1. The present appeal has been preferred by the Revenue against the order of the Commissioner of Income Tax (Appeals) Central-III, Kolkata [hereinafter referred to as ld. ‘CIT(A)’] passed u/s 250 of the Income Tax Act, 1961 (hereinafter the ‘Act’) dated 14.08.2014 for the AY 2001-02.

2. The Revenue in this appeal has taken the following grounds of appeal:

“(i) That on the facts and in the circumstances of the case Ld. CIT(A) has erred in deleting the addition on unsecured loan as unexplained cash credit u/s 68, partially by Rs.1,23,68,883/-.

(ii) That on the facts and in the circumstances of the case Ld. CIT(A) erred in disallowing the interest @ 18% P.a. by accepting pro-rata basis.

(iii) That on the facts and in the circumstances of the case Ld. CIT(A) has erred in deleting the entire disallowance of business loss of Rs.5,00,00,000/- when the Ld. CIT(A) was well aware about the facts of the case that the assessee failed to submit any Books of Accounts and documents. Without Books of Accounts and documents the LD. CIT(A) erred in allowing total business loss as claimed by the assessee.

(iv) The Ld. CIT(A) erred in restricting the disallowance made u/s 14A of the interest expenditure to Rs. 15,41,200/- on the basis of calculation given by the assessee.

(v) That the petitioner craves leave to add, amend and withdraw any ground of appeal at the time of hearing.”

3. Before proceeding to adjudicate the grounds taken in this appeal, it is pertinent to mention here that this Tribunal vide order dated 01.11.2019 has noted that page no. 2 of the assessment order was missing in the file. The Department was asked to supply the copy of the complete assessment order. However, the Ld. D/R vide letter dated 06.06.2022 has submitted that the issue was highlighted to the concerned authorities where from the concerned Assessing Officer has informed that the complete set of the assessment record for AY 2001-02 in the case of the assessee was not available in his office. It has been further stated that even the Ld. A/R in this case has stated that even the assessee does not have the complete assessment order in his possession. In view of this, we proceed to adjudicate the present appeal with the available records.

Ground No. 1:

4. During the assessment proceedings, Ld. AO noticed that the assessee had taken unsecured loan of Rs. 50,92,49,136/-. On being asked to explain the aforesaid loan transaction, the Ld. A/R showed his inability to produce the books of account and other details since the office of the assessee was under police seal. The assessee was declared as the defaulter by the Calcutta Stock Exchange. Since the assessee could not furnish the required details, the Ld. AO proceeded to frame the assessment u/s 144 of the on the basis of information available on record.

4.1. The Ld. AO, from the available record, found that the assessee during the year had taken fresh loan to the extent of Rs. 4,46,42,611/- and since the assessee could not verify the aforesaid loan transactions, therefore, the Ld. AO added the aforesaid loan amount as unexplained cash credit u/s 68 of the.

5. Being aggrieved by the above order of the Ld. AO, the assessee preferred appeal before Ld. CIT(A). During the appellate proceedings before the Ld. CIT(A), Ld. A/R of the assessee furnished the details of some of the loan creditors giving their names, addresses and PAN numbers etc. It was also submitted that the loan creditors were not cooperating in giving the confirmation etc. due to the fact that the police case was registered against the assessee. On the request of the assessee, the Ld. CIT(A) called for the remand report from Ld. AO in respect of the aforesaid loan credits. The Ld. AO issued notices u/s 133(6) of the to all the parties whose addresses, PAN etc. were furnished by the assessee. Notices could be served on a few of them and further, replies were received also from a few of them. In some cases, the assessee could not furnish the names and addresses of the parties, in some cases, no replies were received from the concerned parties and in some cases, there was a difference of the confirmed amount as against the loan amount declared by the assessee. In some cases, the concerned parties confirmed the loan transaction and the amount of loan also tallied. The Ld. CIT(A) prepared a chart in this respect of all the loan confirmations, which for the sake of ready reference is reproduced as under:

5.1. In view of the above chart, the Ld. CIT(A) deleted the addition in cases where the concerned parties had confirmed the transaction and the loan amount also matched. In other cases where there was a difference of the amount confirmed by the concerned parties as against the loan amount declared by the assessee, Ld. CIT(A) added the difference. In case where there was no reply or notice could not be issued for want of address etc., the Ld. CIT(A) confirmed the addition. After reconciliation of the entire figures, out of the total loan amount of Rs. 4,46,42,611/-, the Ld. CIT(A) confirmed the addition of Rs. 3,22,73,782/- and deleted the addition of the remaining amount as the same being confirmed by the concerned parties in the independent inquiries conducted by the Ld. AO by way of issuing summons u/s 133(6) of the. It is pertinent to note here, in some cases Ld. A/R had furnished the PAN, address of the parties at a later stage in the rejoinder to the remand report which was rejected by the Ld. CIT(A). However, the assessee has not filed any appeal against the said order of the Ld. CIT(A). The Ld. D/R could not point out any defect or error in the order of the Ld. CIT(A) warranting our interference in this respect. Therefore, the order of the Ld. CIT(A) is upheld on this issue.

Ground No. 2:

6. Vide ground no. 2, the Revenue has agitated the action of the Ld. CIT(A) in deleting the disallowance out of interest expenditure, made by the Ld. AO on the aforesaid loan amount. The Ld. CIT(A) has deleted the proportionate interest up to the extent the addition on account of the loan amount has been deleted. The Ld. CIT(A) has recomputed the interest on the addition confirmed at Rs. 3,22,73,728/- in respect of loan amount and accordingly restricted addition on account of interest to Rs. 5,69,693/-. There is no infirmity in the order of Ld. CIT(A) in this respect also.

Ground No. 3:

7. Vide ground no. 3, the Revenue has agitated the action of the Ld. CIT(A) in deleting the ad hoc disallowance made by the Ld. AO out of the business loss claim to by the assessee. Ld. CIT(A) in the impugned order has observed that the Ld. AO had made the aforesaid ad hoc disallowance only on estimation basis without giving any reasoning in this respect. The Ld. CIT(A) has further noted that the disallowance has been made just on mere presumption only that there was neither material nor reason nor rational for the Ld. AO to make the aforesaid disallowance. He further noted that even the accounts of the assessee have been audited as required u/s 44AB of the. He, therefore, deleted the disallowance so made by the Ld. AO. After hearing the Ld. representative of both the parties, we do not find any reason to interfere into the order of the Ld. CIT(A).

Ground No. 4:

8. Vide ground no. 4, the Revenue is aggrieved by the action of Ld. CIT(A) restricting the disallowance made u/s 14A of the of interest expenditure to Rs. 15,41,200/- as against the disallowance of Rs. 1,06,03,866/- made by the Ld. AO. In this case, the Ld. AO had made the disallowance of entire interest expenditure whereas the Ld. CIT(A) has restricted the disallowance as per the working given by the assessee as per Rule 8D of the Income Tax Rules, 1962 for computing the disallowance u/s 14A of the. In view of this, we do not find any infirmity in the order of the Ld. CIT(A) on this issue also.

9. In view of the above discussion, we do not find any merit in the present appeal of the Revenue and the same is accordingly dismissed.

10. In the result, the appeal of the Revenue is, hereby, dismissed.