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2025 Supreme(Online)(ITAT) 3054
INCOME TAX APPELLATE TRIBUNAL (AHMEDABAD BENCH)
Siddhartha Nautiiyal, J, Makarand V. Mahadeokar, ACJ
M/s Rudra Petroleum – Appellant
Versus
Commissioner of Income-tax (Appeals), National Faceless Appeal Centre – Respondent
Income Tax Appeal/ITA Nos.353/Ahd/2022 & 354/Ahd/2022
For the Appellants/Petitioners: Kinjal Shah, AR
For the Respondents: Shri Rignesh Das, Sr.DR
The court emphasized verification of claims regarding TDS and unsecured loans, reaffirming principles of income taxation and the necessity of proper documentation under relevant tax provisions.
Headnote:(A) Income-tax Act, 1961 - Sections 40(a)(ia), 43B, 68, and 69 - The appeals were filed against orders of the CIT(A) upholding disallowances on interest payments, VAT liabilities, and unexplained loans. The court held to restore the matters back to AO for verification of claims regarding TDS deduction, VAT liabilities, and the credibility of the unsecured loans as per provisions of sections 40(a)(ia) and 68, along with previous judicial affirmations. (Paras 8.1, 9.1, 11.1)
(B) Appeals - Statistical purposes - Several grounds of appeal relating to various disallowances and additions were retained for further clarifications from the AO, emphasizing the need for substantiated documentation to support claims. (Paras 14.4)
| Table of Content |
|---|
| 1. facts regarding the business and tax assessments of the appellant. (Para 2) |
| 2. arguments regarding disallowances based on tds and the nature of loans. (Para 3 , 4 , 5 , 6 , 9 , 10 , 11) |
| 3. observations focusing on verification of claims and the role of previous case law. (Para 8 , 12 , 14) |
| 4. final judgment allowing appeals for further examination. (Para 15) |
आदेश/ORDER
PER MAKARAND V. MAHADEOKAR, AM:
Both these appeals have been filed by the assessee against the separate orders passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 30/07/2022 & 20/07/2022 for the Assessment Years (AYs) 2014-15 and 2015-16 respectively. Since the assessee is same, for the sake of convenience, both appeals are disposed of by way of this common order.
Facts of the case:
2. The assessee is engaged in the business of trading in petrol, diesel, and oil under the proprietorship concern M/s Rudra Petroleum. Additionally, he is a partner in M/s.Rudra Minerals and M/s Rudra Construction. The assessments for both the Assessment Years were completed under Section 143(3) of the Income-tax Act, 1961 [hereinafter referred to as “the Act”]. Details of the assessment are tabulated below:
| Particulars | A.Y. 2014-15 | A.Y. 2015-16 |
| Date of Filing Original Return | 09.10.2015 | 13.02.2017 |
| Returned Income (Rs.) | 5,76,170/- | 86,870/- |
| Total Additions (Rs.) | 21,19,209/- | 22,31,136/- |
| Final Assessed Income (Rs.) | 27,95,380/- | 23,18,010/- |
| Date & Section of AO's Order | 21.12.2016 Passed u/s 143(3) of the Act | 28.12.2017 Passed u/s 143(3) of the Act |
2.1. For A.Y. 2014-15, the Assessing Officer (AO) disallowed interest payments of Rs.11,500/- made to M/s H J Associates under Section 40 (a)(ia) of the Act for failure to deduct TDS. The AO further disallowed Rs.8,55,000/- of interest expenses paid to related parties due to non-deduction of TDS. The AO also made an addition of Rs.69,709/- under Section 43B of the Act for unpaid VAT liability and Rs.12,83,000/- under Section 68 as unexplained unsecured loans, citing the assessee’s failure to prove the creditworthiness of the lenders. The CIT(A) upheld these disallowances, stating that the assessee had not substantiated compliance with TDS provisions, failed to justify the non-payment of VAT before the due date, and could not establish the financial credibility of the loan creditors.
2.2. For A.Y. 2015-16, the AO added Rs.2,902/- due to an omission in declaring interest income from fixed deposits. A disallowance of Rs. 9,234/- was made under Section 40 (a)(ia) for non-deduction of TDS on interest expenses related to fleet card charges and late payment. The AO also made a substantial addition of Rs. 22,19,000/- under Section 69 , treating the opening balance as unexplained investment due to a lack of documentary evidence. The CIT(A) upheld all these additions, holding that the assessee had not provided sufficient proof to substantiate the source of the opening balance or to justify the non-deduction of TDS.
3. Aggrieved by the orders of CIT(A), the assessee is in appeals before us with following grounds of appeal(s):
In ITA No. 353/Ahd/2022 – A.Y. 2014-15
I. On Disallowance of u/s.40(a)(ia)
1. Your Appellant submits that the CIT(A) has erred in upholding making disallowance of Rs.11,500/- u/s.40(a)(ia) the under Scrutiny Criteria of Limited Scrutiny as per Circular of CBDT.
2. The CIT(A) has erred (both in Law and in fact) confirming the disallowance u/s. 40(a)(ia) paid Rs.11,500/- to M/s. S.J. Associates as Interest. It is submitted that Sec. 40(a)(ia) does not apply on facts of the case and that M/s. S.J. Associates is assessed to Tax and has paid Income-tax on Interest Income and therefore as per provisions of Sec.40(a)(ia) and asked by various judicial authorities the amount without deduction of TDS is not liable to be disallowed.
II. Disallowance of Interest Expenses of Rs.8,55,000/-
a) The CIT(A) has erred in confirming disallowance of Rs.8,55,000/- being interest
