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Kuldeep Kumar Gupta Versus ITO Ward, Baraut

2017 (11) TMI 999 - ITAT DELHI

Addition u/s 68 - unexplained cash credit in the Federal Bank A/c - Held that:- We are of the opinion that when it appears to the AO that the financial capacity of the lenders was weak with their earning capacity of ₹ 1,500/- to ₹ 4,500/- per month, the AO should have examined the issue by questioning them to know the source of the amounts for extending the loan to the assessee, instead of rejecting the sworn statements without scrutiny. No reasons are assigned by the AO for discardi .....

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the compensation from Insurance Company is concerned the assessee could have produced the relevant documents. However, we cannot expect any such evidence in respect of ₹ 38,085/- and the pigmy savings of the daughter of the assessee cannot be termed as income of the daughter so as to club such income with the income of the assessee. Such savings of the daughter could obviously be out of the amounts provided by the assessee. We, therefore, find it just and reasonable to accept the explanati .....

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d from the assessee and duly shown in their respective return, the payment of interest cannot be treated as income of the assessee and hence, addition made on this aspect cannot be sustained. In spite of this clear submission, Ld. CIT (A) failed to deal with this aspect in his order while dealing with ground no. 3. In all fairness Ld. CIT (A) should have rejected this contention of the assessee only after considering the same and by assigning the cogent reasons. Though the Ld. CIT (A) recorded a .....

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t it is a fit case to restore the ground to the file of the AO for verification of the facts pleaded by the assessee and to give a fresh finding. We, therefore, remand this ground to the file of the AO to verify whether the recipients of the interest amount have paid the advance tax and self assessment tax in respect of this particular interest amount by giving an opportunity to the assessee of being heard. - Disallowance towards 10% of the total expenses on the ground that the same is attr .....

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017 - SHRI G.D. AGRAWAL, HON BLE PRESIDENT AND SHRI K. NARSIMHA CHARY, JUDICIAL MEMBER For The Assessee : Sh. K. Sampath, Adv. For The Revenue : Sh. Amit Jain, Sr. DR ORDER PER SHRI K.N. CHARY, J.M. Aggrieved by the order dated 13/03/2013 in appeal no. 695/284/2010-11/Noida relevant to the assessment year 2008- 09 passed by the Ld. Commissioner of Income Tax (Appeals), Noida, U.P. (hereinafter for short referred to as the Ld. CIT(A) ), assessee preferred this appeal on the following grounds: 1. .....

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in sustaining the addition of ₹ 2,23,279/- as interest paid on unsecured loans and treated it as Income of the assessee which ought not to have been treated it as Income of the assessee. 4. That the Ld. Commissioner of Income Tax (Appeal) had erred in law as well as on facts of the case in sustaining the addition of ₹ 1,82,505/- being unexplained entries in Bank A/c, addition which ought not to have been sustained by the Ld. Commissioner of Income Tax (Appeal). 5. That the Ld. Commi .....

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and during scrutiny AO made addition on four counts, namely ₹ 1,00,000/- and ₹ 1,82,505/- disallowance u/s 68, ₹ 2,23,279/- disallowance u/s 40(a)(ia) and ₹ 7,831/- disallowance u/s 37(1). Appeal preferred to the Ld. CIT (A) was dismissed by way of the impugned order. Hence, the assessee is before us in this appeal. Ground no. 1 is general in nature and does not require any specific adjudication. 3. In so far as ground nos. 2 & 4 are concerned, AO observed that there .....

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d that the alleged lenders were petty workers and two of them were the employees of the assessee. Their earnings are between ₹ 1,500/- and ₹ 5,000/- per month and hence, the AO found that their lending the amount was doubtful. In respect of sum of ₹ 1,82,505/- appearing in the bank account, assessee stated that a sum of ₹ 38,085/- was the maturity amount of pigmy saving account opened on the name of his daughter and ₹ 27,500/- was the compensation from Insurance Com .....

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lakh but only on suspicion as to their financial capacity the addition was made without pointing out any specific discrepancy. According to the Ld. AR, should there be any doubt, AO should have examined the matter a little deeper and discarded the evidence furnished by the assessee by recording reasons, but without assigning any cogent reasons the AO disbelieved the affidavits of the parties. According to him there is nothing on record to discard the sworn statement of the lenders. Ld. DR submit .....

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acity of the lenders was weak with their earning capacity of ₹ 1,500/- to ₹ 4,500/- per month, the AO should have examined the issue by questioning them to know the source of the amounts for extending the loan to the assessee, instead of rejecting the sworn statements without scrutiny. No reasons are assigned by the AO for discarding the sworn statements and it is not known where from the AO gathered the information relating to the financial capacity of these persons. For this reason .....

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ance Company is concerned the assessee could have produced the relevant documents. However, we cannot expect any such evidence in respect of ₹ 38,085/- and the pigmy savings of the daughter of the assessee cannot be termed as income of the daughter so as to club such income with the income of the assessee. Such savings of the daughter could obviously be out of the amounts provided by the assessee. We, therefore, find it just and reasonable to accept the explanation of the assessee in respe .....

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nterest on such loans, the assessee was required to deduct tax of such interest payments, therefore, for non deduction of TDS the interest amount of ₹ 2,23,279/- on unsecured loans was disallowed. Ld. CIT (A) records a finding on this aspect that the provisions of Section 40(a)(ia) are squarely applicable to the assessee s case since the total sales/gross receipts/turnover from the business/profession carried out by the assessee, exceeds the monetary limit specified u/s 44AB during the fin .....

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able, thereby not causing any loss to the Revenue and the Revenue is permitted to levy interest u/s 201(1A) even in a case where the person liable to tax has paid tax on due date, as such, if the interest expenses is disallowed it would cause undue benefit to the Revenue. There was a clear assertion by the assessee before the Ld. CIT (A) that since the deductee-assessee had paid due taxes in time on the interest income received from the assessee and duly shown in their respective return, the pay .....

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