2021 (7) TMI 833 - AT - Income Tax

Unsecured loan/deposit made u/s. 68 - HELD THAT - At the time of hearing, the ld. AR of the assessee submitted before us that there are additional evidences which they wish to bring on record and prayed for admission of the same before us. His submission was that these evidences are relevant in determining whether the additions made u/s. 68 of the Act is warranted or not and they wanted to place them before the ld. CIT(A) The findings arrived at and reasons given therein by the ld. CIT(A) are not complete enough and the reasons governing the said findings are not coming out from the order of ld. CIT(A). DR also could not bring on record any submissions or materials/evidences to show that the additional evidences which the assessee now wants to file were already on record before the Department. The Income Tax Act, being a welfare legislation, we are of the considered view that one more opportunity should be provided to the assessee and that the ld. CIT(A) may consider the additional evidences which the assessee wants to file in support of his claim u/s. 68 of the Act and to represent his case on merits - Ground allowed for statistical purposes. Disallowance of site expenses, labour expenses and travelling conveyance expenses - AO had resorted to disallow 20% of these expenses and added the same to the income of assessee - CIT(A) upheld the addition made by the AO as being reasonable and justified - HELD THAT - Before us, the ld. AR made a prayer that since the issue on unsecured loans addition has been remanded to the file of ld. CIT(A) for fresh adjudication, therefore, for the sake of completeness of the entire matter, let this issue be re-adjudicated by him and the matter may be restored back to his file. The ld. DR accepted the proposition put forth by the ld. AR of the assessee. After hearing the parties, in the interest of justice, we agree with the submissions made by the ld. AR and in view thereof, the order of ld. CIT(A) is set aside on this issue also and the matter is remanded back to his file for re-adjudication as per law. This ground is also allowed for statistical purposes.

Summary

Issues:
1. Sustaining addition of unsecured loan/deposit under section 68 of the Income-tax Act, 1961.
2. Disallowance of expenses as made by the Assessing Officer.

Analysis:

Issue 1:
The appeal pertains to the addition of an unsecured loan/deposit of ?57,00,000 under section 68 of the Income-tax Act, 1961. The CIT(A) sustained the addition as the assessee failed to establish the genuineness of the loan. The assessee submitted various details and evidences before the CIT(A), including names and addresses of creditors, ITRs, balance sheets, and ledger accounts. However, the CIT(A) formed an opinion based only on the evidences before him, noting meagre opening and closing balances in the creditors' bank accounts. The ITAT Pune observed that the CIT(A) did not provide sufficient opportunity for the assessee to present additional evidences. Therefore, the ITAT set aside the CIT(A)'s order and remanded the issue back to reassess the additional evidences to be filed by the assessee.

Issue 2:
The second issue concerns the disallowance of expenses totaling ?13,31,116, representing 20% of site expenses, labour charges, and travelling & conveyance expenses. The Assessing Officer disallowed these expenses on an ad-hoc basis due to the lack of verifiable vouchers. The CIT(A) upheld the disallowance, stating that the assessee failed to furnish required details/evidences. The ITAT Pune, considering the remand of the first issue, agreed to set aside the CIT(A)'s order on this matter as well and remand it back for re-adjudication in accordance with the law.

In conclusion, the ITAT Pune allowed the appeal of the assessee for statistical purposes, directing the CIT(A) to re-examine both the addition of unsecured loan/deposit and the disallowance of expenses in light of the additional evidences and submissions to be provided by the assessee.