A & A Capital Services Pvt Ltd Vs ITO (ITAT Delhi)
In the above case ITAT deleted the amount enhanced by CIT (A) u/s 251 (1) (a) by considering that once the assessment framed had disallowed/ added interest expenditure, the corresponding principal sum could not have been taken as subject matter of enhancement.
Assessment completed section 143(3) disallowing assessee’s interest expenditure of Rs. 5,47,39,150/- unexplained u/s 69C on the ground that assessee failed to plead and prove any satisfactory explanation in respect of the loan amount of Rs. 90.52 crores which was confirmed by the CIT (A). During appellate proceedings CIT (A) exercised its jurisdiction u/s 251 (1) (a) and added the principal loan amount of Rs. 90.52 crores as its own money from undisclosed sources u/s 69A/69B.
Before ITAT it was argued by the assessee that source of payment was never doubted or disputed by the AO. All the details and documents were filed to prove the genuineness of the transactions and the loan was repaid back. revenue that AO himself doubted genuineness/ creditworthiness during the course of assessment hence CIT (A) rightly enhanced the principal loan amount. CIT (A) erred in treating the loan of Rs.90.52 crores u/s 69A/69B when the show cause notice of enhancement was with reference to section 69 and there were neither any investments which were not recorded in the books of account nor is there any such finding by the CIT(A). Assessee never owned any money, bullion, jewellery, or another valuable article, which was not recorded in the books of account of the assessee nor found to have any unrecorded investment in its books of account. Addition made simply on suspicion and surmises without verification from assessment record.
