SHABNAM RAFIUSHSHAN KHAN ,MUMBAI vs. ITO WARD 31(2)(1), MUMBAI

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ITA 63/MUM/2025Status: DisposedITAT Mumbai11 March 2025AY 2015-16Bench: JUSTICE (RETD.) SHRI C.V. BHADANG (President), SHRI B.R. BASKARAN (Accountant Member)1 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the issue relating to loans taken from friends and relatives should be restored to the Ld.CIT(A) for fresh examination. The assessee should not be punished for the AO's failure to furnish a complete remand report.

What were the facts?

The assessee, a beautician, made significant cash and cheque deposits in her bank accounts, which were treated as unexplained income by the AO. She also sold gold jewellery, declared Long Term Capital Gain, and claimed exemption, but failed to provide complete sales bills.

What were the issues?

Whether the addition on account of unexplained loans and jewellery sale is justified when the AO failed to provide a complete remand report on the explanation offered by the assessee.

Which sections of the Income-tax Act were involved?

Section 68,Section 133(6),Section 54F

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI

Before: JUSTICE (RETD.) SHRI C.V. BHADANG & SHRI B.R. BASKARAN

O R D E R PER B.R. BASKARAN, A.M : The assessee has filed this appeal challenging the order dated 11-11-2024 passed by the Ld. Commissioner of Income Tax (Appeals)- National Faceless Appeal Centre (NFAC), Delhi [‘Ld.CIT(A)’] and it relates to AY.2015-16. The assessee is aggrieved by the decision of the Ld.CIT(A) in confirming the addition of Rs.65,56,051/- relating to the loans taken by the assessee made by the AO u/s. 68 of the Income Tax Act, 1961 (‘the Act’).

2. The Ld.AR submitted that the assessee is a beautician and make up artist. During the course of assessment proceedings, the AO noticed that the assessee has made deposits into her bank account maintained with Bank of India and Andhra Bank by way of cash as well as cheques aggregating to Rs.1,00,70,500/-, which consisted of cash deposits of Rs.41,45,000/- and cheque deposits of Rs. 59,25,500/-.Since the assessee did not properly explain the sources of above said deposits, the AO treated them as unexplained income of the assessee.

3.

The AO further noticed that the assessee has sold gold jewellery for a sum of Rs.1,13,51,050/- and declared Long Term Capital Gain thereon. The assessee also claimed exemption u/s. 54F of the Act against the same. However, the assessee could furnish sales bill for Rs. 8,85,500/- only. Hence, the AO held that the sale of gold jewellery could be accepted to the extent of Rs.8,85,500/- only and accordingly treated the remaining amount of sale of jewellery of Rs. 1,04,65,550/- as un-explained income. However, the AO gave telescopic benefit of cash and cheque deposits of Rs.1,00,70,500/- against the claim of sale of jewellery. Accordingly, he proposed to assess the sum of Rs. 1,04,65,550/- as un-explained income of the assessee. Since the assessee had declared income of Rs. 5,88,295/- in the return of income, the AO gave set-off of the same and assessed the remaining balance of Rs. 98,77,255/- as undisclosed income of the assessee.

Before the Ld.CIT(A), the assessee explained that the sale of jewellery 4. was for a sum of Rs. 50,30,500/- only and remaining amount was received as loan from friends and relatives. The assessee also filed loan confirmation letters before the Ld.CIT(A). In view of the change in the Ld.CIT(A) called for a remand report from the AO. In the remand report, the AO made enquiries with the buyers of the gold by issuing notices u/s. 133(6) of the Act and he got reply from some of the buyers of the gold and the value of sales made to them was Rs. 33,21,204/-. However, he did not mention anything about the claim of receipt of loans from friends and relative. Accordingly, the Ld.CIT(A) granted relief to the extent of Rs.33,21,204/- referred above and confirmed the balance amount of addition.

5.

The Ld.AR submitted that the AO did not offer any comments in the remand report on the claim of receipt of loans from friends and relatives, even though confirmation letters were filed before the tax authorities. Even the Ld.CIT(A) has also noticed this fact, yet he did not allow credit for loans received by the assessee from friends and relatives. The Ld.AR submitted that the Ld.CIT(A) was not justified in doing so.

6.

The Ld.DR on the contrary, supported the order passed by the Ld.CIT(A).

7.

Having heard the rival submissions, we are of the view that there is merit in the contentions of the Ld.AR. Since the assessee has offered new explanation before the Ld.CIT(A) along with certain documents in respect of claim of receipt of loan from friends and relatives, the Ld.CIT(A) has proceeded to callfor remand report from the AO. If the AO did not offer any comments with regard to the loans received by the assessee, in our view, the Ld.CIT(A) should have pointed out the same to the AO and directed him to furnish remand report thereon. This action, in our view, required in the interest of natural justice. In our view, the assessee cannot be AO to furnish remand report in respect of the loans taken by the assessee. Accordingly, we deem it proper to restore the issue relating to receipt of loans from friends and relatives to the file of the Ld.CIT(A) for examining it afresh in accordance with law.

8.

In the result, the appeal of the assessee is treated as partly allowed.

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