Non-Coverage of suspicious loan transaction in the exception’s clause of CBDT circular

Last updated: 18 January 2021

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This Income Tax Appellate Tribunal ruling concerns the non-coverage of a suspicious loan transaction within the exception clause of a CBDT circular. The Revenue appealed the deletion of an addition of Rs. 90,00,000/- for a loan and Rs. 1,18,330/- for interest, which the Assessing Officer had deemed bogus. The loans were allegedly provided by companies that had themselves procured funds from paper companies. The Tribunal reviewed the case to determine if the deletion by the CIT(A) was justified.

Court :
ITAT Indore

Brief :
This appeal by the Revenue is directed against the order of ld. Commissioner of Income Tax (Appeals)(in short ‘Ld. CIT(A)-II, Indore dated 21.08.2019 pertaining to assessment year 2010-11. The assessee has raised following grounds of appeal:

Citation :
ITA No.931/Ind/2019

IN THE INCOME TAX APPELLATE TRIBUNAL
INDORE BENCH, INDORE

BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER
AND
SHRI MANISH BORAD, ACCOUNTANT MEMBER

ITA No.931/Ind/2019
Assessment Year:2010-11

DCIT-3(1)
Indore
(Revenue)
P.A. No.ABZPD1724G

Vs.
Shri Manoj Daga,
Indore
(Respondent )

Revenue by Shri Ashish Porwal, Sr. DR
Respondent by Shri S.N. Agrawal, CA

Date of Hearing: 09.11.2020
Date of Pronouncement: 08.01.2021

O R D E R

PER KUL BHARAT, J.M:

This appeal by the Revenue is directed against the order of ld. Commissioner of Income Tax (Appeals)(in short ‘Ld. CIT(A)-II, Indore dated 21.08.2019 pertaining to assessment year 2010-11. The assessee has raised following grounds of appeal:

“1. Whether on the facts and in the circumstances of the case,the Ld. CIT(A) was justified in deleting the addition ofRs.90,00,000/- on account of bogus incurred loan u/s 68 and Rs.1,18,330/- on account of interest paid thereon as bogus loanare received from M/s. Purvi finvest Ltd., M/s. East West Finvest Ltd. and M/s. Trimurti Finvest Ltd, who have procuredbogus share application money/premium from the papercompanies of Kolkata and thereafter advances loan to theassessee and also many persons/entry/companies as per enquiries carried out through investigation Wing Kolkata.

2. Whether on the facts and in the circumstances of the case, The Ld. CIT(A) was justified in deleting the additions of Rs.90,00,000/- + interest of Rs.1,18,330/- inspite of specific findings of the Assessing Officer in the assessment order.

3. The appellant craves leave to add to or deduct from or otherwise amend the above grounds of appeal.”

To know more in details find the attachment file

FAQ :

The appeal concerned whether a suspicious loan transaction, deemed bogus by the Assessing Officer, was covered by the exception clause of a CBDT circular.

The Assessing Officer added back Rs. 90,00,000/- for the loan and Rs. 1,18,330/- for interest paid on it.

The loans were allegedly provided by M/s. Purvi Finvest Ltd., M/s. East West Finvest Ltd., and M/s. Trimurti Finvest Ltd.

The lending companies had reportedly procured funds from paper companies in Kolkata, which were then advanced as loans.

The CIT(A) deleted the addition made by the Assessing Officer regarding the bogus loan and interest.