration, taking into account the explanations provided by the assessee.

Issue No. 3: Addition of unexplained investment
The CIT(A) confirmed the addition of unexplained investments totaling ?38,08,416/- based on various sources, including company letters, custodian letters, dividend warrants, and seized assets. The assessee argued that the AO did not provide the company letters corresponding to certain additions, violating the principle of natural justice. The Tribunal found that the AO failed to provide necessary documents before raising the addition and set aside the CIT(A)'s findings. The Tribunal restored the issue to the AO for re-examination, providing the assessee with the required documents and opportunities to present their case.

Issue No. 4: Addition of unexplained deposits in bank account
The AO initially raised an addition of ?1,62,327/-, which the CIT(A) reduced to ?85,225/-. The assessee explained the deposits with supporting documents. The Tribunal found that the addition required further verification and set aside the CIT(A)'s findings. The issue was restored to the AO for fresh adjudication, considering the evidence provided by the assessee.

Issue No. 5: Addition of share of profit from partnership firm
The assessee challenged the addition of ?2,52,075/- as share of profit from M/s. Sunrise Enterprises, arguing that the final figure was not on record. The Tribunal agreed that the final profit figure should be determined and set aside the CIT(A)'s findings. The AO was directed to re-examine the issue based on the final profit figure from M/s. Sunrise Enterprises.

Issue No. 6: Disallowance of interest expenditure
The assessee contested the disallowance of interest expenditure amounting to ?2,76,76,843/-, citing previous Tribunal decisions allowing similar claims. The Tribunal reviewed relevant case laws and previous decisions, including those in the cases of Sudhir S. Mehta and Ashwin S. Mehta, which allowed similar interest expenses. The Tribunal allowed the interest expenses claimed by the assessee and decided the issue in favor of the assessee.

Issue No. 7: Deduction under Section 80L of the Income Tax Act
The Tribunal did not specifically address this issue in the provided judgment.

Issue No. 8: Levy of interest under Sections 234A, 234B, and 234C of the Income Tax Act
The Tribunal did not specifically address this issue in the provided judgment.

Issue No. 9: Tax Deducted at Source (TDS) applicability on assessed income
The Tribunal did not specifically address this issue in the provided judgment.

Appeal by Revenue (ITA No. 6026/M/2017):
The revenue challenged the deletion of an addition of ?78,43,099/- on account of unexplained investment in shares. The CIT(A) had allowed the deletion based on satisfactory explanations and supporting documents provided by the assessee. The Tribunal found no reason to interfere with the CIT(A)'s findings and decided the issue in favor of the assessee against the revenue.

Conclusion:
The appeal filed by the assessee was allowed, and the appeal filed by the revenue was dismissed. The Tribunal directed the AO to re-examine certain issues, providing the assessee with the necessary documents and opportunities to present their case. The interest expenditure claimed by the assessee was allowed based on previous Tribunal decisions.