INCOME TAX OFFICER vs. HASMUKH HIRJIBHAI SHAH, PUNE

आदेश / ORDER PER ANIL CHATURVEDI, AM :

This appeal filed by the Revenue is emanating out of the order of 1. Commissioner of Income Tax (A) – 4, Pune dt.10.09.2016 for the assessment year 2007-08.

Assessee is an individual who filed his return of income for A.Y. 2007-08 on 25.03.2008 declaring total income of Rs.4,33,910/-. The return of income was initially processed u/s 143(1) of the Act. Thereafter, the case was re-opened u/s 147 of the Act by issuing notice u/s 148 of the Act

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dt.30.03.2014 which was issued and served on the assessee. Thereafter

assessment was framed u/s 143(3) r.w.s. 147 of the Act by order

dt.30.03.2015 and the total income was determined at Rs.78,33,910/-.

Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A),

who vide order dt.10.09.2016 (in appeal No.PN/CIT(A)-4/ITO, Ward-5(3),

Pune/126/2015-16) granted substantial relief to the assessee. Aggrieved by

the order of Ld.CIT(A), Revenue is now in appeal before us and has raised

the following grounds :

“1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in not considering the Assessing Officer’s contention that the Karta of HUF is the manager of the financial transactions made in the name of the HUF and manipulated the transactions by depositing the cheques in the bank accounts of the HUF ?

information received in his office, AO noticed that during the year under

consideration, assessee had received total amount of Rs.74 lakhs in

aggrigate as loan from Kailash International, Natasha Enterprises and Mohit

International. The assessee was asked to substantiate the loan taken and

give the details of the same. The assessee inter-alia submitted that the

loans and advances were exclusively received and utilized by the Karta of

HUF and was reflected in the audited accounts in the HUF’s return of

income. The submission of the assessee was not found acceptable to the

AO. AO was of the view that the genuineness of sources of loan was not

proved by the assessee. AO noted that since assessee had raised the issue

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of taxation in the hands of HUF and not in his individual capacity, to

protect the interest of the revenue, substantive addition of Rs.74 lakhs was

made in the hands of individual and protective addition was made in the

hands of HUF. Aggrieved by the order of AO, assessee carried the matter

before Ld.CIT(A), who deleted the addition by observing under :

“6.3 DECISION :- I have perused the assessment order the submission made by the appellant and the detailed / evidences filed in the Paper Book as stated above carefully. I find that during the re-assessment proceeding, virtually, the AO did not consider the detailed submission made before him by the appellant. It evidently transpires from the assessment order that the appellant filed submission stating the facts of the case in his letter dated 20/01/2015 contending that the loan transaction of Rs. 74,00,000/- were made in the name of Hasmukh H Shah (HUF) during A.Y.2007-08 not Shri. Hasmukh H Shah (Individual). It is further seen that vide submission dated 16/03/2015, the appellant re- iterated the aforesaid facts inter-alia contending that another letter was filed before the AO on 11/03/2015. The appellant further filed the letter on 24/03/2015 the condense of which have. also been briefly stated by the AO in para 8 of the assessment order. However, no detailed discussion was made by the AO as to why the appellant's claim that the transactions pertained to the HUF and not be individual should not be accepted. The appellant had submitted time and again his say that the balance sheet and the audited account made in the case of HUF in the year 2007 are far before the statement of Shri Praveen Jain recorded in the year 2013 and further that the aforesaid transaction were reflected in the return and accounts filed before the department in the case of the HUF, were not considered and decided by the AO in the assessment order. That being the main issue in the case of the appellant, the same was required to be elaborately discussed by the AO with reference to the details / evidences filed besides various submissions made before him by the appellant. Instead of harping on the same, the AO discussed the facts of the statement of Shri Praveen Jain, accommodation entries, technical defect of sec.292B etc., which in my opinion, had resulted into detraction from the main issue in this case. I find from the copies of Balance Sheet and Audited account and bank account of UTI Bank Ltd. as well as ledger account of the concerned loan creditor that the transaction of loans and advances of Rs. 74,00,000/- were effected in between the 3 loan creditors namely M/s. Kailash International, Natash Enterprises and Mohit International of Rs. 44,00,000/- , Rs.10,00,000/- and Rs.20,00,000/- on 07-08/06/2006, 07/06/2006 and 07/06/2006 respectively and also Hasmukh H Shah (HUF). The transaction no were indicate that the same were made in between in aforesaid 3 parties and Shri Hasmukh H Shah in his individual capacity. A plain looking of the documents filed by the appellant before the AO could implicitly prove the aforesaid facts. Accordingly I agree with the submission of the appellant that the AO erred in making addition of unsecured loan of Rs.74,00,000/- in the hands of the appellant under consideration. Action, if any, was required to the taken in the hands of the HUF namely Hasmukh H Shah (HUF) by the concerned Assessing Officer having jurisdiction over the said case. The addition so made of Rs. 74,00,000/- in the case of the appellant is hereby deleted. Ground no.4 and 5 are accordingly allowed.”

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Aggrieved by the order of Ld.CIT(A), Revenue is now before us.

hand, reiterated the submissions made before AO and Ld.CIT(A) and

supported the order of Ld.CIT(A).

The issue in the present ground is with respect to addition of Rs.74 lakhs in

the hands of the assessee. It is the case of assessee that the amount has

been received by the Karta of HUF and not

by the assessee in his individual capacity. We find that Ld.CIT(A) after

considering the submissions of the assessee and the documents furnished

before him has given a finding that the transaction of Rs.74 lakhs was

effected between Kailash International, Natasha Enterprises and Mohit

International and the HUF of assessee and that the transactions nowhere

indicated that the same were made by assessee in his individual capacity.

Before us, Revenue has not placed any material on record to controvert the

findings of Ld.CIT(A) or has pointed any fallacy in the findings of Ld.CIT(A).

We therefore find no reason to interfere with the order of Ld.CIT(A). Thus,

the grounds of the Revenue are dismissed.

Order pronounced on 7th day of June, 2019.

Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 7th June, 2019. Yamini

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आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to :

आदेशानुसार/ BY ORDER

// True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.