Loading judgment…
Facts
The assessee, an individual, declared income from house property, capital gains, and other sources. The assessment was completed after an addition of Rs. 13,60,000/- u/s 69A of the Income Tax Act, which represented unexplained credits received from close relatives. The assessee had provided supporting documents to establish the genuineness of these transactions.
Held
The Tribunal held that the assessee had sufficiently discharged the onus to establish the identity, creditworthiness, and genuineness of the lenders. As the entities are independently assessed to income tax, the addition made by the AO was not justified and directed to be deleted.
Key Issues
Whether the addition of Rs. 13,60,000/- made under Section 69A of the Income Tax Act for unexplained credits from close relatives is justified when the assessee has provided supporting documents to prove genuineness.
Sections Cited
143(3), 144C(13), 68, 69A
AI-generated summary — verify with the full judgment below
Before: SMT. BEENA PILLAI & SMT. RENU JAUHRI
Assessee by : Shri Kapil K. Jain Revenue by : Shri Krishna Kumar Date of Hearing 18.02.2025 Date of Pronouncement 28.02.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the Learned Assistant Commissioner of Income-tax, Circle 4(2)(1), Mumbai 1961 [hereinafter referred to as “AO”] passed u/s. 143(3) r.w.s 144C(13) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2022-23.
The assessee has raised the following grounds of appeal: “1) On facts and circumstances of the case, the Ld. A. O. and Hon. DRP is not justified in making aggregate addition of Rs. 13,60,000/- with respect to A.Y. 2022-23. Payal Harshang Shah amounts received by the Appellant from her husband, her HUF and her father- in-Law and assessing the same U/s. 68 by holding the same as unexplained. The Ld. A. O. and Hon. DRP failed to appreciate that the Appellant substantiated the credits by proving the identity, genuineness and capacity of the payers. 2) Without prejudice to above, the addition of Rs. 13,60,000/- has been made U/s. 69A of the Income Tax Act despite the fact the draft assessment proposed the addition U/s. 68.”
Brief facts of the case are that the assessee is an individual deriving income from house property, capital gains and other sources. She has filed her return declaring a total income of Rs. 57,63,770/- on 22.06.2022 for the AY 2022-23. The case was selected for scrutiny and assessment was completed at an income of Rs. 71,36,780/- after making an addition of Rs. 13,60,000/- u/s 69A of the Act after taking approval of the Ld. DRP. Aggrieved with the order of Ld. AO, the assessee filed an appeal before the Tribunal.
The sole substantive issue involved in this case is the addition made u/s 69A of the Act in respect of the amounts received by the assessee from close relatives during the year which were treated as unexplained.
The assessee has submitted the following breakups with regard to the amounts received during the year:
Sr. No Name Amount Relationship a. Harshang Shah 5,13,000 Husband b. Kian Shah 71,000 Son c. Harshang Shah 7,00,000 HUF d. Nitin Shah 1,47,000 Father-in-law 14,31,000 A.Y. 2022-23. Payal Harshang Shah 6. During the course of proceedings before Ld. DRP, the assessee had filed confirmations, copies of bank statements and other relevant details to establish the genuineness of these credits shown in her bank account. However, Ld. DRP accepted her explanation only with regard to Rs. 71,000/- received from Shri Kian Shah (son) and directed that the balance amount of Rs. 13,60,000/- should be treated as unexplained receipts u/s 69A of the Act.
Aggrieved with the order of AO, the assessee has preferred an appeal before the Tribunal. Before us, Ld. AR has submitted that during the course of remand proceedings, all the requisite details were submitted before the Ld. AO. These were largely accepted by the Ld. AO in his remand report submitted to the DRP. However, in its final direction Ld. DRP only allowed relief to the assessee with regard to Rs. 71,000/- received from her son Shri Kain Shah and the remaining amounts were treated as unexplained. Ld. AR has, further, submitted a paper book containing copies of documents furnished before the Ld. AO as well as Ld. DRP and argued that the onus on the assessee to prove the identity of the creditors, the genuineness of the transactions and their creditworthiness has been fully discharged. He, accordingly, argued for the deletion of the addition made by the Ld. AO u/s 69A of the Act. Ld. DR, on the other hand, has strongly defended the order of the Ld. AO and submitted that the addition made by the Ld. AO should be upheld as the assessee has been unable to establish the genuineness of these transactions.
A.Y. 2022-23. Payal Harshang Shah We have heard the rival submissions and perused the material available on record. In respect of the three amounts in dispute, the assessee has furnished the following explanation/supporting documents: a. Harshang Shah (Husband) - Rs. 5,13,000/- This loan received from her husband has been confirmed by him through loan confirmation filed along with copies of bank statements evidencing the relevant transactions. Further, a copy of income tax return acknowledgement and balance sheet of Shri Harshang Shah has also been filed. b. Harshang Shah (HUF) Rs. 7,00,000/- The assessee has explained that she had given a loan to the HUF earlier (on 13.02.2021) out of sale proceeds of the flat which has been received back on 18.01.2022. In support of this claim, copies of bank statements, confirmation letter and income tax return acknowledgement have been filed in respect of the HUF. c. Nitin Shah (father-in-law) Rs. 1,47,000/- - as explained by the assessee she had earlier given this amount to her father-in-law as a loan and repayment has been received from him during the period under consideration. In support of this claim, a confirmation letter, balance sheet of Shri Nitin Shah and a copy of income-tax return acknowledgement have been filed.
A.Y. 2022-23. Payal Harshang Shah 8. Thus, it is clear that in respect of all the three transactions, the identity, genuineness and creditworthiness of the concerned entities have been established. It is also to be noted that all the transactions have been made with close family members through banking channels.
In view of the above facts, we are of the view that the assessee has sufficiently discharged the onus to establish the key ingredients viz. identity, creditworthiness and genuineness of the lenders, in respect of these credits. Since all three entities are independently assessed to income tax, addition, if any, could only be considered in their individual hands. Accordingly, we hold that the addition made by the Ld. AO of Rs. 13,60,000/- u/s 69A of the Act in respect of the above credits in the hands of the assessee was not at all justified and is, therefore, directed to be deleted.
In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 28.02.2025.