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TMI Blog2019 (12) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... aise funds but taking loan from bank involves various factors such as lengthy application process, long list of pre-requisites to qualify for the loan and also involve collateral security whereas all the factors were not involved in the case of unsecured loans. CIT (Appeals) has ignored this submission of the assessee. Commissioner of Income-tax (Appeals), though noted the above submissions in his order but confirmed the addition by further invoking the provisions of section 40A(2)(a) of the Act. The action of the learned Commissioner of Income- tax (Appeals) is not as per law therefore, we allow ground No. 2 of the appeal Ad hoc disallowance - Expenditure incurred in cash - HELD THAT:- AO has made the disallowance simply by holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eby upholding the impugned assessment order. The learned Commis sioner of Income-tax (Appeals) clarified that it is a pure administrative matter between the Assessing Officer, range head and the Principal Commissioner of Income-tax-1 and the assessment cannot be quashed on administrative issues. 2. That the learned Commissioner of Income-tax (Appeals)-I, Kanpur has erred in law and on facts by sustaining the arbitrary addi tions/disallowances of ₹ 90,050 made by the learned Assessing Officer on account of interest paid on unsecured loan to the related persons and also setting aside the matter for verification of the nature of funds. 3. That the learned Commissioner of Income-tax (Appeals)-I, Kanpur ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed as not pressed. We dismiss the same as not pressed, 3. Regarding ground No. 2, the learned authorised representative submit- ted that the assessee had paid interest on unsecured loans at 15 per cent. and 16 per cent. and the Assessing Officer has allowed interest only at 14.75 per cent. and has disallowed the balance holding the same to be excessive. The learned authorised representative submitted that private loans obtained by an assessee always carry higher rate of interest and the action of the Assessing Officer in comparing the interest rate paid by the assessee with the bank rate was not justified. It was submitted that the learned Commissioner of Income-tax (Appeals) has also dismissed this around of appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g list of pre-requisites to qualify for the loan and also involve collateral security whereas all the factors were not involved in the case of unsecured loans. We find that the learned Commissioner of Income-tax (Appeals) has ignored this submission of the assessee. The Commissioner of Income-tax (Appeals), though noted the above submissions in his order but confirmed the addition by further invoking the provisions of section 40A(2)(a) of the Act. The action of the learned Commissioner of Income- tax (Appeals) is not as per law therefore, we allow ground No. 2 of the appeal 6. Now coming to ground Nos. 3 to 6 regarding ad hoc disallowance, we find that the Assessing Officer has made the disallowance simply by hold- ing that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not the case of the Assessing Officer that the assessee was unable to adduce satisfactory evidence that the expend iture was incurred for the purpose of his business. When appropriate evidence was adduced, it was not in the power of the Assessing Officer to arbitrarily disallow any item of expenditure on the ground that the sums were not verifiable. There was no indication as to what step was taken by the Assessing Officer to have those expenses verified. If the Assessing Officer had not taken pains to have the expenses verified, he could not disallow any portion of the expend iture on the ground that it was not verifiable. The expenses were to be allowed. 7. In view of the above, ground Nos. 2 to 6, taken by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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