INCOME TAX OFFICER,WARD-3(1)(4), VADODARA vs. KAUSHALYA LADDHA, VADODARA

The brief facts of the case are that the assessee had filed return of income for A.Y. 2017-18 on 01.11.2017 declaring total income of Rs.9,84,950/-. The case was selected for scrutiny under CASS. The AO had noticed that there was substantial increase in unsecured loan taken during the year. The assessee was unable to establish the genuineness

Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was partly allowed.

Now the Revenue is in appeal before us. The following grounds have been taken in this appeal:

No one attended on behalf the assessee on any of the occasions in spite of service of notices. We have heard Shri Arvind Kumar Namdeo, the Ld. SR-DR of the Revenue in respect to the grounds as taken in this appeal.

The First Ground pertains to deletion of Rs. 3,35,739/- in respect of unsecured loan taken by the assessee. The assessee had obtained fresh unsecured loan of Rs. 18,56,43,752/- during the year from seven persons. It was explained before the Ld. CIT(A) that most of the entries for loan transactions were erroneous book entries made by the accountant and no actual money was received either in cash or through cheque, except in three cases. The amount of Rs. 1,15,739/- received from Sanghai Commercial & Credit Pvt. Ltd. was on account of interest expense on which TDS was made. The Ld. CIT(A) had held this transaction as genuine. The assessee has also produced confirmation in respect of loan of Rs. 1,20,000/- received from Mudrika Ceramics Pvt. Ltd. and Rs. 1,00,000/- from Shreya Printing Press, which were also held as genuine by the Ld. CIT(A). It is found that the additional evidences filed by the assessee in respect of credit worthiness and genuineness of these loan transactions were duly forwarded to the Assessing Officer (AO) and the remand report sent by the AO was duly considered by the Ld. CIT(A). According to the AO, no reason was given for taking loan from these persons. Once the assessee had brought on record the confirmation and

The Ground No.-2 pertains to addition of Rs. 53,80,987/- in respect of repayment of loan. The AO had made the addition for the reason that the source of repayment of loan was not explained. Before the Ld. CIT(A), the assessee had brought evidence on record in respect of the loan repayment, on which the remand report of the AO was obtained. The Ld. CIT(A) had deleted the addition by giving a finding that the entire repayment of Rs. 53,80,987/- was made through banking channel and was out of disclosed business receipts of the assessee. The Revenue has been unable to controvert this finding of the Ld. CIT(A). We, therefore, do not find any reason to interfere with the order of the Ld. CIT(A) on this issue. Further, addition of Rs.18,53,08,013/- was upheld on account of fresh loans taken during the year and that much of fund was already available with the assessee. Therefore, no separate addition was called for in respect of repayment of loans. The addition made by the AO in this respect was rightly deleted by the Ld. CIT(A). Accordingly, the ground taken by the Revenue is dismissed.

Ground No. 3 pertains to disallowance out of purchases and expenses. The AO had made ad-hoc disallowance of 10% of purchases and expenses for the reason that no evidence in this respect was brought on record. Before the Ld. CIT(A), the assessee had produced certain bills, vouchers and other details in respect of purchases and expenses on

Ground No. 4 pertains to addition of Rs. 4,81,000/- on account of cash deposits made during demonetization period. The Ld. CIT(A) had deleted the addition by holding that this cash deposit represented cash in hand and business receipts of the assessee. This finding of the Ld. CIT(A) has not been controverted by the Revenue. It is found that the total cash deposit during the year was Rs. 11,39,000/-, which was not disputed by the AO. The cash deposits of Rs. 4,81,000/- only made during the demonetization period was doubted by the AO and added to income. Considering the fact that the cash deposits made prior to demonetization period were not disputed and that the assessee had sufficient balance to explain the cash deposit during demonetization period, the decision of Ld. CIT(A) on this issue is upheld. The ground taken by the Revenue is dismissed.

Ground No. 5 pertains to addition of Rs. 4,08,448/- on account of bad debts, which was deleted by the Ld. CIT(A). The fact that this amount represented bad debt written off in the books of account, had not been disputed by the AO. The ledger copy of bad debt account and the documentary evidences in this respect were brought on record before the

In the result, the appeal of the Revenue is dismissed.