Intouch Mobicare Pvt. Ltd. vs DCIT

PER MANISH AGARWAL, AM :

The present appeal is filed by assessee against the order dated 18.01.2018 by Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“Ld. CIT(A)”] in Appeal No. NFAC/2018-19/10342133 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 20.03.2024 passed u/s 147 r.w.s. 144 r.w.s. 144B of the Act pertaining to Assessment Year 2019-20.

Brief facts of the case are that the assessee company has filed its return on 20.09.19 declaring total income at INR 2,52,07,390/-. The case of the assessee was re-opened after passing the order u/s 148A(d) of the Act dated 23.03.2023 and after obtaining the approval from the Ld. PCIT. Notice u/s 148 was issued on the same date i.e. on 23.03.2023, than the AO proceeded to pass the reassessment order wherein the AO alleged that assessee has received loan from M/s. Odisha Finlease P. Ltd. of INR 3.00 crores and during the previous year relevant to Assessment Year under appeal, assessee has repaid a sum of INR 1.5 crores alongwith interest of INR 22.50 Lakhs. The AO observed that during the year under appeal, a search & seizure action was conducted u/s 132 of the Act in the case of M/s. KK Spun India Ltd. and during the course of post search proceedings, statements of one Shri Aditya Jain were recorded on oath wherein he has admitted that he was providing accommodation entries to various entities through various dummy companies and one of such beneficiaries company is M/s. Odisha Finlease P. Ltd. from whom assessee had received loan of INR 3.00 crores. Thereafter, the AO referred the financials and other particulars of the lender company and hold that lender company is merely a dummy company, managed and controlled by Shri Aditya Jain and, therefore, the loan taken from the said company is bogus and accordingly, interest paid at INR 22.50 Lakhs was disallowed.

In first appeal, Ld. CIT(A) confirmed the findings of the AO that since the loan taken from M/s. Odisha Finlease P. Ltd. has been held as bogus in AY 2018-19 and therefore, the interest paid in this year is also bogus.

Aggrieved by the order of Ld.CIT(A), assessee is in appeal before the Tribunal by taking various Grounds of appeal as mentioned in the appeal memo.

Grounds of appeal Nos. 2, 4 & 5 are related to the confirmation of the disallowance made by the AO of INR 22.50 lacs out of interest expenses u/s 68 of the Act, thus they are taken together for consideration.

Heard the contentions of both parties at length and perused the material available on record. At the outset, it is observed that the Co-ordinate Bench of the Tribunal in ITA No.8254/Del/2025 for AY 2018-19 vide order dated 10.03.2026 in assessee’s own case, has quashed the reassessment proceedings initiated u/s 148 of the Act for AY 2018-19 wherein loan taken from M/s Odisha Finlease P. Ltd. was held as bogus. It is further observed that in AY 2018-19, payment of interest of INR 6.00 Lakhs was allowed as genuine expenditure though the loan taken was alleged as bogus. Moreover, in the year under appeal, INR 1.50 crores was repaid and in subsequent assessment year also, remaining 1.50 crores were repaid by the assessee however, on both the occasions, the AO has not doubted the repayment of loan in the order passed u/s 143(3) of the Act, though in AY 2018-19 such loan was held as bogus.

Considering the overall discussions made herein above and the entirety of the facts and keeping in mind that the reassessment order in which the AO has held the loan taken from M/s Odisha Finlease Pvt. Ltd. as bogus has already been quashed by the Co-ordinate Bench though no findings were given in the merits of the loan taken however, the findings that the loan taken was bogus were not remained in existence. Thus, there is no reason to disallow the interest paid on such loan. Further, in AY 2018-19 when the AO has held the loan as bogus, he himself has allowed the payment of interest of INR 6.00 lacs. Accordingly, we allow the interest paid by the assessee as business expenditure and deleted the disallowance made by the AO. Accordingly, Ground of appeal Nos. 2, 4 & 5 raised by the assessee are allowed.

The remaining Grounds of appeal became academic in nature hence, not adjudicated.

In the result, the appeal of the assessee is allowed.