Merely passage of time cannot treat unsecured loan no longer payable and it can not invoked sec 41(1)

Last updated: 03 January 2012

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
“(i) On the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred in law in deleting the addition of Rs. 13,80,000/- made by the Assessing Officer on account of unsecured loans by accepting unsecured loan as genuine. The decision of the Ld. Commissioner of Income Tax (Appeals) is not acceptable as the need for raising the loan has not been investigated into. The Ld. Commissioner of Income Tax (Appeals) has not considered the fact that all the parties were related to assessee and not interest was paid to them. Further the Ld. Commissioner of Income Tax (Appeals) has not discussed the issue of raising the loan when the company has turnover of Rs. 3,62,47,198/- and was always in a position to repay the loan. Hence, the Ld. Commissioner of Income Tax (Appeals) has erred in principle by treating these loans as genuine only because it were accepted in past years also. (ii) On the facts and in the circumstances of the case, as the Ld. Commissioner of Income Tax (Appeals) has erred in law by restricting the sale of scrap to Rs. 5,000/-. The order of the Ld. Commissioner of Income Tax (Appeals) is not acceptable since the assessee is following mercantile system of accounting the values are to be reflected in books and value of scrap is genuine at the rate of 5% as compared to 2% calculated by the Ld. Commissioner of Income Tax (Appeals).

Citation :
ACIT, CIRCLE-1,MUZAFFARNAGAR (Appellant)Vs. M/S AFGAN CANE CRUSHER,VILLAGE AND POST – BUTRADA, SHAMLI, MUZAFFARNAGAR (PAN / GIR NO. AAACFA8812G) (Respondent )

Daily Limit Reached