ITA No. 433/KOL/2024

Parties Involved

Facts Summary

Brief facts of the case are that the assessee is a partnership firm engaged in the saree business. E-return for A.Y. 2018-19, furnished on 30th October, 2018, declaring total income of ₹12,64,310/-. Case of the assessee selected for complete scrutiny under Computer Assisted Scrutiny Selection (CASS) for two reasons namely (i) unsecured loans and (ii) transactions with company, whose registration has been cancelled by Ministry of Corporate Affairs (MCA) followed by notices u/s 143(2) and 142(1) of the Act which were validly served upon the assessee. During the course of assessment proceedings, the ld. AO observed that the assessee has taken huge unsecured loan from various parties. Assessee furnished necessary details for each of the party with their address, opening balances, loans received/ paid during the year, interest paid and closing balances. The ld. AO issued notices u/s 133(6) of the Act to the parties after examining of the records regarding unsecured loans shown by the assessee at ₹7,32,58,026/- and made addition u/s 68 of the Act at ₹3,23,00,000/- for alleged unsecured cash credit and also disallowed the interest amount of ₹42,19,262/- paid to the parties for which additions u/s 68 of the Act has been made and income assessed at ₹3,77,83,570/-. Aggrieved assessee preferred an appeal before the ld. CIT (A) and partly succeeded as ld. CIT (A) deleted the addition of ₹1,96,50,000/- and sustained the remaining amount of unexplained unsecured loan at ₹1,26,50,000/- alon…

Legal Issues

• 1. Whether the ld. CIT (A) erred to give a relief of ₹1,96,50,000/- despite of the fact the Assessing Officer has added back the entire unsecured loan?
• 2. Whether the ld. CIT (A) erred to give a relief of ₹22,99,882/- despite of the fact the Assessing Officer has added back the entire interest component of ₹42,19,262/- on the unsecured loan?

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

Precedents Relied Upon

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