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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: HONBLE KUL BHARAT & HONBLE MANISH BORAD
order u/s 143(3) of the Income Tax Act 1961(In short the ‘Act’) dated 20.03.2015 framed by ITO-2(4), Indore. 1
Assessee has raised following grounds of appeal;
“1. That the learned Commissioner of Income Tax (Appeals) erred in confirming addition of Rs.8,00,000/- on account of unexplained cash credit under section 68 of the Income Tax Act.
2. That the learned Commissioner of Income Tax (Appeals) erred in not appreciating the submission of the assessee company.
That the assessee company craves leave to add, alter, amend and/or delete any of the grounds of appeal.”
3. Briefly stated that as culled out from the records are that the assessee is a Private Limited Company engaged in manufacturing and trading of bitumen emulsion. E-return of income filed on 29.09.2012 declaring income of Rs.4,85,470/-. The case selected for scrutiny followed by serving of notices u/s 143(2) and 142(1) of the Act. Ld. A.O after examining the books of accounts on check basis and details filed by the assessee concluded the assessment u/s 143(3) of the Act on 20.03.2015 making various additions totaling to Rs.34,11,743/- which inter alia includes the addition for unexplained cash credit of Rs.28,00,000/-. Aggrieved assessee preferred appeal before Ld. CIT(A) and partly succeeded.
4. Now the assessee is in appeal before the Tribunal raising sole grievance for addition of Rs.8,00,000/- on account of unexplained cash credit of Rs.8,00,000/- confirmed by Ld. CIT(A).
5. Ld. Counsel for the assessee referring to the paper book and written submissions and also placing the reliance on the decision of the Tribunal in the case of Ajit & Ajay Estate & Resorts Pvt. Ltd, & 763/Ind/2016 submitted that both the lower authorities erred in treating the loan of Rs.8,00,000/- received from Shri Babulal Paliwal as unexplained and failed to appreciate that loan of Rs.2,50,000/- was received in the earlier assessment year was not questioned by the revenue authorities and in the year under appeal also against the amount taken on loan part of the amount has been repaid during the year. Further all necessary evidences to prove the identity, genuineness and creditworthiness have been filed.
Per contra Departmental Representative vehemently argued and supporting the order of lower authorities.
We have heard rival contentions and perused the records placed before us.
The assessee has raised three grounds of appeal out of which Ground No. 2 & 3 are general in nature and the sole issue has been raised in Ground No.1 challenging the finding of Ld. CIT(A) confirming the addition of Rs.8,00,000/- on account of unexplained cash credit u/s 68 of the Act and received as loan from Shri Babulal Paliwal.
9. The assessee company has furnished the confirmation letter, copy of income tax return and balance sheet of Shri Babulal Paliwal along with bank statement in order to prove the identity, genuineness and creditworthiness. It is not disputed that loan has been taken through banking channel and in the confirmation letter, details of the transaction along with Permanent Account Number of the loan provider is mentioned. The alleged cash creditor has given loan to assessee in past also as there is an opening balance of Rs.2,50,000/- and as per the details filed before us the loan of Rs.2,50,000/- was taken in the preceding financial year. During the year under appeal fresh loan have been taken of Rs.4,00,000/- each on 16.05.2011 and 11.11.2011 respectively. An amount of Rs.2 lakh has been repaid back on 24.12.2011 which justifies the Iconic Bituminous Pvt. Ltd Ld. Counsel for the assessee that the alleged transaction are genuine. Creditworthiness of the cash creditor stands proved from the copy of income tax return and balance sheet. Copy of capital account and balance sheet of the cash creditor Shri Babulal Paliwal placed at page-5 of the paper book shows that there is an opening capital of Rs.9,65,198/- and after the adjustment of the income and withdrawal during the year the closing capital balance is Rs.11,00,438/-. In the balance sheet against the capital of Rs.11,00,438/- and loan from Shri Punit Paliwal of Rs.40,000/- there stands invested Rs.8,50,000/- as a loan to the assessee company. It itself shows that there was sufficient fund with Shri Babulal Paliwal to provide the loan to assessee. Interest income earned on the loan has been duly offered to tax by the cash creditors.
10. In view of the facts and circumstances of the case we are satisfied with the identity, genuineness and creditworthiness of the unsecured loan of Rs.8,00,000/- taken from Shri Babulal Paliwal and therefore find no justification in the finding of both the lower authorities for making the addition u/s 68 of the Act for Iconic Bituminous Pvt. Ltd unexplained cash credit. We accordingly delete the addition of Rs.8,00,000/- u/s 68 of the Act and allow Ground No.1 raised by the assessee. Ground No.2 & 3 are general in nature which needs no adjudication.
In the result the appeal of the assessee is allowed.
The order pronounced in the open Court on 01.04.2019.