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Facts
The Assessing Officer (AO) made an addition of Rs. 1,84,00,000 under Section 69A of the Income Tax Act on account of cash loans taken by the appellant. The AO relied on statements made by employees of M/s. Evergreen Enterprises and Mr. Nilesh Bharani. The CIT(A) deleted this addition.
Held
The Tribunal held that Section 69A is not applicable in this case as the money is explained as loans, even if taken in cash. The Tribunal noted that the statements relied upon were retracted and lacked corroborative evidence, and that similar additions in past assessment years were deleted.
Key Issues
Whether Section 69A of the Income Tax Act is applicable for cash loans when the source is explained and statements are retracted. Whether additions can be made solely based on uncorroborated retracted statements.
Sections Cited
69A, 115, 132(4), 269SS, 271D
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Mumbai “A” Bench, Mumbai.
Before: Smt. Beena Pillai (JM) & Shri Omkareshwar Chidara (AM)
The above captioned the appellant filed an appeal with the following grounds of appeal before the ITAT :- 1. "On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 1,84,00,0001- made on account of cash loan without appreciating the findings of the search and p ost se arch in the case of M/s. Evergreen enterprises wherein the employees and Mr. Nilesh Bharani who is one of the partners of M/s Evergreen enterprises have admitted on oath u/s 132(4) of the Act to have been indulged in providing cash loans to various beneficiaries including Mr. ABBAS ISMAIL CONTRACTOR which clearly falls under the provisions of section 115 of the India Evidence Act and hence, the case is certainly hit by provision of section 115 of the Indian Evidence Act.
2. "Whether on the facts and in the circumstances of the case and in law, in consequence to the question of law, the Ld. CIT(A) was justified in not upholding the addition made by the AO amounting to Rs. 1,84,00,0001- u/s 69A on account of cash loan taken?
3. "On the facts and in the circumstances of the case, the Ld. CIT(A) was justified in not upholding the addition made by the A.0. even though it is well established that the modus operandi of obtaining cash loans entries had to be considered in the light of surrounding circumstances,
2 Abbas Ismail contractor normal course of human conduct and preponderance of probability."
4. "The appellant craves leave to amend or alter or add a new ground which may be necessary."
From the above grounds, it is observed that the addition is made under section 69A of the Income Tax Act. As this is the departmental appeal, the Ld. DR initiated the case and argued that since Mr. Nilesh Bharani and the employees of M/s. Evergreen Enterprises have stated on oath that various persons including the appellant availed cash loan from Mr. Nilesh Bharani and hence the addition under section 69A of the Act should be upheld on account of cash loan taken by the appellant. The Ld. DR has heavily relied on the assessment order and grounds of appeal mentioned in this Departmental appeal.
The Ld. AR of the appellant has taken the Bench to the provisions of section 69A of the Act which is reproduced below :- “Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.”
The Ld. AR has argued that section 69A of the Act is not applicable to him for the following reasons :- a) The Department is making an allegation that the appellant took cash loans from Mr. Nilesh Bharani and others. If it is a loan, the same cannot be added under section 69A of the Act because it is explained source.
b) If it is a cash loan, as alleged by the Revenue, the addition cannot be made under section 69A of the Act. The relevant sections for violation of section 269SS of the Act is mentioned under section 271D of the Act which is a penalty section. The Revenue never raised these violations.
3 Abbas Ismail contractor c) The parties who gave the statements have already retracted and hence there is no validity to these statements. d) In similar circumstances, in earlier assessment years 2012-13 and 2013-14, the additions made by the Ld. AO were already deleted by the ITAT vide orders in and ITA No. 5435/Mum/2024. e) In similar circumstances, the ITAT Mumbai has deleted the additions in the cases of other assessees who were alleged to have taken loans. Mayurbhai Kanjan Shah. f) The Ld. AR of the appellant filed written submissions in which several other cases were cited for the proposition that merely based on the statements of other parties, additions cannot be made without corroborate evidences.
The Bench has given thoughtful consideration to the arguments of both parties and decided to delete the addition made by the Ld. AO for the following reasons:- a) The Ld. AO made the addition under section 69A of the Act and this section is not applicable in the aforesaid circumstances because there is no unexplained money, even if the statements of Nilesh Bharani are correct. The money is explained, even as per Revenue because it was mentioned that appellant took loans. b) The appellant had been denying that they have not taken any cash loans from the beginning.
c) The Ld. CIT(A) has adjudicated that no value can be attached to the retracted statements based on which additions were made. e) In the similar circumstances, the additions were made in the hands of appellant for earlier assessment years as mentioned in this order and the same were deleted by the Coordinate Benches of Mumbai. f) Neither the creditor nor the debtor has accepted these transactions and except the retracted statement of Mr. Nilesh Bharani, there is no corroborate material with the Department.
Following the judicial discipline, the addition made in this year also is deleted.
4 Abbas Ismail contractor
The appeal of Revenue is dismissed.
Order pronounced in the open Court on 17/03/2025.