SRINIVASA RAO BATHINI,WARANGAL vs. INCOME TAX OFFICER, WARD-1, WARANGAL

The brief facts of the case extracted from Hyd/2024 for the A.Y 2011-12 are that, the assessee, an individual, is engaged in the business of commodity trading, has not filed his return of income for the A.Y 2011-12. The Page 1 of 8 information available on record shows that, the assessee had entered into financial transactions/deposits in the bank account in excess of Rs.10 lakhs or more and therefore, the assessment has been reopened u/s 147 of the I.T. Act, 1961 and notice u/s 148 dated 29/03/2018 was issued and served on the assessee. In response to notice u/s 148, the assessee did not file his return of income. Therefore, notice u/s 142(1) of the Act dated 30/11/2018 was issued and served on the assessee. In response to the show cause notice, Shri K. Satyanarayana, Authorized Representative of the assessee appeared and filed Power of Attorney, cash flow statement, unaudited profit & loss account along with balance sheet and copy of return of income filed on 16/12/2018 declaring total income of Rs.3,55,210/- as total income. The Assessing Officer called upon the assessee to explain the source for the cash deposits. In response, the assessee submitted that he has taken loans from relatives, friends and farmers and source for cash deposit is, out of loan received from the parties. The assessee had also furnished names of persons from whom loans claimed to have been received. The Assessing Officer after considering the relevant submissions of the assessee observed that, except names from whom he has taken the amount; the assessee did not file any confirmation from the lenders regarding the loans taken in cash. The assessee neither proved genuineness of the transactions nor explained the creditworthiness of the parties, therefore, rejected the argument of the assessee and made addition of Rs.27,51,000/- u/s 68 of the I.T. Act, 1961 as unexplained cash credits. The Assessing Officer had also made addition of Rs.1.00 lakh towards deduction claimed u/s 80C of Page 2 of 8 the I.T. Act, 1961 towards LIC premium and tuition fees on the ground that, the appellant could not file any evidence to substantiate his claims.

Being aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT (A). Before the learned CIT (A), the assessee has filed certain additional evidences in the form of affidavits along with Pattadar Pass Book from the persons from whom he has received loans in cash. The learned CIT (A) forwarded the additional evidences filed by the assessee to the Assessing Officer for his comments and remand report. The Assessing Officer in the remand report, dated 21/09/2023 commented upon the additional evidences filed by the assessee and also given reasons for additional evidences on two additions made during the assessement proceedings. The learned CIT (A) after considering the relevant evidences filed by the assessee and also taken into account the remand report of the Assessing Officer observed that, on a careful perusal of the copy of the affidavits, it is very clear that they are stereotype and the appellant claims to have received loans in cash from 4 persons, all of them claims to have been agriculturists, without any evidence to prove their genuineness and creditworthiness. Further, in respect of 2 persons, the appellant has not filed any details including their PAN Nos to prove the creditworthiness. Therefore, observed that the appellant has failed to prove the creditworthiness and genuineness of the transactions in respect of loans received in cash and therefore, rejected the arguments of the assessee and sustained the additions made towards loans u/s 68 of the I.T.

Page 3 of 8 Act, 1961. Similarly, the learned CIT (A) also sustained the addition made by the Assessing Officer towards deduction made u/s 80C for Rs.1.00 lakhs since the appellant has not filed any evidence to prove the payment of LIC premium and tuition fees.

Being aggrieved by the order of the learned CIT (A), the assessee is in appeal before the tribunal.

The learned Counsel for the assessee referring to the remand report dated 21/09/2023 submitted that, the Assessing Officer has verified the additional evidences filed by the assessee and found them to be correct and therefore, once the Assessing Officer satisfied the evidences with regard to loans received from various persons, then the learned CIT (A) cannot travel beyond the remand report of the Assessing Officer and allege that, the assessee has failed to prove the genuineness of the transaction and creditworthiness of the parties. The learned Counsel for the assessee further referring to the affidavit filed by the parties submitted that, all of them have filed affidavit along with copy of Pattadar Pass Book and claimed that, they have given loans to the appellant. The learned CIT (A) neither disbelieved the affidavit filed by the assessee, nor carried out any independent inquiries with the creditors to ascertain the nature of the transactions. The learned CIT (A) without carrying out any further inquiry, simply sustained the additions made by the Assessing Officer, even the Assessing Officer has accepted the genuineness of the transactions in the remand proceedings. Therefore, he submitted that the additions made by the Assessing Officer should be Page 4 of 8 deleted. In so far as the addition of Rs.1.00 lakhs towards deduction u/s 80C is concerned, the learned Counsel for the assessee submitted that, the assessee has claimed deduction on payment towards LIC premium and tuition fees and filed the relevant evidences, therefore, the additions so made by the Assessing Officer should be deleted.

The learned DR, on the other hand, supporting the orders of the learned CIT (A) submitted that, the appellant has not proved identity of the parties, genuineness of the transactions and creditworthiness of the loan creditors which is evident from the affidavits filed by the parties where 4 of them claims that they are having agricultural income and given loan in cash. Further, 2 remaining creditors claimed to have been engaged in the business, but no supporting evidences including the ITR filed for the relevant A.Y has been filed. The learned CIT (A) after considering the relevant evidences has rightly sustained the additions made by the Assessing Officer and thus, the order of the learned CIT (A) should be upheld.

We have heard the arguments of both the parties, perused the material available on record and gone through the orders of the authorities below. The facts borne out from the record shows that the appellant has made cash deposits into the Bank Account and explained the source out of loans from various persons. The assessee claims to have received loan from 8 persons amounting to Rs.27,10,000/- and filed affidavits along with copy of Pattadar Pass Book. Out of 8 persons, 4 persons

Page 5 of 8 claims to be agriculturists and derive agricultural income to explain loan given to the assessee. From the details filed by the assessee including the affidavits, we find that all of them have small agricultural landholding and out of said land holding, it is difficult to explain the source for huge amount of loans given to the assessee. Further, except the copies of the Pattadar Pass Book, the appellant has not filed any evidences to prove the creditworthiness of the loan creditors. Further, in respect of remaining 4 creditors, the appellant claims to have take loan from persons who are engaged in electrical work, agency and sale of lubricant oil business, but no details of PAN and Bank Accounts has been filed to prove the genuineness of the transactions. From the above, it is undisputedly clear that the appellant has failed to prove the amount of loan received from the persons with credible evidences. Further, even before us, except the affidavits filed before the learned CIT (A), the assessee has not filed any evidences to justify his case. Therefore, we are of the considered view that there is no error in the reasons given by the learned CIT (A) to sustain the additions made by the Assessing Officer towards loans claims to have been received in cash from various persons u/s 68 of the I.T. Act, 1961. Thus, we are inclined to uphold the findings of the learned CIT (A) and reject the grounds taken by the assessee.

In so far as the addition of Rs.1.00 lakh towards deduction u/s 80C of the I.T. Act, 1961 is concerned, the appellant has not filed any evidences including receipts for payment of LIC premium and tuition fees. In absence of any Page 6 of 8 evidences, the argument of the assessee that he has paid LIC premium and tuition fee cannot be accepted. Thus, we are inclined to uphold the findings of the learned CIT (A) and rejects the grounds taken by the assessee.

In the result, appeal taken by the assessee in for the A.Y 2011-12 is dismissed.

The facts and issues involved in this appeal are identical to the facts and issues which we had considered in for the A.Y 2011-12. The assessee has made cash deposits into bank account and explained the source out of loans claims to have been received from 17 persons amounting to Rs.95.00 lakhs. The assessee could not establish the genuineness of the transaction and creditworthiness of the loan creditors which is evident from the findings of the facts recorded by the learned CIT (A) in light of the affidavits filed by the assessee. A similar issue has been considered by us in appellant’s own case for the A.Y 2011-12 where the Assessing Officer has made addition towards loans u/s 68 of the I.T. Act, 1961 and the same has been upheld by the learned CIT (A). The assessee has challenged the additions before the Tribunal and after appraisal of the relevant facts, the ITAT has confirmed the addition made by the Assessing Officer. Since facts are exactly identical for the year under consideration, the reasons given by us in preceding paragraph No.7 shall mutatis mutandis apply to this appeal, as Page 7 of 8 well. Therefore, for similar reasons, we are inclined to uphold the findings of the learned CIT (A) and dismiss the appeal filed by the assessee for the A.Y 2012-13.