The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) deleted the disallowance of Rs. 116 crore as Commissioner of Income Tax (Appeals) failed to prove the non-genuineness of records pertaining to the unsecured loan.
The fact in brief was that the return of income declaring total income of Rs.85, 32, 38,690/- was filed on 30.09.2018. The case was subject to scrutiny assessment and notice u/s 143(2) of the Act was issued on 08.05.2019. A search and seizure action u/s 132 of the Act was carried out on the business and residential premises of the Mhatre Group of cases including the assessee on 20.09.2017 M/s J.M Mhatre Infra Pvt. Ltd.
The assessing officer stated that during the search action conducted in the case of the assessee company it was found that balance in respect of sundry creditors were transferred to Alka Security Ltd, Alka Commodity Ltd., AIDOS Trade Limited and Mahesh Kothari Share & Stock Broker Pvt. Ltd. which was shown under the head ‘unsecured loan’.
Further stated that the similar issue has been discussed in the assessment order for the A.Y. 2015-16 to 2016-17. The assessing officer stated that amount booked by the assessee in respect of the aforesaid persons in assessment year 2015-16 and assessment year 2016-17 has been added back to the total income of the assessee company in those years treating it to be bogus in nature being only in the form of accommodation entries
Therefore, the AO treated the amount outstanding in the account of the aforesaid parties transferred by the assessee company to Alka Security Ltd, Alka Commodity Ltd., AIDOS Trade Limited and Mahesh Kothari Share & Stock Broker Pvt. Ltd. shown under the head unsecured loan as accommodation entries. Accordingly, interest amount of Rs.162, 94,076/- debited by the assessee company was disallowed and added to the total income of the assessee company
Mr. Rajiv Khandelwal representing the assessee submitted that the assessee has filed a ledger account of the above parties evidencing payment of interest and loan amount through account payee cheques along with bank statement during the assessment proceedings. e ld. Counsel also submitted that one of the lenders namely Alka Commodities Ltd. also approached NCLT for recovery of loan amount and NCLT has passed an order dated 09.07.2021.
Further referred the copy of agreement made with the aforesaid five parties placed in the paper book evidencing payment made by the such parties to the assessee, ledger account of the lenders dues settlement agreement dated 30.04.2018, petition filed by the Alka Commodity Ltd before the NCLT and the order passed by the NCLT Mumbai on 09.07.2021 etc.
The AO has not brought any relevant material on record to controvert and disproved the evidence and claim of interest expenditure incurred by the assesse in respect of unsecured loan amount. Therefore, The two member bench of the tribunal comprising Narendra Kumar Chaudhary ( Judicial member) and Amarjith Singh ( Accountant member) consider that decision of CIT(A) in sustaining the disallowance of interest payment made by the assessing officer purely on presumption basis without disproving the relevant supporting evidences brought on record by the assessee is not justified. Therefore, this ground of appeal of the assessee was allowed. Accordingly, the appeal of the assessee was allowed.
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