DEEPA GUPTA,KOLKATA vs. A.C.I.T., CENTRAL CIRCLE - 3(3),, KOLKATA

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ITSSA 101/KOL/2024Status: DisposedITAT Kolkata31 January 2024AY 2015-20163 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition of ₹7,31,395/- as unexplained unsecured loans under Section 68 of the Income Tax Act was not sustainable. The Tribunal noted that the loans of ₹3,05,761/- from M/s Arti Food Products and ₹4,28,724/- from M/s Arti & Sons were taken in the Financial Year 2013-14, relevant to AY 2014-15. Although these amounts were added to the assessee's capital account in FY 2014-15 (relevant to AY 2015-16) on the ground of dissolution of the lending firms, the Tribunal found that the AO's own assessment order, in paragraph 4.1, clearly stated that these loans were taken in FY 2014-15. The Tribunal applied the principle laid down by the Calcutta High Court in Jatia Investment Co. vs CIT, which states that Section 68 cannot be invoked if the money was not credited in the books of account during the financial year in question. Therefore, the Tribunal set aside the order of the CIT(A) and directed the AO to delete the addition.

What were the facts?

The assessee, Deepa Gupta, is appealing an order from the Commissioner of Income-tax (Appeals) for Assessment Year 2015-16. The appeal arises from a search operation conducted on September 22, 2015, and subsequent dates, which led to the issuance of a notice under Section 153A of the Income Tax Act. The Assessing Officer (AO) added ₹7,31,395/- to the assessee's total income under Section 68, treating it as unexplained unsecured loans. The AO noted that loans of ₹3,05,761/- from M/s Arti Food Products and ₹4,28,724/- from M/s Arti & Sons, outstanding as of March 31, 2015 (relevant to AY 2014-15), were added to the assessee's capital account in AY 2015-16. The AO's addition was confirmed by the CIT(A) due to a lack of documentary evidence regarding the dissolution of the firms from which the loans were allegedly taken.

What were the issues?

1. Whether the addition of ₹7,31,395/- as unexplained unsecured loans under Section 68 of the Income Tax Act, 1961, is sustainable when the loans were taken in a preceding financial year and subsequently added to the capital account in the relevant assessment year. Assessee's contention: The assessee argued that the addition made by the AO is not tenable because the loans were taken in the preceding financial year (FY 2013-14, relevant to AY 2014-15), not in the assessment year under appeal (AY 2015-16). The assessee relied on the Calcutta High Court decision in Jatia Investment Co. vs CIT [1994] 206 ITR 718 (Cal), which held that Section 68 cannot be invoked if money was not credited in the books of account during the financial year. Revenue's contention: The revenue, through the AO and CIT(A), contended that the loans were unexplained and that the assessee failed to produce documentary evidence to establish the claim that the loans were received from partnership firms that had since been dissolved. The revenue's position implicitly supports the AO's action under Section 68.

Which sections of the Income-tax Act were involved?

Section 68,Section 153A,Section 131,Section 139(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRI SONJOY SARMA, JM

For Appellant: Shri Surojit Ghosh, AR
For Respondent: Shri Gaurav Kanaujia, DR
Hearing: 16.01.2025Pronounced: 31.01.2025

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals), Kolkata-21, (hereinafter referred to as the “Ld. CIT(A)”] dated 27.06.2024 for the AY 2015-16.

2.

The only issue raised by the assessee is against the order of ld. CIT (A) confirming the addition of ₹7,31,395/- as made by the ld. AO u/s 68 of the Act in respect of unsecured loans.

3.

The facts in brief are that a search operation u/s 131 of the Act was conducted on 22.09.2015 and on subsequent dates in the office and business premises of Raja Group of cases and residential premises of the key persons including Smt. Deepa Gupta, the assessee. Accordingly, the notice u/s 153A of the Act was issued which was complied with by the assessee by filing the return of income on

4.

In the appellate proceedings, the ld. CIT (A) dismissed the appeal of the assessee by affirming the findings given by the ld. AO in the assessment order. The ld. CIT (A) noted that the assessee has not produced any documentary evidences to establish the claim that the loans were received from a partnership firms which had since been dissolved.

5.

After hearing the rival contentions and perusing the materials available on record, we find that the unsecured loans were taken from from two entities namely one ₹3,05,761/- from M/s Arti food Products and two ₹4,28,724/- from M/s Arti & Sons during the F.Y. 2013-14, relevant to A.Y. 2014-15. We further note that during the F.Y. 2014- 15 relevant to A.Y. 2015-16, these loans were added to the capital account of the assessee on the ground that the entities from whom

6.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 31.01.2025.

Sd/- Sd/- (SONJOY SARMA) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated:31.01.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//

Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata

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