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TMI Blog2020 (10) TMI 423X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Act, 1961 (for short, the Act) is directed against the order dated 22.12.2016 made in ITA.No.2110/Mds/2016 on the file of the Income Tax Appellate Tribunal, Chennai 'A' (SMC) Bench (for brevity, the Tribunal) for the assessment year 2011-12. 3. The assessee filed this appeal by raising the following substantial questions of law : "i. Whether, in the facts and circumstances of the case, the interest expense of the assessee on such moneys borrowed be disallowed under Section 57(iii) of the Income Tax Act, 1961 merely because of the Assessing Officer's claim that the assessee is financially sound ? ii. Whether, in the facts and circumstances of the case, the Assessing Officer's action in disallowing the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loans and other details. Apart from that, the Assessing Officer observed that the financial position and liquidity ratio of the assessee appeared to be sound. Accordingly, the deduction claimed to the extent of Rs. 7,36,579/- was disallowed and the assessment was completed. 6. Aggrieved by the same, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) -2, Chennai-34 [for short, the CIT(A)]. Among other things, the assessee contended that the amounts of loan were received through proper banking channels and from family members, that therefore, the necessity of obtaining the promissory note did not arise, that the persons, from whom monies were borrowed, were assessed to income tax and they filed income tax retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s deduction and in this regard, followed the decision of the Kerala High Court in the case of CIT Vs. Popular Vehicles and Services Ltd. [reported in (2010) 325 ITR 523]. Further, with regard to earlier assessments, the Tribunal held that those assessments were accepted by intimation given under Section 143(1) of the Act and none of them was scrutiny assessment. The assessee is before us by way of this appeal challenging the order passed by the Tribunal. 9. Admittedly, the assessee had given the names of persons, from whom he borrowed money and also stated that the interest paid had been allowed as a deduction from year to year. It may be true that the earlier assessments stood concluded upon intimation being issued under Section 143(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue. The assessee cannot be worse off before the Tribunal in his own appeal. Thus, considering the facts and circumstances of the case and taking note of the nature of business activities done by the assessee, we deem it appropriate to set aside the orders passed by the Assessing Officer, the CIT(A) and the Tribunal and remand the matter to the Assessing Officer for a fresh consideration. 12. Accordingly, the above tax case appeal is allowed, the orders passed by the Assessing Officer, the CIT(A) and the Tribunal are set aside and the matter is remanded to the Assessing Officer for a fresh consideration. Before the Assessing Officer, the assessee shall produce all the relevant details to establish his case. The Assessing Officer shall con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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