SHAMSHER SINGH,JIND vs. ITO WARD -1, JIND

Briefly, the facts are, assessee is a resident individual. For the assessment year in dispute, assessment in case of the assessee was originally completed under Section 143(3) of the Act vide order dated 18.10.2011 accepting the income declared by assessee. However, the assessment order so passed was subjected to proceedings under Section 263 of the Act and while doing so, learned revisionary authority held that while completing the assessment, assessing officer has not made any inquiry or examination regarding the authenticity of agricultural income shown by assessee as well as unsecured loan of Rs.9,00,000. Accordingly, he set aside the assessment order with a direction to the assessing officer to make de novo assessment. While completing the assessment in pursuance to the directions of the revisionary authority, assessing officer made couple of additions including the disputed addition of Rs.9,00,000 under Section 68 of the Act. Though, the assessee contested the addition of Rs.9,00,000 before learned Commissioner (Appeals), however, he was unsuccessful.

Before me, learned counsel for the assessee submitted that assessee had taken a loan of Rs.9,00,000 from one Shri Azad Singh who happens to be the uncle of assessee. He submitted, simply relying upon the observations of the revisionary authority in the order passed under Section 263 of the Act, learned Commissioner (Appeals) confirmed the addition without making any further inquiry or providing opportunity to the assessee to establish the genuineness of the loan. He submitted, the lender is related to assessee and has sufficient creditworthiness to advance the loan. He submitted, the lender has good agricultural land holding and sufficient agricultural income. He submitted, due to ignorance of the lender in the matter of bank transactions, he has taken assistance from some other relative. Only because, assessee and other relative, accompanied the lender to the bank at the time of transfer of money to assessee, it cannot be presumed that the loan given to assessee is ingenuine. He submitted, learned Commissioner (Appeals) has not examined the creditworthiness of the lender. To prove the creditworthiness of the lender, learned counsel sought permission of the Bench to furnish documentary evidences in the form of Jamabandi Nakal to demonstrate the landholding of the creditor. Thus, he submitted, the matter may be restored back to the assessing officer to decide afresh after considering all the evidences including the additional evidence now furnished.

Learned Departmental Representative, though, relied upon the observations of the assessing officer and learned Commissioner (Appeals), however, he submitted, the issue can be restored back to assessing officer for allowing assessee an opportunity to prove the loan transaction.

I have considered rival submissions and perused the material available on record.

The dispute arising in the appeal is with regard to loan of Rs.9,00,000, stated to have been availed by the assessee from his uncle Shri Azad Singh. It is a fact on record that in course of proceedings under Section 263 of the Act, the said lender had appeared before the revisionary authority and admitted of having advanced the loan to assessee. However, relying upon the statement of the lender, wherein, he expressed his ignorance regarding the mode and manner of deposit and transfer of money in the bank account, the revisionary authority had directed the assessing officer to verify the genuineness of loan transaction. It is observed, primarily, relying upon the observations of the revisionary authority in the order passed under Section 263 of the Act, learned Commissioner (Appeals) has upheld the addition. It is a fact on record that assessee has established the identity of the creditor. The doubt, if any, is with regard to the creditworthiness. To establish the creditworthiness, learned counsel has referred to some documents showing the landholding and agricultural income of the lender. Admittedly, these documentary evidences were not filed before the departmental authorities and are being filed for the first time before me by way of additional evidences. In my view, the additional evidences sought to be produced by assessee at this stage will have a crucial bearing on the outcome of the disputed issue, hence, needs to be admitted. However, considering the fact that the departmental authorities had no chance to verify the additional evidences to examine the authenticity of assessee’s claim regarding creditworthiness of the lender, I am inclined to restore the issue back to the assessing officer for fresh adjudication. Assessing officer is directed to examine all the evidences including the additional evidences filed before me and only after considering the evidences filed by the assessee on their own merits, assessing officer shall decided the issue after providing due and reasonable opportunity of being heard to the assessee. Grounds are allowed for statistical purposes.

In the result, the appeal is allowed for statistical purposes.