DCIT, Circle-II, Moradabad vs Shri Rakesh Kumar, C/o-M/s. Rakesh Oil Co., Jawahar Road, Chandausi.

Parties Involved

Facts Summary

The assessee filed his return of income on 27.09.2012 through e-mode, declaring total income of INR 14,29,470/-. The case was selected for scrutiny assessment. The Assessing Officer (“AO”) issued statutory notices to the assessee. In response thereto, Ld. Authorized Representative (“AR”) of the assessee attended the proceedings. The assessee is engaged in the business of petrol pump, sale of MS, HSD, lubricants and running tanker. During the course of assessment proceedings, the AO noticed that there were unsecured loan liability. Accordingly, the assessee was called upon to explain the unsecured liability. The AO on the basis that the assessee failed to establish creditworthiness and genuineness of the transaction, made addition by invoking the provision of section 68 of the Income Tax Act, 1961 (“the Act”). Thereby, the AO added unsecured loan of INR 37,25,628/- and the interest expenditure thereon of INR 7,41,810/-. The AO further on treating the credit entries in different bank accounts of the assessee, made addition of INR 3,25,30,988.90/-. Further, he made disallowance out of tanker plying business of INR 3,88,991/- and adhoc expenses of INR 37,270/- respectively. Thus, he assessed the total income of the assessee at INR 3,89,04,160/-. Aggrieved against this, the assessee preferred appeal before Ld.CIT(A), who after considering the submissions, partly allowed the appeal. Thereby, he deleted the addition related to unsecured loan and interest thereon, credit entries in t…

Legal Issues

• 1. Deletion of addition of Rs. 44,67,438/- made on account of unsecured loan are bogus cash credits of Rs. 37,25,628/- & added back as unexplained cash credit u/s 68 of the I.T. Act, 1961 and disallowance of alleged interest paid to loan depositors of Rs. 7,41,810/-.
• 2. Deletion of addition of Rs. 3,25,30,988/- made on account of unexplained and unaccounted credit entries in assessee's various bank accounts.
• 3. Deletion of addition of Rs. 3,88,991/- made on account of disallowance out of tanker expenses invoking the provision of 44AE.
• 4. Order of the Ld. Commissioner of Income Tax (Appeal), Moradabad is erroneous in law and on facts may be cancelled and the order of the Assessing Officer may be restored.

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

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