2020 (12) TMI 628 - AT - Income Tax

Advance finance charges collected by financier which is added to loan amount as well insurance paid by financier - HELD THAT - One more opportunity need to be granted to the assessee to produce relevant evidences to substantiate contentions as are made with respect to advance finance charges collected by financier which is added to loan amount as well insurance of ₹ 1,00,000/- paid by financier on behalf of the assessee to insure the truck purchased by the assessee. Thus, we are remitting the matter back to the file of the AO for fresh adjudication of the matter denovo on merits in accordance with law. The assessee is directed to produce relevant documentary evidences before the AO to justify his stand. Non explanation by assessee of sources of income for making payment of installment - additions have been sustained by learned CIT(A) by holding that the assessee could not explain the sources from where payment of principal amount of repayment of loan vide installments paid during the year - HELD THAT - Before us, the statement is made by learned counsel for the assessee that all the payments towards instalments of loan to Tata Motors Finance Limited was paid by assessee by banking channel. It is stated by ld counsel for the assessee that the said bank account was disclosed to department and hence no addition is warranted. The assessee has produced before us bank book and bank statements of Axis Bank, in the paper book filed with tribunal. DR on the other hand relied upon the orders of learned CIT(A). After hearing both the parties and perusing the material on record, we are of the considered view that the contentions of the assessee require verification by authorities below. Thus, it is considered fit to restore the matter to the file of the AO for fresh adjudication of the issue on merits in accordance with law. The assessee is directed to produce all the relevant evidences before the AO to justify its stand that the repayment of installments to Tata Motor Finance Limited was made from known sources and out of the declared income. Undisclosed investment in purchase of coal - assessee stated before us that there was wrong filing of the purchase amount in quarter four of the return of VAT filed with Sales Tax Authority, wherein third quarter amount of purchase was added once again by mistake into the fourth quarter purchases while filing VAT returns - HELD THAT - As evidences filed before us, along with books of accounts requires verification by the authorities below. Thus, we are remitting the matter back to the file of the AO for fresh adjudication of the matter denovo on merits in accordance with law. The assessee is directed to produce relevant evidences along with the books of accounts before the AO to evidence that the purchases as per books of accounts are to the tune of ₹ 62,31,340/- and not an amount of ₹ 1,00,13,912/- as claimed to be shown in VAT return as purchases for the year under consideration, and an amount of ₹ 37,82,572/- was error in filing of the VAT return. The assessee is directed to produce relevant documentary evidences /books of account before the AO to justify his stand. The AO shall admit evidences filed by the assessee which shall be adjudicated on merits in accordance with law.

Summary

Issues Involved:
1. Validity of the assessment order.
2. Service of notice under section 143(2) within the statutory period.
3. Addition under the head secured loan.
4. Addition related to the purchase of a truck.
5. Addition related to the payment of loan installments.
6. Addition related to undisclosed investment in the purchase of coal.
7. Addition related to extra profit in coal business.
8. Observations and findings of lower authorities.
9. Interest charged under different sections of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Validity of the Assessment Order:
The appellant did not press this ground. Consequently, the tribunal dismissed it as not being pressed.

2. Service of Notice under Section 143(2) Within Statutory Period:
The appellant did not press this ground. Consequently, the tribunal dismissed it as not being pressed.

3. Addition under the Head Secured Loan:
The appellant did not press this ground. Consequently, the tribunal dismissed it as not being pressed.

4. Addition Related to the Purchase of a Truck:
The assessee contended that the total invoice value of the truck was ?15,90,000, with a down payment of ?40,000, and the remaining ?15,50,000 was financed by Tata Motors Finance Limited. However, the authorities observed that the contracted price was ?22,51,400, leading to an unexplained payment of ?7,01,400. The tribunal noted that these included ?6,01,400 as finance charges and ?1,00,000 as insurance, which were added by the financier for computing EMI and not actual payments by the assessee. The tribunal remitted the matter back to the AO for fresh adjudication, directing the assessee to produce relevant documentary evidence.

5. Addition Related to the Payment of Loan Installments:
The assessee argued that all loan installment payments totaling ?3,26,762 were made through banking channels from a disclosed bank account. The tribunal found merit in the contention but required verification by the authorities below. The matter was remitted back to the AO for fresh adjudication, with directions for the assessee to produce relevant evidence.

6. Addition Related to Undisclosed Investment in the Purchase of Coal:
The assessee claimed a mistake in the VAT return for the fourth quarter, where purchases were overstated by ?37,82,572. The tribunal noted the need for verification of the actual purchases amounting to ?62,31,340 against the VAT return showing ?1,00,13,912. The matter was remitted back to the AO for fresh adjudication, directing the assessee to produce relevant evidence and books of accounts.

7. Addition Related to Extra Profit in Coal Business:
The appellant did not press this ground. Consequently, the tribunal dismissed it as not being pressed.

8. Observations and Findings of Lower Authorities:
The appellant did not press this ground. Consequently, the tribunal dismissed it as not being pressed.

9. Interest Charged under Different Sections of the Income Tax Act:
The appellant did not press this ground. Consequently, the tribunal dismissed it as not being pressed.

Conclusion:
The tribunal allowed the appeal partly for statistical purposes, remitting the matters related to the purchase of the truck, payment of loan installments, and undisclosed investment in the purchase of coal back to the AO for fresh adjudication. The tribunal directed the AO to provide the assessee with an adequate opportunity to present relevant evidence and to decide the matters on merits in accordance with the law. The other grounds were dismissed as not being pressed.