AI Structured Summary
Not yet generated for this judgment
Judgment
PER AMITABH SHUKLA, AM,
This appeal filed by the Revenue is against order dated 29.04.2025 of the Learned Commissioner of Income Tax(Appeals)/National Faceless Appeal Centre, New Delhi, [hereinafter referred to as ‘ld. CIT(A)] arising out of assessment order dated 07.12.2019 passed u/s 147 r.w.s. 144 of the Income Tax Act, 1961 pertaining to Assessment Year 2012-13. The word ‘Act’ herein this order would mean Income Tax Act, 1961.
The Revenue has raised following grounds of appeals:-
1.On the facts and circumstances of the case, the Ld, CIT(A) has erred in deleting the addition made by making disallowance of interest expenses amounting to Rs. 52,68,017/-made by the AO in the light of the fact that M/s Balaji Precision Components did not have sufficinet liquid funds for making interest free advance and during the assessment proceedings, assessee has failed to provide any crucial details for non-taxability of interest free loan.
2.On the facts and circumstances of the case, the Ld, CIT(A) has erred in deleting the addition of Rs. 51747245/- ignoring the fact that Investigation wing reported that Company i.e. M/s. Porter Buildcon Pvt. Ltd. is a paper company and as per enquiry made about the entity M/s. Porter Buildcon Pvt. Ltd., revealed no such entity existed at the given address.
Heard rival parties in the light of material available on records. The brief factual matrix of the case has been vividly recorded by the ld. CIT(A) on page-2 of his order reproduced hereunder:-
“……..facts of the case are that the assessee ‘Shri Jagdish Kumar’ (hereinafter referred to as ‘Appellant’) is an individual and was running a proprietorship concern under the name and style of “M/s Balaji Precision Components” which was engaged in manufacturing and exporting of automobile parts such as Forged and Machined Forging, Anti Vibration Equipment etc. Return of income for the year under consideration was filed on 15/09/2012 declaring income of Rs. 8,59,23,304/- under the head of business, house property and other sources income and was processed u/s 143(1) of the Act by the CPC. On the basis of the information received from the Investigation Unit-7, Delhi, it was stated that the appellant was in receipt of the advance money paid to Shri Kiran Vohra amounting to Rs. 25,00,000/- which was originally paid on account of purchasing of an immovable property and a paper company namely M/s Porter Buildcon Pvt. Ltd. appeared in the books of accounts as a loan creditor. To verify the said transactions, the AO proceeded with the reopening of the case of the appellant u/s 147 of the Act and after obtaining necessary administrative approvals, notice u/s 148 of the Act was issued on 31/03/2019. The objections filed in reopening of the proceedings were stated to have been disposed off by the AO on 04/12/2019 and notices u/s 142(1) of the Act were issued time to time calling for information, however, the appellant neither filed his return of income in response to the 148 notice nor any explanations in response to other notices. In view of the lack of the explanations, the AO resorted to the best judgment assessment on the basis of the evidences available on record and made additions of Rs. 52,68,017/- and Rs. 5,17,47,245/- on account of disallowance of interest expenses and unexplained un-secured loan to the income originally declared of Rs. 8,58,23,304/-. Aggrieved by the aforesaid additions/ disallowances made by the AO…..”
Contesting the above additions, the assessee raised before the ld. CIT(A), grounds of appeal both on grounds of legal challenge as well as merits of the additions. We have noted from para-7 of the appellate order that the ld. CIT(A) gave relief to the assessee both on legal grounds as well as merits of the addition. The same is reproduced hereunder:-
“7.Thus, the impugned additions made of Rs. 52,68,0171- and Rs.5,11,47,2451on account of disallowance of interest expenses and unexplained unsecured loans are deleted both on the legal issues and on merits as well. Accordingly, ground no. '1 and its sub grounds (a) to (h) are treated as allowed. However, the AO is directed to recompute the income of the appellant considering the income assessed originally u/s 143(3) of the Act dated 2310212015 instead of the income declared in the return of income while giving appeal effect to this order…..”
At the outset, the ld. Counsel for the assessee argued that the appeal of the Revenue is not maintainable since it has not challenged the decision of the ld. CIT(A) qua legal grounds taken before him. It was submitted that as the assessment stands annulled on legal grounds, the assessment order per se does not exist and hence merits of addition contested by the Revenue do not survive. The ld. DR submitted that its appeal may be decided on its merits. We have found sufficient force in the argument of the ld. Counsel that when the assessment stands annulled on legal grounds, the merits of the addition also seized to exist. Accordingly, we dismiss the appeal of the Revenue.
In the result, the appeal of the Revenue is dismissed.