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TMI Blog2024 (2) TMI 1328X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in deleting the addition made on the account of section 24 of the I.T. Act. 3. Whether on the facts and circumstances of the case and in Law, the Ld.CIT(A) has erred in deleting the addition made on the account of cash deposit under Section 68 of the I.T. Act. 4. Whether on the facts and circumstances of the case and in Law, the Ld.CIT(A) has erred in not providing sufficient time to the assessing officer to provide its comment on the Remand report which is clear violation of Rule 46A of the I.T. Rules, 1962. 5. It is therefore, prayed that the order of the CIT(A) may be directed to afford the reasonable opportunity to the assessing officer to examine the fresh evidence submitted by the assessee and admitted by the appellate authority and thus, the matter may be set aside to the file of the Ld.CIT(A) to afford the reasonable opportunity to the assessing officer to examine the veracity and merits of the fresh evidences submitted by the assessee. 6. The appellant craves to add, modify or alter any grounds during the course of appeal proceedings." 3. Ground No.1 raised by the Revenue, relates to deletion of addition made by the Assessing Officer under section 69 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een filed. This shows that the said above parties are dubious and the transactions as noted above are also suspicious and non-genuine. Since, the transactions were not explained with evidences and circumstances of the case, this amount of Rs. 3,72,10,700 which has been squared off for repaying the unsecured loan of Rs. 3,72,10,700/- was found to be unexplained investment u/s 69 of the Income-tax Act, and therefore assessing officer made the addition. 6. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A), who has deleted the addition made by the Assessing Officer, observing as follows: "Decision: It can be noticed from the assessment order that the assessing officer had called for the details of loans repaid during the relevant previous year in respect of the above 5 loan creditors. As already mentioned above, the assessing officer found that the compliance by the assessee is inadequate and so held the said "repayments" as unexplained investments u/s 69 of the I T Act. The assessing officer in initial part of order stated that the confirmations of the said loans and documents pertaining to their creditworthiness was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , most of the repayment was against the previously availed loan as the opening balance itself is Rs. 82,01,976. As stated above, the assessing officer had not submitted any comments/remarks in spite of a remand report specifically being called for upon the additional evidences submitted by the appellant. Kavita Bansal She is assessed to with ITO ward-2[New], Vapi, Gujarat under PAN: AGKPK2150K. For the relevant AY the loan creditor filed his RoI vide Ack. No.281202020311017 dated 31-10-2017. In the return of income filed by her. She had shown an income from house property and other sources (interest) to the tune of Rs. 8,97,670 apart from share of profits from partnership firms to the tune of Rs. 44,37,061 in the relevant year. She had confirmed the transactions with the appellant and the same are reflected in the bank statements held by her in Cosmos Cooperative Bank and HDFC Bank. As seen from the accounts, the loan transaction between this creditor and the appellant is as follows: It can be noticed that there is an opening balance of Rs. 35,51,736 and a further loan of Rs. 37,00,000 on two occasions. As against the total sum of Rs. 76,86,868 due, the appellant repaid an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 1,95,00,000. A perusal of the above shows that the receipt and repayment of Rs. 80,00,000 and Rs. 16,50,000 on 31.05.2016 & 06.06.2016 respectively were on the same day. This being so, the assessing officer while douting the repayment had added back the closing balance of Rs. 1,95,00,000 while the actual repayment is Rs. 1,53,50,000 i.e., the assessing officer added the closing balance lying in the account while is the amount received by the appellant on 31.03.2017 through HDFC bank of loan creditor to HDFC bank account of appellant. As stated above, the assessing officer had not submitted any comments/remarks in spite of a remand report specifically being called for upon the additional evidences submitted by the appellant. Nawal Bansal HUF He is assessed to with ITO ward-2[New], Vapi, Gujarat under PAN: AAFHN2284L. For the relevant AY the loan creditor filed his RoI vide Ack. No.592592321310318 dated 31-03-2018. He had confirmed the transactions with the appellant and the same are reflected in the bank statements held by him in Cosmos Cooperative Bank. As seen from the accounts, the loan transaction between this creditor and the appellant is as follows: It can be seen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties. As regards (2) i.e., mismatch between clause 23 and clause 31 (C) of the 3CD report, the contention of the appellant is that "particulars of any payment made to persons specified under section 40A(2)(b)" are to be reported under Clause 23. Section 40A deals with "Expenses or payment not deductible in certain circumstances and clause (b) of sub-section 2 of section 40A specified the persons to whom clause (a) of sub-section 2 of section 40A is applicable. Section 40A(2)(a) pertains to expenditure incurred by an assessee. According to the appellant the repayment of loan is not an expenditure incurred and so the same would not be reported in clause 23 BUT instead gets reflected in clause 31 of the 3CD report. In clause 31(c) of CD report, the "particulars of each payment of loan or deposit or any specified advance is an amount exceeding the limit specified in section 269T made during the year" are to be reported while in clause 31(a) "particulars of each loan or deposit in an amount exceeding the limit specified in section 269SS taken or accepted during the previous year are to be reported. From the 3CD report is it noticed that the appellant reported the transactions with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the books' qualify for addition under the said section if assessee fails to offer proper/satisfactory explanation. In the instant case the transactions made by the appellant that are subjected to addition under this section are all reflected in the books of account maintained by him. Nowhere did the assessing officer state that these repayments were made from undisclosed sources. Moreover the assessing officer perused 3CD report and found that that repayments have been disclosed in clause 31(c). Further the repayments cannot be regarded as 'investments' for the reason that investments are assets of the investor which are likely to yield returns and investment as a such can be redeemed to obtain the principal. So, the repayment of loan disclosed in the books of account would not come under the purview of section 69. In similar facts and circumstances, the Hon'ble ITAT Delhi "A" Bench in the case JCIT(OSD) vs. Sarvhit Trust ITA No. 2745/Del/2016held that there is no justification to invoke the provisions of section 69 of the act of repayment of loans taken earlier and the loans were duly recorded in the books of account and repayment was made through banking c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing channel, hence no addition should be made under section 69 of the Act. Therefore, ld Counsel contended that order of ld CIT(A) may be upheld. 10. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We find from the computation of total income filed by Smt. Kavita Bansal along with her return of income (ROI), the interest received from the assessee is declared and the TDS upon is also claimed. As regards the other 4 parties are concerned, it is the claim of the appellant that no interest is paid, which is confirmed by the said parties. According to the assessee the repayment of loan is not an expenditure incurred and so the same would not be reported in clause 23 but instead gets reflected in clause 31 of the 3CD report. In clause 31(c) of CD report, the "particulars of each payment of loan or deposit or any specified advance is an amount exceeding the limit specified in section 269T made during the year" are to be reported while in clause 31(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to interfere with the decision and findings of the Ld.CIT(A) in deleting the addition made by the Assessing Officer. Hence, we dismiss ground No.1 raised by the Revenue. 11. In the result, ground No.1 raised by the Revenue is dismissed. 12. Ground No.2 raised by the Revenue relates to deleting the addition made by Assessing Officer on the account of Section 24 of the Act. 13. Succinct facts qua the issue are that during the assessment proceedings it was observed by the assessing officer from Schedule 13 of the profit and loss account, that a sum of Rs. 51,86,006/- has been claimed under the head 'Interest on DHFL loan', from the details on record and the submissions made it was noted that the assessee has obtained a housing loan on mortgage for Flat No.801, Juhu, Mumbai. Interest has been paid on such loan which has been used for business purposes. Such interest paid on housing loan qualifies for deduction u/s 24 of the Act, against income from house property. However, in the instant case, the assessee has claimed such expenses under business head u/s 37 of the Act. This is further confirmed from the fact that the assessee has shown the said residential property in its fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance of interest finding that the premises has been used as commercial property. The Assessing Officer had noted that the property is a business asset figuring in the block of assets of the depreciation schedule. It is also noted by the Assessing Officer that a loan is availed on it. The Assessing Officer had not disputed that the loan is not used for business purpose. While this is so, the Assessing Officer opined that the interest ought to have been claimed u/s 24 of the Act and not u/s 37 of the Act. Hence, it is not the contention of the Assessing Officer as it appears from the assessment order that the claim is not allowable altogether. Instead, the Assessing Officer holds it allowable under a different Section i.e. u/s 24 instead of section 37 of the Act. While holding so, the Assessing Officer had just disallowed the claim made u/s 37 of the Income Tax Act, but had not allowed it alternately u/s 24 of the Income Tax Act, as opined. 18. The provisions of Section 24 of the Act are different from the provisions of Section 37 of the Act. While section 24 of the Act, permits deduction of interest on loan utilised for the purpose of acquiring the property against the income d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,50,000 HDFC 50200013907 08.12.2016 19,00,000 Since, the assessee did not submit any details, the source and nature of the above cash deposit remained unexplained. The identity and creditworthiness of the persons involved, the genuineness of the transactions can be proved only when the assessee makes its compliances by furnishing evidences in the form of confirmations, bank statements, copies of financials, returns filed and income declared therein. In the instant case, the assessee has not been able to produce any evidence on that account. Therefore, entire cash deposits made during demonetization period of Rs. 34,50,000/- was treated as unexplained credit attracting the provision of section 68 of the Act. The Assessing Officer also noted that a sum of Rs. 34,50,000/- is subjected to application of section 115BBE, on account of unexplained cash deposit. 22. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A), who has deleted the addition made by the Assessing Officer. Aggrieved by the order of ld. CIT(A), the Revenue is in appeal before us. 23. The Learned Commissioner of Income Tax - Departmental Representativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's claim that the cash deposits in question were made out of its duly disclosed business receipts was not to be accepted, then, the Assessing Officer was obligated to have rejected the books of account of the assessee, for the reason, that by not doing so he had on the one hand held the cash deposits to have been sourced out of an unexplained source, while for at the same time by accepting its books of account had accepted it claim that the cash deposits in duly accounted bank accounts were sourced out of the duly disclosed source of the assessee. 26. The ld CIT(A) noted from the assessee`s balance sheet that the bank accounts in question in which the cash deposits were made by the assessee during the demonetization period formed part of its books of account. Considering the aforesaid facts, when the bank accounts in question, viz.(i) A/c. No.038600101557 with Cosmos Bank Ltd.; (ii) A/c. No.25580200001395 with the Bank of Baroda and (iii) A/c. No.50200013907230 with HDFC Bank Ltd are all duly been accounted for by the assessee in its books of account for the year under consideration, therefore, the Assessing Officer by not rejecting the said books of account had clearly accep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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