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Facts
The assessee made large cash deposits, and while most were accepted as sales proceeds, unsecured loans of Rs. 6,37,363/- taken from three relatives were treated as unexplained money under Section 69A by the Assessing Officer (AO). This addition was subsequently confirmed by the CIT(A).
Held
The Tribunal found that the view taken by the AO and CIT(A) was contradictory to the facts on record, as the loans were from closely related persons and the assessee had provided copies of the lenders' ITRs. Consequently, the Tribunal set aside the CIT(A)'s order and directed the AO to delete the addition.
Key Issues
Whether the addition of unsecured loans from relatives as unexplained money under Section 69A of the Income Tax Act was justified, given the nature of the relationship and documentary evidence provided.
Sections Cited
69A
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Income Tax Appellate Tribunal, “SMC” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR
O R D E R This is an appeal filed by the assessee against the order dated 23.02.2024, passed by the ld. Addl./JCIT(A)-2, Ludhiana, for the Assessment Year 2017-2018.
At the outset, on perusal of the appeal record, it is found that the appeal of the assessee is filed belatedly by 29 days. Looking to the facts and circumstances of the case, we condone the delay of 29 days in filing the present appeal on being delayed for genuine and bonafide reasons. The appeal of the assessee is admitted for hearing.
The only issue raised in this case is against confirmation of addition of Rs.6,37,363/- by the ld. CIT(A) as made by the AO u/s.69A of the Act in respect of unexplained money.
Facts in brief are that the assessee filed the return of income which was selected for scrutiny for the reason of ‘large cash deposits in bank accounts during the year.’ Accordingly, statutory notices were issued along with the questionnaire to the assessee. The AO observed that Rs.1,30,54,346/- was deposited by the assessee in his bank account and accordingly the assessee was called upon to explain the same. The assessee replied to the notice by submitting that the cash was deposited out of the sale proceeds of the assessee except unsecured loan of Rs.6,37,363/- which were raised from the relatives. The AO accepted the cash deposited in the bank account to be sales proceeds however added the unsecured loans taken by the assessee from relatives as unexplained money u/s.69A of the Act. In the appellate proceedings, the ld. CIT(A) confirmed the order of the ld. AO on this issue.
After hearing the rival contentions of the parties and perusing the material on record, we find that the addition made by the AO of Rs.6,37,363/- was on account of loans taken by the assessee from three persons, details of which are given at page 5 of the paper book. We note that all the three parties were closely related to the assessee, one is brother-in-law, second is husband of the assessee and third is maternal uncle of the assessee. We find that the loans taken from the above persons on various dates as per the requirement of the assessee in the business. Copies of the loan creditors are available at pages No.6 & 7 of the paper book. The assessee has also filed copy of the ITRs of the above three lenders before us. Having considered all these details, we find that the view taken by the AO and the ld. CIT(A) is apparently