2022 (7) TMI 934 - AT - Income Tax

Unsecured loan u/s 68 - assumptions and uncorroborated material collected during the search and seizure operation - HELD THAT - Addition is based on the information collected during the search and seizure operation carried out in case of Gautam Jain Group the entire additional evidence now sought to be brought on record by the assessee along with retraction affidavit of Shri Dharmendar Kumar Bhave, lenders from whom the assessee claimed to have availed of the loan, is required to be examined to substantiate the cause of justice. CIT(A) has passed the impugned order ex-parte without having any reply of the assessee on record. To decide the issue once for all assessee must be provided with an opportunity of being heard. So we hereby allow the additional evidence sought to be led by the assessee and case is remitted back to the CIT(A) to decide afresh after considering the additional evidence and by providing opportunity of being heard to the assessee. Consequently both the appeals filed by the assessee are allowed for statistical purposes.

Summary

Issues involved:
Challenge to addition of interest paid on loan in assessment years 2013-14 & 2014-15 based on unsecured loans being non-genuine/accommodative in nature.

Analysis:

1. The appellant, a partnership firm engaged in the business as a builder and developer, contested the addition of interest payment on unsecured loans from M/s. Rajat Diamond Exim P. Ltd. and M/s. Frontline Diamond P. Ltd. The Assessing Officer (AO) deemed these loans non-genuine/accommodative due to the search and seizure operation revealing accommodation entries of bogus purchases/unsecured loans. Consequently, the AO made an addition of Rs. 16,38,797 under section 143(3) of the Income Tax Act, 1961.

2. The appellant appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who upheld the addition. The appellant then approached the Tribunal, arguing that the addition was based on assumptions and uncorroborated material from the search and seizure operation. They sought to submit additional evidence, including a retraction affidavit from one of the lenders, Shri Dharmendar Kumar Bhave, which was not presented before the lower authorities.

3. The Tribunal examined the additional evidence sought to be introduced by the appellant, including loan confirmations, ITR acknowledgments, bank statements of lenders, and the retraction affidavit. Considering that the entire addition was based on information from the search and seizure operation, the Tribunal deemed it necessary to evaluate the new evidence to ensure justice. The Tribunal noted that the CIT(A) had passed the order ex-parte without the appellant's response on record, thus remitting the case back to the CIT(A) for fresh consideration after allowing the additional evidence and providing the appellant with a hearing opportunity.

4. Ultimately, the Tribunal allowed both appeals filed by the appellant for statistical purposes, emphasizing the importance of a fair hearing and examination of all relevant evidence to reach a just decision. The case was remanded to the CIT(A) for reevaluation in light of the additional evidence presented by the appellant, ensuring due process and fairness in the adjudication of the matter.