Payment Of Interest On Cash Loan Falls Within Ambit Of Unexplained Expenditure U/s. 69C Of IT Act, 1961: Calcutta HC

In the matter, the intra court appeal was directed against the order dated May 8, 2023. The appellant had filed the said writ petition challenging the order passed by the first respondent under Section 148A(d) of the Act dated April 7, 2023 and the consequential notice issued under Section 148 of the Act.

While holding that the single judge bench was justified in refusing to entertain the writ petition and leaving it upon to the appellant to agitate all issues in the reopening proceedings for which notice under Section 148 has been issued on April 07, 2023, a bench of Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya observed, “…it cannot be stated that the order passed under clause (d) of Section 148 is a nonspeaking order nor the order to be branded as outcome of non-application of mind. To test the correctness of the order, it is necessary that the disputed question of facts have to be thoroughly analyzed. There are several stake holders in the entire process which requires deeper probe into the matter and such an exercise cannot be done in exercise of writ jurisdiction”.

Senior Advocate Abhrotosh Majumder appeared for the appellant and Advocate Tilak Mitra appeared for the respondent.

In the pertinent matter, the Single Bench by the impugned order had rejected the contention of the appellant that the Assessing Officer has not proceeded merely on the basis of remarks “potential borrowers/lenders” as in the later part of the order the assessing officer has clarified that on verification of the documents, he has found credible evidence of actual borrowings done by the appellant and not “potential” in nature.

The Assessing Officer had held that the appellant assessee has availed cash loan to the tune of Rs. 40,70,00,000/- through finance broker Kaseras, other different lenders and it has also been recorded. Further noted that there was an unexplained expenditure within the meaning of Section 69C of the Act and that the cash loan and repayment in cash comes within the crux of the provisions of Section 269SS and Section 269T and other relevant provisions of the Act.

After perusing the impugned order in the writ petition, the Single Judge Bench had also observed that it was on huge materials and evidence regarding the alleged transaction and that the court cannot act as an assessing officer and scrutinize those facts and evidence.

The writ court while refusing to interfere with the order passed under Section 148A(d) of the Act was also of the opinion that the impugned order was neither a non-speaking order nor there has been any violation of the principles of natural justice. It had further noted that there were not any procedural irregularities and the assessing officer did not lack inherent jurisdiction.

Accordingly, the bench dismissed the appeal.

Cause Title: Shyam Sundar Dhanuka v. Union of India and others [Neutral Citation: 2023:CHC-OS:5094-DB]