GIRISH MADHUKAR RATHI,PUNE vs. DEPUTY COMMISSIONER OF INCOME TAX,

Briefly stated the relevant facts include that the assessee is son of Shri

The Assessing Officer is of the view that despite the filers income tax return by concerned loan creditors, banking transactions, the loan transactions are not genuine. According to Assessing Officer, Shri Madhukar Rathi lacks creditworthiness. Despite the documentation furnished by the assessee with regard to creditworthiness of Shri Madhukar Rathi, loan transactions through banking channels, repayment of loans with interest, compliance of TDS provisions, wherever applicable, the AO invoked the provisions of section 68 of the Act and made addition on account of unsecured loan of Rs.79 lakhs. No such additions were made in the past although similar loans were taken in earlier assessment years.

During the first appellate proceedings, the assessee could not win the appeal before the CIT(A). The CIT(A) as per discussion given in para 8.3 of his order, the CIT(A) dismissed the appeal of assessee and confirmed the additions.

Aggrieved with the order of the CIT(A), the assessee is in appeal before us with the grounds extracted above.

Before us, ld. Counsel brought our attention to the facts relating to the said loan transactions i.e. taking loans from Shri Madhukar Rathi and Shri Madhukar Rathi in turn taking loans from Rahul Anil Birla, Rakesh N. Birla and Nand Sales Corporation and submitted that the transactions are genuine. The repayments of loans, compliance to the TDS provisions, the creditors have also filed their returns, the fact of the transactions being effected through banking channel, etc. supports the case of the assessee. As pr ld. AR, the assessee stands discharged the onus cast on his side. It is not the case of the Revenue that this is a case any money laundering or accommodation entries or scams, etc. On such facts, as per ld. AR, it is unfair to make addition by the Assessing Officer and confirmed by the CIT(A).

On the other hand, ld. DR heavily relied on the orders of Assessing Officer and CIT(A). It is the case of ld. DR that, with meagre taxable income of Shri Madhukar Rathi, so much money could not have been given as loan to the assessee (his son).

We have heard both the sides on this limited issue of making addition u/s 68 of the Act. It is an undisputed fact that the assessee has Running Account in matters of taking loans from Shri Madhukar Rathi (father) and Shri Madhukar Rathi in turn taking loans from Rahul Anil Birla and Nand Sales Corporation. The said transactions are undisputedly through banking channels. It is further an undisputed fact that during the year under consideration, the assessee repaid to the tune of Rs.1,25,50,000/- to Shri Madhukar Rathi. So, it is case of taking loans and repayment of loans through a Running Account. Regarding balance of loan in the Running Account, it is also an undisputed fact that, in past too, no addition of these loans amounts were added by AO despite the similar loan transactions with Shri Madhukar Rathi and, in turn, Shri Madhukar Rathi with Rahul Anil Birla, Rakesh N. Birla and Nand Sales Corporation. In our view, therefore, it is case of mere suspicion of the AO that led to invoking of the provisions of section 68 of the Act. Otherwise, there is no evidence with Revenue to demonstrate that it is case of money laundering, non discharge of onus by the assessee. With the loans taken from Birlas & others, Shri Madhukar Rathi is capable of providing loan of Rs.79 lakhs to the assessee. AO has not disturbed the loans in the cases of Birlas & others. In our view, there is no case of addition u/s 68 of the Act. The additions made by the AO are not sustainable. Therefore, we are of the opinion, the grounds raised by the assessee are required to be allowed.

In the result, the appeal of assessee is allowed.

The CIT (Appeals)-4, Pune.

The Pr. CIT-3, Pune. 5. ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, “बी” बेंच,, ऩुणे / DR, ITAT, “B” Bench, Pune. गार्ड फ़ाइऱ / Guard File. 6. आदेशानुसार / BY ORDER, //सत्यावऩत प्रतत//// वररष्ठ तनजी सधचव / Sr. Private Secretary आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune