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2023 (11) TMI 26 - AT - Income TaxAddition u/s 68 - assessee company, during the year under consideration, unsecured loan had been taken by the company from The Director of the company - HELD THAT - CIT(A), while confirming the addition, has observed that the assessee did not furnish copies of ITR of Director of the company from whom loan is taken and that no explanation regarding the source of credits in his bank account was furnished. We find that the ITR in the case of director was filed on 30.03.2023, i.e., after the passing of the order of the ld. CIT(A), on 18.01.2023, in the case of the assessee. In pursuance of the ITR, assessment order in the case of director stands independently passed on 30.05.2023, where the ITR was filed on 30.03.2023. The amount stands assessed in the hands of Director of the assessee company. Therefore, there is no occasion for assessing the same in the hands of the assessee as this would amount to double taxation, which is impermissible in law.mAccordingly, the addition in the hands of the assessee is deleted. Addition u/s 37 - disallowance of claimed Employee Benefit Expenses, other expenses and Finance Cost - HELD THAT - We find the grievance of the assessee to be justified despite the fact that the assessee did not carry out any business activity during the year, the fact remains that the was in existence during the year. It is also undisputed that the expenditure in question was incurred as normal expenditure during the year. That the salary of the Accountant and Peon had to be paid. The running and maintenance expenses, audit fees and ROC fees were also a necessary concomitant. Thus, the Employee Benefit Expenses and other expenses are allowed and the addition in this regard is deleted. However, no details of finance cost having been furnished, the addition to this extent, as confirmed by the ld. CIT(A), is upheld.
Issues Involved:
1. Legality of the order passed by the CIT(A) upholding the additions proposed by the AO. 2. Addition of Rs. 5,16,582/- under section 37 of the Income Tax Act. 3. Addition of Rs. 16,97,000/- under section 68 of the Income Tax Act. 4. Alleged violation of principles of Natural Justice by the CIT(A). Summary of Judgment: Issue 1: Legality of the Order by CIT(A) The assessee challenged the legality of the CIT(A)'s order upholding the additions proposed by the AO. However, this issue was not separately addressed in detail in the judgment. Issue 2: Addition under Section 37 of the Act The AO disallowed Employee Benefit Expenses of Rs. 2,15,000/-, other expenses of Rs. 2,99,120/-, and Finance Cost of Rs. 2462/-, totaling Rs. 5,16,582/-, citing lack of documentary evidence and justification. The CIT(A) upheld this addition, stating that the onus to substantiate the expenses was on the assessee, which was not discharged. The Tribunal found that despite no business activity, the company was in existence and incurred normal and necessary business expenses. Thus, the Tribunal allowed the Employee Benefit Expenses and other expenses but upheld the disallowance of the Finance Cost due to lack of details. Ground No. 2 was partly accepted. Issue 3: Addition under Section 68 of the Act The AO added Rs. 16,97,000/- as unexplained credits, citing failure to prove the identity, credit worthiness, and genuineness of the transaction involving unsecured loans from the Director, Shri Sunny Garg. The CIT(A) upheld this addition. However, the Tribunal admitted additional evidence, including the ITRs and assessment orders of Shri Sunny Garg, which were filed after the CIT(A)'s order. The Tribunal noted that the amount was assessed in the hands of Shri Sunny Garg, leading to potential double taxation, which is impermissible. Hence, the addition of Rs. 16,97,000/- was deleted. Ground No. 3 was accepted. Issue 4: Violation of Principles of Natural Justice The issue regarding the violation of principles of Natural Justice was not separately elaborated upon in the judgment. Conclusion: The appeal was partly allowed, with the addition under Section 68 deleted and partial relief granted under Section 37. The order was pronounced on 22nd September 2023.
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