GURUKRUPA STONE,ARAVALI vs. INCOME TAX OFFICER, MODASA

This assessee’s appeal for A.Y. 2010-11, arises from order of the CIT(A)-2, Ahmedabad dated 06-02-2015, in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”.

The assessee has raised following grounds of appeal:-

The Learned Commissioner of Appeals-11 has erred in facts and in law, in confirmed addition Amt. of Rs. 5,18,000/- as a unexplained Unsecured Loan received from various Loanee during the year.”

Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee.

We have heard the rival contentions and perused the material on record. During the course of appellate proceedings, the ld. counsel has submitted that the Co-ordinate Bench of the ITAT vide & 1178/Ahd/2016 in the case of Hipoline Ltd. vs. ITO order 12-06-2019 has adjudicated the similar issue on same fact wherein the total disallowance was restricted to 30% of the total addition made u/s. 40(a)(ia) of the act. We have perused the above cited decision of the Co-ordinate Bench and the Co- ordinate Bench has adjudicated the similar issue on identical facts as under:- “5. Heard the respective parties, perused the relevant materials available on record including the judgment relied upon by the authorized representative appearing for the assessee. The relevant portion of the said judgment passed by the Hon'ble Delhi ITAT Bench while dealing in the identical issue is as follows: "6. We have considered rival submissions and find that issue is covered in favour of the assessee by order of ITAT Jaipur Bench in the case of Shri Raiendra Yadav vs. ITO and Smt. Sonu Khandelwal vs. ITO. In these orders it was held that the disallowance u/s 40(a)(ia) to be restricted to 30% of the addition. In these orders the Tribunal has considered the amended provisions of section 40(a)(ia) of I. T. Act. In these orders the assessment year's involve was 2007-08 and 2008-09. In ITA No. 6312/Del/20l6 Smt. Kanta Yadav vs. ITO the present appeal the assessment year is 2012-13. Therefore facts are identical. In this view of the matter and following the above decisions of Jaipur Bench, we set aside and modify the orders of the authorities below and direct the Assessing Officer to restrict the addition to 30% of the total addition made on account of deduction of TDS u/s 40(a)(ia) of the Act. " We find substance in the contentions and/or submissions made by the assessee's Counsel taking into consideration the observation made by the Hon'ble ITAT Delhi Bench as above. It also appears that the issue is squarely covered by the aforesaid judgment. Hence, respectfully following the same we set aside and modify the orders passed by the authorities below. We further direct the Learned AO to restrict the addition to 30% of the total addition made on account of deduction of TDS u/s 40(a)(ia) of the Act.”

Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee.

We have heard the rival contentions and perused the material on record. During the course of appellate proceedings before us, the ld. counsel has submitted a copy of order of the Co-ordinate Bench of the ITAT vide in the case of M/s. Shiv Krupa Tin Containers Order dated 09-06-2016 wherein the identical issue on similar fact was decided in favour of the assessee. The relevant part of decision as cited by the assessee is reproduced as under:- “4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The issue in the present ground is with respect to disallowance u/s.40A(3) of the Act. It is an undisputed fact that assessee has made cash payments for expenses and these payments have been made to Electricity Company for the supply of Electricity. The payment of Electricity was the purpose of business, the payee to whom the assessee has made the payment has not been doubted by the AO; meaning thereby that the genuineness of payment and identity of the payee are not in doubt. In such a situation, we find that the Hon'ble Page No 5 Gurukrupa Stone vs. ITO

The assessee has preferred appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the asessee.

We have heard the rival contentions and perused the material on record. The assessing officer has made an addition of unsecured loan of Rs. 5.18 lacs received from 4 different persons treating the same as unexplained stating the creditworthiness of the depositors were not proved for want of relevant evidence of having agricultural income and income from sale of milk. In this regard, we have noticed that assessee has submitted in his explanation before the ld. CIT(A) that assessing officer has unilaterally rejected the explanation without calling any further evidences if at all required from the depositors and the assessee has come to know the reason for disallowance of the amount of unsecured loan only on receipt of the assessment order. Therefore, during the course of appellate proceedings before the ld. CIT(A), the assessee has referred such evidences of sale of agricultural produce and the certificate of secretary of village Panchayat certifying that the depositors were bonafide farmers owning agricultural land and expenditure of their income from agricultural activities, however, the ld. CIT(A) has not admitted the additional evidences stating that there was no reasonable cause for not producing the same earlier before the assessing officer. In this regard on perusal of the record, it is observed that assessing officer has not brought to the notice of the assessee that any further evidences were required from the depositors before treating the unsecured loan as unexplained. Therefore, we are of the view that action of the ld. CIT(A) of not admitting the evidences is not justified. In view of the above facts and circumstances, we restore this issue to the file of assessing officer Page No 7 Gurukrupa Stone vs. ITO for deciding afresh after examination and verification of the additional evidences furnished by the assessee. Therefore, this ground of the assessee is allowed for statistical purposes.