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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI C.M.GARG & SHRI O.P.MEENA
आदेश /O R D E R PER O. P. MEENA, ACCOUTANT MEMBER: 1. This appeal filed by the Assessee is directed against the order of learned Commissioner of Income Tax (Appeals)-2, Surat(in short “the CIT (A)”) dated 19.09.2016 pertaining to Assessment Year 2012-13 which in turn has arisen from the order passed by the Deputy Commissioner of Income Tax, Circle-1(2), Surat(in short “the AO”) dated 30.03.2015 under section 143(3) of Income Tax Act,1961 (in short ‘the Act’).
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Ground No.1 and 2 relates to confirming the addition of Rs.3,50,000/- with interest Rs.6,214/- on account of unexplained cash credit u/s.68 of the Act.
Brief facts of the case are that the assessee has raised unsecured loan amount of Rs.15,10,000/- from various persons which was subsequently re-paid during the year. The assessee was asked to explain the loan creditors of five persons which was explained by the assessee by filing a letter. However, the AO was of the view that all the loans have been provided immediately after receiving equal amount of funds through clearing/NEFT etc., all the documents submitted are found to be corroborative and reasons submitted are afterthought. The prime plea of the assessee that amount has been received through cheque, hence, genuineness of the loan cannot be questioned. However, the assessee has refrained from making available to the lendors. Therefore, the loans amounting to Rs.15,10,000/- were added u/s.68 of the Act. Consequently, interest thereon amounting Rs.73,302/- was also added.
Being aggrieved, the assessee filed appeal before the ld.CIT(A) wherein the addition in respect of Jasoda S Chaudhari
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(Rs.2 lakhs) Daxaben B. Kalsariya (Rs.2.60 lakhs) and Babubhai H.Chaudhari (Rs.7 lakhs) with interest were deleted on the ground that they have duly appeared before the AO and filed confirmations, hence addition with interest in respect of these three persons was deleted. However, the addition of Rs.3,50,000/- + interest of Rs.6,210/- in respect of Shri Chhaganbhai M Thakore was upheld on the ground that he has denied to have given any loan to the appellant in his statement u/s.131 of the Act. The copy of statement and oath was also provided to the appellant during the appellate proceedings, however, the lendor did not attend the office in compliance to summons u/s.131 of the Act for the cross examination, instead of he submitted an affidavit claiming that he had given loans to the appellant during the year and retracting the statement given earlier. However, the CIT(A) has confirmed the same by citing same case in support of his view.
Being aggrieved the assessee has filed this appeal before us. The ld.Counsel submitted that in compliance to summons issued u/s.131 of the Act Shri Chhaganbhai M Thakore has furnished the Return of Income for A.YL. 2012-13 and 2013-14 along with the computation of income, copy of bank statement with Canara Bank
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and copy of ledger account appearing in his books of accounts for A.Y. 2012-13. It was mentioned in the letter dated 08.08.2016 submitted to the AO (PB, Page 4) that he was living in Disa in North Gujarat and due to heavy rain he was unable to comedown to Surat to attend the summon proceedings. Therefore, he has submitted an affidavit sworn in before the notary at Disa stating therein the details of transactions entered into by him with the assessee wherein it has been clearly mentioned that he has advanced a sum of Rs.3,50,000/- to Shri Sai Enterprise on 24.02.2011 which was returned by them on 08.04.2011. He has also stated the statement given to AO he was under sheer confusion and having not much educational background, hence wrongly replies which is not correct, hence he is retracted the statement filed in on this affidavit. The ld.counsel further submitted that Shri Chhaganbhai M Thakore was not produced before the AO for cross examination even though specifically demanded by the assessee. Therefore, it was submitted that the evidence which is not shown to the assessee cannot be admitted as held by the Hon'ble Supreme Court in the case of Kishanchand Chellaram Vs. CIT 125 ITR 713 (SC). Further, the amount of Loan has been re-paid during the year under consideration. Therefore, no adverse view is called for and
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the issue is squarely covered by decision of Gujarat High Court in the case of CIT vs. Ayachi Chandrasekhar Narsang wherein it has been held that where the department had accepted re-payment of loan in subsequent year, no addition was to be made in current year on account of cash credit. Even in the case of ITO vs. Shyam Sundar Jajodia [2008] 26 SOT 541 Del. The Tribunal held that re- payment of loan confirmed the earlier explanations/correspondence of loan. It was further contended that where lenders of the assessee are Income Tax Assessee’s whose PAN have been disclosed AO cannot ask the assessee to prove genuineness of the transaction without first verifying such fact from Income Tax Returns of the lenders as held by the Hon'ble Gujarat High Court in the case of CIT vs Ranchodbhai J.Nakhwa [2012] 21 taxmann.com 159 (Guj).
Per contra, the ld.Senior Departmental Representative supported the orders of the Lower Authorities.
We have considered the rival submissions and perused the material on record. We find that the CIT(A) has confirmed the addition of Rs.3,50,000/- received from Shri Chhaganbhai M Thakore only on the account of that he has denied to have given
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any such to the assessee in his statement recorded on oath u/s.131 of the Act. However, subsequently Shri Chhaganbhai M Thakore has filed an affidavit retracting the statement as given before the AO and also filed copy of return for the A.Y. 2012-13 & 2013-14 and copy of bank statement and copy of ledger account by reflecting the receipt of loan by an amount of Rs.3.5 lakhs on 07.04.2011 by cheque and by payment with interest of the amount of Rs.3,55,593/- on 31.05.2011. Thus, all the transactions are through cheque and reflected in the bank statement, copy of account and supported by affidavit of the lendor, therefore, we are of the considered opinion that CIT(A) was not justified in confirming the such addition without allowing cross examination to rebut the averments made in the affidavit. Further, the Hon'ble Gujarat High Court in case of Ranchodbhai J. Natwa (supra) has held that where lendors of the assessee are Income Tax Assessee’s whose PAN have been disclosed to AO cannot ask assessee further prove genuineness of the transaction without first verifying such facts from Income Tax Return. Further, when the amount has been re-paid back which has been accepted by the AO, then no adverse view can be taken as held by the Hon'ble Gujarat High Court in the case of CIT vs. Ayachi(supra). In view of these facts, the addition
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of Rs.3,50,000/- together with interest of Rs.6,214/- is therefore directed to be deleted.
In view of these facts, ground no.1 & 2 of appeal is accordingly allowed.
In the result, appeal of the assessee is allowed.
The order pronounced in the open court on 14.11.2018.
Sd/- Sd/- (सी.एम.गग� /C.M. GARG) (ओ.पी.मीना/O.P.MEENA) �याियकसद�यतथा/JUDICIAL MEMBER लेखासद�यकेसम� /ACCOUNTANT MEMBER सुरत/ Surat, �दनांक Dated: 14th November, 2018/S.Gangadhara Rao, Sr.PS Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order / / TRUE COPY / / Assistant Registrar, Surat