Upendra Chinubhai Shah Vs ACIT (ITAT Ahmedabad)
Disallowance of interest expense u/s. 69C needs re-verification hence matter send back: ITAT Ahmedabad
ITAT Ahmedabad held that disallowance of interest expense by treating the same as unexplained expenditure under section 69C of the Income Tax Act needs re-verification. Accordingly, matter send back to the file of jurisdictional AO.
Facts- The assessee is an individual deriving income from Salary, house property, capital gain, business as well as other sources. The return of the assessee was taken for scrutiny assessment. AO issued a notice dated 30.11.2019 to show cause as to why the interest expenses of Rs.10,79,531/- should not be treated as unexplained expenditure u/s. 69C of the Act being interest expenditure on unexplained cash credit as per Section 68 of the Act.
Assessee submitted for the earlier Asst. Year 2016-17 vide order dated 21-08-2019, CIT(A) treated the unsecured loan as genuine and thereby deleted the disallowance of interest expenses of Rs.8,29,884/-. Since there is no loan taken during this financial year the proposed disallowance of interest amount of Rs.10,79,531/- does not arise. Therefore requested to drop the addition. However the above explanation was not accepted by the AO, since the Revenue is in appeal against the Ld. CIT(A) order, the issue has not reached finality, the unsecured loan taken in earlier years cannot be considered as genuine thereby confirmed the sum of Rs.10,79,531/- as unexplained expenditure u/s. 69C of the Act.
