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Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH
Before: Shri Rajpal Yadav & Shri Amarjit Singh
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before: Shri Rajpal Yadav, Judicial Member And Shri Amarjit Singh, Accountant Member ITA No. 1460/Ahd/2015 Assessment Year 2011-12
Bhawesh Kushal Thakkar, The ITO, A/43, Prestin Bunglow, Ward-6(4), B/H. Hariom Nagar, Vs New Ward: 3(2)(6), Ghodasar, Chinkuwadi, Ahmedabad Ahmedabad-380050 (Respondent) PAN: AIGPT9084R (Appellant)
Revenue by: Shri Mudit Nagpal, Sr. D.R. Assessee by: Shri Tushar Hemani, A.R. Date of hearing : 19-10-2018 Date of pronouncement : 15-01-2019 आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
This assessee’s appeal for A.Y. 2011-12, arises from order of the CIT(A)-13, Ahmedabad dated 27-03-2015, in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”.
The assessee has raised following grounds of appeal:- “(1) The learned CIT (A) has erred on facts and in law in confirming the addition of Rs. 685300/- made -by the assessing officer as unexplained credits u/s 68 of the I.T. Act, 1961 ignoring the
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facts that the assessee has discharged its onus of proving necessary ingredients • of section 68 i.e., the identity, genuineness and credit worthiness of the depositors. (2) The Id. Commissioner of Income Tax (Appeals.) erred on facts and in law in partially confirming the addition of Rs. 100678/- out of total expenses and depreciation amounting to Rs. 201357/- claimed by the assessee ignoring the facts that out of total expenses of Rs. 201357/- Rs. 105217/- is depreciation and other expenses are bare minimum expenses.”
In this case, return of income declaring income of Rs. 2,36,575/- was filed on 30th May, 2011. Subsequently, the case was selected under scrutiny by issuing of notice u/s. 143(2) of the act on 3rd August, 2012. During the course of assessment proceedings, the assessing officer has noticed that assessee has made following cash deposit in his bank account :- Bank of India Maninagar Branch, Ahmedabad Rs. 15,50,800/- Axis Bank Maninagar Branch, Ahmedabad Rs. 14,19,500/- Axis Bank Maninagar Bannch, Ahmedbad Rs. 10,86,000/-. The assessee was asked to explain the source of cash deposit in the aforesaid bank accounts with documentary evidences. The assessee has furnished copies of cash book, bank book and ledger a/c. The assessee claimed that he was engaged in the business of computer related job work and share consultancy business and maintained regular books of accounts and further claimed that all the transactions including cash transactions were duly recorded in his books of accounts. The assessee has claimed to have received and re- paid loan to the tune of Rs. 3,08,500/- from 17 persons mostly in the range of Rs. 18500/- to Rs. 19000/- . However the assessee has failed to submit complete address, PAN, confirmation letter, copy of return of income, source of income of these persons to prove the identity of the persons, genuineness of the transactions and creditworthiness of the said depositors. In addition to above the assessee also claimed to have received loans and advances to the
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amount of Rs. 5,50,000/- from various persons however the assessee failed to submit complete addresses, PANs no. confirmation letters, copies of return of income, source of income of these persons to prove the genuineness of the transactions and creditworthiness of the depositors. The assessee has also shown advance of Rs.1,81,000 in cash against car sale and Rs.2,75,000/ as advance receipt against income. The assessing officer has stated that assessee has not furnished any valid documentary evidences in support of claim for advance of Rs. 1,81,000/- in cash against car sales and Rs. 2,75,000/- as advance receipt against income.Therefore, the assessing officer has issued noticed dated 13th December, 2013 which is reproduced as under:- "Vide your aforesaid submissions you claimed to have received loans/deposits in cash from various persons as under: 1) Ajaykumar Seta Rs.18,500/- 2) Aakashbhai Agarwal Rs.19,500/- 3) Amitbhai Agarwal Rs.18,500/- 4) Dhiraj Khakharia Rs.18,000/- 5) Dikuben Maheshbhai Thakkar Rs.18,500/- 6) Harishbhai Punjabi Rs.18,500/- 7) Hemantkumar Patel Rs.19,000/- 8) Jaydeeplal Rs.18,000/- 9) MadhurKadia Rs.18,500/- 10)NageshwarThakur Rs.18,000/- 11)Rahul Arora Rs.18,500/- 12)Rashmin Patel Rs.19,000/- 13)Vinod J Thakkar Rs.10,000/- 14)Ankita Thakkar Rs.19,000/- 15)Yogesh Ambavani Rs.19,000/- 16)Shivam Patel Rs.19,000/- 17)Sumitbhai Agarwal Rs.19,000/- ORDER U/S 143(3) OF THE I T ACT - SHRI BHAVESH KUSHAL THAKKAR - A Y 2011-12 It is further seen that in addition to above loans, you also claimed to have received loans by cheque. However, you have failed to submit complete addresses, PANs, confirmation letters, copy of returns of income, sources of income of these persons as to prove the identity of the persons, genuineness of the transactions and creditworthiness of the depositors. You are therefore required to furnish complete documentary evidences as to prove the identity of the persons, genuineness of the transactions and creditworthiness of the depositors. You are further asked to prove the business needs and utilization of these loans/ deposits; failing which adverse view will be taken, Vide your aforesaid submissions you claimed to have received loans & advances of Rs.99,500/- in cash and further Rs.4,50,500/- by cheque from various persons. However, you have failed to submit complete addresses, PANs, confirmation letters, copy of returns of income, source of income of these persons as to prove the genuineness of the transactions and creditworthiness of
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the depositors. You are therefore required to furnish complete documentary evidences as to prove the genuineness of the transactions and creditworthiness of the depositors. You are further asked to prove the business need of these loans and utilization of Money; failing which adverse view will be taken. Vide your aforesaid submissions you claimed to have received Rs.1,81,000/- in cash from Shri Harish Pandit Son/ as advance against car sale. In this regard, you have not furnished any documentary evidences in support of your above contention. Furnish the confirmation letter alongwith copy of RTO book in support of the above, failing which adverse inference will be drawn. In your submission you have shown advance receipts against income amounting to Rs.2,75,000/-. Furnish relevant documentary evidences in support of the above, failing which adverse inference will be drawn."
On the basis of submission of the assessee and verification of the material, the assessing officer has made addition of Rs. 1,58,500/- in respect of advance shown from 9 persons as the assessee has not submitted any details or documents i.e.PANs, confirmation letters, copies of return of income, bank statements etc to prove the identity of the persons,genuieness of the transactions and creditworthiness of the depositors. In respect of 9 persons from whom the assesseee claimed to have obtained loan of Rs. 1,68,000/- the assessee has failed to furnish evidences in respect of so called loans deposit as to prove the identity of the persons, genuineness of the transactions and creditworthiness of the depositors. Further in respect of 4 persons from whom the assessee has claimed to have taken loan of Rs.66,500/, the assesseee has only submitted confirmation letter with PANs. However, the assessee failed to furnish the copies of return of income, bank statements, etc. therefore, the assessing officer has made addition of Rs. 66,500/-. The assessing officer has noticed that in case of Harish Soni, the assessee has claimed loan of Rs. 98,000/-. However, the depositor has given confirmation letter of loan to the amount of Rs. 49,000/- only, therefore, the remaining unexplained amount of Rs. 49,000/- was added to the total income of the assessee.
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In the case of Shivam Patel from whom the cash loan of Rs. 13,300/ was shown the assessee has not furnished any detail .In respect of Rashmin Patel the assessee has claimed loan advance of Rs. 1,97,000/- and Rs.49000/ respectively. However, the said party has not confirmed the advance to the amount of Rs. 49,000/- . Therefore, the assessing officer has held that cash credit of Rs. 62,300/- remained unexplained. In respect of advance of Rs. 1,81,000/- from Harish Pandit Soni in cash against sale of car, the assessing officer stated that assessee has not furnished any documentary evidences and not explained why the amount was withhold for almost 8 months when the deal was cancelled. Therefore, the assessing officer has made addition of Rs. 6,85,300/- (Rs. 1,58,500/-+ 1,68,000/-+ 66,5000+49,000+62,300+1,81,000/-) as unexplained cash credit and added to the total income of the assessee.
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 carefully. The assessee has claimed to have received and re-paid cash loan from 17 parties to the amount of Rs. 3,08,500/-. The assessee has further obtained loan in cash for Rs. 99,500/- from 5 persons and an amount of Rs. 4,50,000/- by cheques from the four persons. It is noticed that in respect of nine persons from whom the assesee obtained loan of Rs. 1,58,500/- the asssessee has failed to furnish details or documents i.e. PANs, confirmation letters, copy of return of income, bank statement to prove the identity of the persons and creditworthiness of the depositors.
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In respect of cash loan of Rs. 1,68,000/- from other 9 persons, the assessee has only submitted confirmation letters without other details such as PANs, confirmations letter, copy of return of income, bank statements etc. to prove the identity, genuineness and creditworthiness of the depositors. We have perused the information on record in respect of the aforesaid 17 parties from whom the assesse had claimed cash loans. It is noticed that in respect of some of the parties the assessee has filed only confirmation letters. On perusal of the material on record it is noticed that assessee has not filed complete information i.e. in respect to cash loan from Madhu Kedia it is stated that she has been serving in a company at Kharshila (Rajasthan) however vague address of the lender was given as station Road Kharshila Chhatigarh. It is observed that because of incomplete information, it is not feasible for the assessing officer to carry out verification and investigation to prove the genuineness of the transactions. These material facts demonstrate that assessee has failed to prove the basic requirement of section 68 by not establishing the identity, genuineness and creditworthiness of the impugned transaction with relevant basic material. In the case of Shivam Patel from whom the cash loan of Rs. 13,300/ was shown the assessee has not furnished any detail. For the reasons stated above in this order for want of proper relevant material the assessee failed to prove the identity of the persons genuineness of the transactions and creditworthiness of the persons therefore unexplained deposits ( Rs. 158,500+ Rs. 1,68,000 + 13,300) to the amount of Rs. 3,39,800 is treated as unexplained and added to the total income of the assessee.
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In respect of four persons from whom the assessee has claimed loan of Rs. 66,500/- the assessee has furnished confirmation letters and PAN of the depositors. The assessing officer had not allowed the claim of the assessee on the ground that copies of return of income, bank statemenst , source of income were not furnished to prove the identity of the person, genuineness of the transactions and creditworthiness of the depositors. We observe that in these four cases the assesse has taken loan of Rs. (18500, 10,000, 19000 & 19000) totaling to Rs. 66,500/- and the PANs of the depositors have been furnished. In the cases of these four persons, assessing officer should have made further verification as the identity and addresses of the persons were available in the PAN of such persons. Considering these facts, we allow the claim of the assessee in respect of the loan amount Rs. 66,500/-. In respect of unsecured loan of Rs. 98,000/- claimed to be received from Shri Harish Soni, it is noticed that the aforesaid person has confirmed the granting of unsecured loan to the extent for Rs. 49,000/- only as against Rs. 98,000/- claimed by the assessee. In respect of Rashmin Patel the assessee has claimed loan advance of Rs. 1,97,000/- and Rs.49000/ respectively. However, the said party has not confirmed the advance to the amount of Rs. 49,000/- After considering the contention of the assessee that the depositors have inadvertently mentioned the wrong amount in the confirmation letters we consider it appropriate to restore this issue to the file of the assessing officer for deciding afresh after examination of the information to be produced by the assessee.
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In respect of advance of Rs. 1,81,000/- form Shri Harin Pandit Soni in cash against sale of car in support of which the assessee has submitted a confirmation letter from Harish P Soni showing cash receipt of Rs. 1,81,000/- on 15/07/2010 and payment back on 05-03-2011 due to cancelation of deal. It is noticed that assessing officer has not disproved these material fact with any cogent material and disallowed the impugned amount on assumption basis, therefore, the claim of the assessee on this issue is allowed. In the result, this ground of appeal of the assessee is partly allowed as under:- (i) Disallowance sustained(Rs.1,58,500/-+168000/-+13300/-)= 3,39,800/- (ii) Set aside for verification: (Rs. 49,000/-+49,000/-)= 98,000/- (iii)Disallowance deleted (Rs. 66,500/- + 18100/-)= 247,500/- as per the terms and conditions stated in this order.
Second ground of appeal of the assessee is pertained to the disallowance of expenses of Rs. 2,01,357/- . At the time of assessment the assessing officer observed that assessee has shown gross income of Rs. 6,20,768/- after claiming various expenses of Rs. 2,01,357/-. However, during the course of assessment proceedings, the assessee has failed to produce the books of accounts and supporting evidences to substantiate the claim of expenses. Consequently, the assessing officer has disallowed the whole expenses to the amount of Rs. 2,01,357/-.
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Aggrieved assessee filed appeal before the ld. CIT(A). The ld. CIT(A) has restricted the disallowance to the 50% of the expenses to the amount of Rs. 1,00,678/-
We have heard the rival contentions and perused the material on record carefully. The assessee has claimed various expenses to the amount of Rs. 2,01,357/- against the gross income of Rs. 6,60,768/-. In the absence of supporting details, the assessing officer has disallowed 100% of these expenses, however, the ld. CIT(A) has restricted the disallowance to the extent of 50% of such expenses. After considering the gross income and nature of business of the asssessee, we observe that it would be reasonable to disallow 25% of such expenses for want of proper supporting material in the case of assessee, therefore, we restrict the disallowance to the extent of Rs. 5,04,00/-. Accordingly, the appeal of the assessee on this issue is partly allowed.
In the result the appeal of the assessee is partly allowed.
Order pronounced in the open court on 15-01-2019
Sd/- Sd/- (RAJPAL YADAV) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 15/01/2019 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT
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CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद