SHASHIKANT SURESH PATIL,,NANDURBAR vs. ASSISTANT COMMISSIONER OF INCOME TAX,, DHULE

This appeal by the assessee against the order dated 31-01-2017 passed by the Commissioner of Income Tax (Appeals)-1, Nashik [„CIT(A)‟] for assessment year 2013-14.

Ground Nos. 1 and 2 raised by the assessee questioning the action of CIT(A) in confirming the addition made by the AO u/s. 68 of the Act on account of unexplained cash credits in the facts and circumstances of the case.

The brief facts of the case relating to the issue are that the assessee is an individual and engaged in the business of civil contractor. During the course of assessment proceedings, the AO show caused the assessee why an amount of Rs.35,00,000/- on account of unsecured loan from Mrs. Vidyabai Narayan Patil should not be added u/s. 68 of the Act. The assessee submitted that affidavit notarized by Mrs. Vidyabai Narayan Patil confirming the unsecured loan. The AO examined on oath and held that she is engaged in household work and has no information about lending money to the assessee. He observed that the affidavit filed by Mrs. Vidyabai Narayan Patil is entirely non-genuine and it is an attempt to give a colour of genuineness of loan transactions and assessee made the creditors to make false affidavits to cover up the transactions. For not proving the creditworthiness and genuineness of the transactions the AO added the said amount to the total income of the assessee. The CIT(A) confirmed the same.

Before us, the ld. AR Shri Hari Krishan submits that the unsecured creditor is a mother-in-law of assessee and she deposited the said amount in her account on 30/31-03-2012. She advanced Rs.35,00,000/- to the assessee on 03-04-2012 by banking channel. He argued that since the amount was deposited in the creditors account on 30/31-03-2012 it could be taxed in the A.Y. 2012-13 but not in A.Y. 2013-14 the year under consideration. The ld. AR also referred to written submissions filed before the CIT(A) which is at page 17 of the paper book and prayed to allow ground Nos. 1 and 2.

The ld. DR, Shri Alok Malviya submits that the AO observed from the Balance sheet, that the assessee has taken loans from friends and relatives. The AO asked the assessee to produce IT return, bank account statements and confirmation of creditors. To verify the genuineness of transaction and creditworthiness of the creditors summons u/s. 131 were issued. The ld. DR referred to para 5.2.2 and submitted that the said Mrs. Vidyabai Narayan Patil admitted that she has not any information about lending any money to the assessee nor any information about her bank accounts maintained by her. The ld. DR argued that the main ingredients of section 68 of the Act particularly the creditworthiness and genuineness has not been proved by the assessee and the CIT(A) rightly confirmed the addition made by AO.

Heard both the parties and perused the material available on record. Coming to the contentions of ld. AR that no addition can be made in the year under consideration but it should be in A.Y. 2012-13, we note that there is no dispute an amount of Rs.35,00,000/- was deposited in Mrs. Vidyabai Narayan Patil on 30/31-03-2012 relating to A.Y. 2012-13. There is also no dispute the said amount credited in the account of assessee through banking channel on 03-04-2012 relating to A.Y. 2013-14. The contention of ld. AR is that the source of credit has been in the books of account of Mrs. Vidyabai Narayan Patil in A.Y. 2012-13 and should be assessed in A.Y. 2012-13. We note that admittedly, the said amount credited in the books of account of assessee on 03-04-2012 i.e. Financial Year 2012-13 relating to A.Y. 2013-14 in our opinion the arguments of ld. AR that the said amount should be assessed in A.Y. 2012-13 is misconceived and has no merit. Therefore, the arguments of ld. AR are rejected.

Coming to the merits of case as rightly pointed by ld. DR that the assessee failed to offer explanation for the cash credits found in his accounts. Though the said Mrs. Vidyabai Narayan Patil appeared before the AO, but on examination on oath she denied having advancing money to the assessee and no information about her bank accounts. We also note that to prove the cash credits a satisfactory explanation should be offered to the AO regarding the identity, creditworthiness and genuineness of transactions. No doubt Mrs. Vidyabai Narayan Patil appeared before the AO and filed her affidavit confirming the transactions but however during the course of cross-examination she stated contrary to the averments made in the affidavit clearly establishes that the assessee failed to prove to genuineness and creditworthiness of creditor. We note that the CIT(A) confirmed the addition made by the AO for not proving the creditworthiness and genuineness of transactions. Therefore, the assessee failed to prove the genuineness and creditworthiness of transactions as required u/s. 68 of the Act and hence we find no infirmity in the order of CIT(A). We completely agree with the reasons recorded by the CIT(A) in para 6.12 of the impugned order. Thus, ground Nos. 1 and 2 raised by the assessee fails and are dismissed.

Ground No. 3 raised by the assessee questioning the action of CIT(A) in confirming the addition of Rs.1,00,000/- made by the AO u/s. 68 of the Act on account of unsecured loan in the facts and circumstances of the case.

The ld. AR reiterated the same submissions as made in ground Nos. 1 and 2 and ld. DR prayed to dismiss the ground No. 3 by taking into consideration the submissions as made involving ground Nos. 1 and 2.

We find that the facts and circumstances relating to this issue are identical and similar to ground Nos. 1 and 2 except variance in the disputed amount. The CIT(A) also dealt the issue relating to Rs.1,00,000/- along with the issue raised in ground Nos. 1 and 2 here-in-above wherein we have taken a view in confirming the addition by holding the reasons recorded by the CIT(A) in para 6.12 of impugned order are correct. Therefore, in order to avoid the repetition, the reasons recorded by us in above mentioned paragraphs while deciding the ground Nos. 1 and 2 is applicable in equal force to this ground No. 3 also. We uphold the order of CIT(A) relating to addition of Rs.1,00,000/- and ground No. 3 raised by the assessee is dismissed.

In the result, the appeal of assessee is dismissed.