SHRI SHIV SHANKER PRAHLADKA,SURAT vs. DCIT CIR-3, RANCHI

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ITA 179/RAN/2018Status: DisposedITAT Ranchi18 December 20193 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had discharged the burden under Section 68 by providing evidence such as PAN cards, Income Tax Returns of lenders, and proof of repayment of loans with interest. The payment of interest and repayment of the loan indicated the commerciality and bona fides of the transactions.

What were the facts?

The assessee, engaged in textile manufacturing, disclosed a total income of Rs. 8,63,790/-. The Assessing Officer (AO) made an addition of Rs. 68,80,000/- under Section 68 for unexplained unsecured loans, which was upheld by the CIT(Appeals).

What were the issues?

Whether the addition made under Section 68 for unsecured loans is sustainable when the assessee provides evidence of loan sources, repayment, and interest payment, and lenders show interest income in their returns.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI

Before: SHRI PRADIP KUMAR KEDIA&

For Appellant: Shri Devesh Poddar, Adv
For Respondent: Shri Nisha Singhmarr, JCIT (D.R.)
Hearing: 06.11.2019Pronounced: 18.12.2019

PER Ms. MADHUMITA ROY - JM:

The instant appeal at the behest of the assessee is directed against the order dated 28.03.2018 passed by the Ld. CIT(Appeals), Ranchi, Jharkhand arising out of the order dated 08.12.2016 passed by the DCIT Circle-III, Ranchi under section 143(3) of the Income Tax Act (hereinafter referred as to ‘the Act’) for A.Y. 2014-15.

2.

The assessee is engaged in the business of manufacturing of textile filed its return of income on 05.11.2014 disclosing total income at Rs. 8,63,790/- for the A.Y. 2014-15. The assessment was finally completed upon making certain addition including addition of Rs. 68,80,000/- under section 68 of the Act on the ground that the assessee has failed to establish and verify the source,

ITA No.179/Ran/2018 Shri Shiv Shanker Prahladka vs. DCIT Asst.Year –2014-15 - 2 - nature, genuineness and creditworthiness of the parties from whom unsecured loan has been claimed to have been obtained. In appeal the same was further confirmed by the Ld. CIT(A). Hence, the instant appeal before us.

3.

At the time of the hearing of the appeal the Ld. AR submitted before us that the documents relating of the unsecured loan taken by the assessee from the parties were duly submitted before the Ld. AO including the copy of the computation of income, Balance Sheet and Profit and Loss Account and bank account statements of those parties. Further, that the loan was received by Account Payee cheque and deposited in the bank account. Moreso, the loan has been repaid to the parties which was also made known to the Ld. CIT(A) and, hence, the addition under section 68 is not permissible and thus the same is liable to quashed.

However, the Ld. DR relied upon the order passed by the authorities below.

4.

Heard the parties, perused the relevant materials available on records. The case of the assessee is this that the persons from whom the assessee obtained the unsecured loan are assessed to tax having PAN account. The loan was received by Account Payee Cheque issued by these parties in favour of the assessee. Further that the appellants made payment or credited interest payable on such loan receipt. Simultaneously the creditors have shown the amount of interest as income in their Income Tax Returns. The Revenue’s case is this that the assessee has fixed to prove the genuineness of the transactions and creditworthiness of the parties/lenders and hence addition is sustainable. It further appears that the interest paid by the assessee on the amount of loan was also shown by the parties in their respective return of income.

ITA No.179/Ran/2018 Shri Shiv Shanker Prahladka vs. DCIT Asst.Year –2014-15 - 3 -

We have further considered the evidences being the PAN Card, Income Tax Return of the lenders, the details of repayment made by the assessee to those parties from which it appears that the loan has been duly repaid along with interest by the assessee to those parties as claimed by the assessee before the authorities below and before us as well. Noticiably, the assessee has paid interest on loan borrowed which indicate element of commerciality in the transaction. Significantly, the loan stood eventually repaid which is another strong circumstance to establish the bona fides of the credit entries. Hence, we find merit in the plea of the assessee for discharge of burden with reference to Sec. 68 of the Act. We, thus, set aside the order of CIT(A) on this score and direct the AO to delete the additions so made.

In the result, the assessee’s appeal is thus allowed. 5. This Order pronounced in Open Court on 18/12/2019

Sd/- Sd/- (PRADIP KUMAR KEDIA) (Ms. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 18/12/2019 TANMAY, Sr. PS TRUE COPY आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)- 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ranchi 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, (Sr. Private Secretary) आयकर अपील�य अ�धकरण / ITAT, Ranchi

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