AO Misconstrued Directions given by PCIT in Revisionary Order regarding Payment of Loans: ITAT directs re adjudication [Read Order]

The Kolkata bench of Income Tax Appellate Tribunal (ITAT) directed readjudication on finding that the assessing officer misconstrued the directions given by the Principle Commissioner of Income Tax (PCIT) in revisionary order regarding the payments of loans .

The Assessee Rajendra Kumar Mishra  had filed its return on 22.09.2014 reporting a total income of Rs.17,06,820/.In the course of assessment proceedings, AO observed from the books of account that assessee had received as well as repaid certain unsecured loans during the year under consideration in cash.

After verifying the documents the AO concluded that the total amount of Rs.2,67,000/- (Rs.1,47,000 + Rs.1,20,000/-) on account of unsecured loan taken and repaid in cash in excess of Rs.20,000/- is disallowed u/s. 269SS & 269T of the Act. He thus, added this amount to the total income of the assessee while concluding the assessment.

Subsequently, revisionary proceedings were invoked under Section 263 by PCIT, Kolkata wherein it was observed that the addition/disallowance made under Section  269SS and 269T by the AO is not in accordance with the said provisions.

While giving effect to the said revisionary order, assessment proceedings were initiated by the AO wherein AO observed that the assessee had taken an unsecured loan of Rs.32,99,000/- recorded in his books of account, which in absence of any verifiable documents were held to be the own money of the assessee. He thus made an addition of Rs.32,99,000/- under Section 68 of the Income Tax  Act.

After verifying teh submission if the assessee submission AO noticed that the deduction has been claimed against the payments made during the previous year relevant to AY 2011- 12 and

Aggrieved by the order the assessee filed an appeal before the CIT(A) who confirmed the addition . Therefore  the assessee filed another appeal before the tribunal.

Rajesh Kumar Mishra, the counsel for assessee   submitted that  AO has digressed from the directions given by the PCIT in the revisionary order wherein the issue was only in respect of loans of Rs.2,67,000/- taken and repaid in cash for which the treatment given by the  AO in the assessment made under Section 143(3)of Income Tax Act was not in accordance with the provisions of section 269SS and 269T of the Income Tax Act.

Therefore the AO has misconstrued the directions and has gone ahead in making enquiries on the entire amount of unsecured loans of Rs.32,99,000/- reported by the assessee in his tax audit report and audited financial statement. Mahita Nair, Counsel for Revenue argued that the assessee has failed to make any submissions both before the AO and the  CIT(A) which has led to the said addition. 

Rakesh Kumar Das,counsel for revenue submitted that the assessee has failed to make any submissions both before the AO and the  CIT(A) which has led to the said addition. 

After reviewing the facts the ITAT bench of Narender Kumar Choudhry, (Judicial Member) and Padmavathy S (Accountant Member) directed readjudication on finding that the assessing officer misconstrued the directions given by the Principle Commissioner of Income Tax (PCIT) in revisionary order regarding the payments of loans .

To Read the full text of the Order CLICK HERE

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