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Facts
The assessee filed an appeal against the order of the Ld. CIT(A)/NFAC concerning AY 2012-13. The Assessing Officer made several additions, including Rs. 3,68,76,096 for unexplained cash credit, Rs. 15,92,941 for routine expenses, Rs. 54,00,000 for unsecured loans, and Rs. 6,75,285 for unverifiable expenses. The CIT(A) granted partial relief on these additions.
Held
The Tribunal held that the deletion of Rs. 3,68,76,096 for unexplained cash credit by the CIT(A) was justified, as the addition was based on duplicated entries and the assessee's business turnover supported the cash deposits. The issue of unsecured loans was restored to the AO for fresh verification due to incomplete documentation. The restriction of disallowance for routine expenses and unverifiable expenses by the CIT(A) was upheld.
Key Issues
Whether the deletion of addition for unexplained cash credit was justified, and if the assessee had provided sufficient evidence for unsecured loans and expenses.
Sections Cited
143(2), 142(1), 144, 69A, 68, 250(4)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R. K. PANDA & MS. ASTHA CHANDRA
These are cross appeals – the first one is filed by the assessee and the second one filed by the Revenue and are directed against the order dated 28.12.2023 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2012-13. For the sake of convenience, these were heard together and are being disposed of by this common order.
These appeals were earlier dismissed by the Tribunal for want of prosecution. Subsequently the Tribunal vide M.A. Nos.59 & 60/PUN/2024 order dated 09.04.2025 recalled the earlier orders. Hence, these are recalled matters.
ITA No.462/PUN/2024 (By the Revenue)
Facts of the case, in brief, are that the assessee is an individual and filed his return of income on 30.09.2012 declaring total income of Rs.5,65,920/-. The case was selected for scrutiny and accordingly statutory notice u/s 143(2) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was issued and served on the assessee. Subsequently notices u/s 142(1) and 143(2) of the Act were issued and served on the assessee calling for various documents on the basis of which the return of income was filed. Since there was no response from the side of the assessee, the Assessing Officer completed the assessment u/s 144 of the Act determining the total income of the assessee at Rs.4,51,10,240/- as against the returned income of Rs.5,65,920/- wherein he made the following additions: a) addition u/s 69A Rs.3,68,76,096/- b) provision for routine expenses Rs.15,92,941/- c) Unsecured loans u/s 68 Rs.54,00,000/- d) Unverifiable expenses Rs.6,75,285/-
Before the Ld. CIT(A) / NFAC the assessee uploaded the written submissions on various dates. The assessee thereafter filed certain additional evidences which were forwarded to the Assessing Officer for his comments. Considering the comments of the Assessing Officer in the remand report and rejoinder of the assessee to such remand report, the Ld. CIT(A) / NFAC deleted the addition of Rs.3,68,76,096/- made by the Assessing Officer as unexplained cash credit u/s 69A of the Act. He, however, restricted the addition on account of provision for routine expenses to Rs.2,83,000/-, restricted the addition to Rs.50 lakhs out of Rs.54 lakhs made by the Assessing Officer u/s 68 of the Act towards unsecured loans and restricted the disallowance out of expenses to Rs.3,23,704/-.
Aggrieved with such part relief granted by the Ld. CIT(A) / NFAC, the Revenue as well as the assessee are in appeal before the Tribunal by raising the following grounds:
Grounds raised by the Revenue in 1. On the facts and in the circumstances of the case, with regard to the addition of Rs.3,68,76,096/- towards unexplained cash credit u/s.69A, the ld. CIT(A) erred in fact by simply relying on the remand report submitted by the AO, without verification of the same.
2. On the facts and in the circumstances of the case, with regard to the addition of Rs.3,68,76,096/- towards unexplained cash credit u/s.69A, the ld. CIT(A) erred in considering the remand report without exercising his coterminous powers u/s.250(4) of the Act.
3. In view of the facts and circumstances of the case, with regard to the addition of Rs.3,68,76,096/- towards unexplained cash credit u/s.69A, the ld. CIT(A) erred in non-appreciation of the correct facts.
4. On the facts and in the circumstances of the case, with regard to the addition of Rs.3,68,76,096/- towards unexplained cash credit u/s.69A, the ld. CIT(A) erred in non-appreciation of the fact that the contention of the assessee as per the additional evidences furnished, wherein it is categorically submitted by the assessee that the cash withdrawals from assessee's other banks were Rs.1,91,33,353/- which were majorly from Union Bank of India (Rs.6,60,000/-) and RDCC Cash Credit Account No. 37545 (Rs.1,84,73,353/-) is not correct.
5. On the facts and in the circumstances of the case, with regard to the addition of Rs.3,68,76,096/- towards unexplained cash credit u/s.69A, the ld. CIT(A) erred in non-appreciation of the fact that verification of sources of cash deposits in HDFC Bank Ltd has not been carried out properly in the remand report proceedings.
6. It is humbly requested that the order of the CIT(A) may be set-aside back to the file of the AO for verification afresh.
Grounds raised by the assesse in 1.0. On facts and circumstances of the case and in law, Ld CIT(A) erred in confirming the disallowance of provisions for routine expenses pertaining to audit fees, accounting charges and legal & professional lees amounting to Rs.83,000/- 2.0 On facts and circumstances of the case and in law, Ld CIT(A) erred in confirming the addition u/s 68 of unsecured loan received from Janardan Patil of Rs.50,00,000/-. 3.0 The ld. CIT-(A) before confirming the addition of sec. 68 of unsecured loan of Rs.50,00,000/-, ought to have considered the understated vital facts being. The 1st Proviso to see.68 would not apply for impugned AY 2012-13, a) accordingly, the appellant is not required to prove the source of lender's fund; b) The appellant had proved the complete identity, genuineness and creditworthiness of lender on filing the copies of PAN AO details. Ledger a/c confirmation of loan, own bank statement and bank statement of the lender filed on record; c) The entire loans has been received through proper banking channels. d) The Ld. AO did not conduct any independent inquiry and had not brought any contrary material on record to disprove the loan received during the year. e) The part repayment of loan has been accepted as genuine in the assessment order. 4.0 On facts and circumstances of the case and in law, ld. CIT(A) erred in confirming the ad-hoc disallowance of expense of Rs.3,23,704/- (20% of Rs.16,18,250/-).
The appellant craves leave to add, amend, alter, and or withdraw any of the grounds of appeal at the time of hearing.
6. So far as the grounds raised by the Revenue regarding deletion of Rs.3,68,76,096/- is concerned, we find on the basis of various submissions made by the assessee the Ld. CIT(A) / NFAC called for a remand report from the Assessing Officer who gave the following comments in the remand report on this issue:
We find after considering the above submissions, the Ld. CIT(A) / NFAC deleted the addition by observing as under: “7.1 During the course of appellant proceedings, the appellant submitted the additional evidences explaining the source of cash deposits and submitted that the basis of addition of Rs.3,68,76,096/- was not provided by the AO and it is not known as to how the AO arrived at the above figure. 7.2 I have perused the assessment order, grounds of appeal, submission filed by the appellant including additional evidences, remand report submitted by the AO and counter comments submitted by the appellant on the remand report carefully. I find from the remand report that in ITS data, the same cash deposit transactions was shown twice. Therefore the AO after examining the additional
evidences reported that the actual cash deposit amount is reported double than the actual. Thus the correct cash deposit amount was found to be Rs.1,84,38,048/-, Further the AO found that the appellant is in the business of sale of petrol, diesel & lubricant oil and the turnover of the appellant during FY 2011-12 was Rs.18,77,16,250/-. Therefore the AO reported that considering the nature of business of the appellant the source of cash is the business receipts Considering the finding of the AO in the remand report proceedings, the addition of Rs.3,68,76,096/- made by the AO is hereby deleted. Thus the ground of appeal raised by the appellant is allowed.”
8. After considering the rival arguments made by both the sides, we do not find any infirmity in the order of the Ld. CIT(A) / NFAC on this issue. Admittedly the Assessing Officer in the remand report has categorically stated that the total cash deposit is not Rs.3,68,76,096/- but it is only Rs.1,84,38,048/- and the mistake occurred due to the duplication of entries. He has also gave a finding that the total turnover of the assessee from sale of petrol, diesel, lubricant oil is Rs.18,77,16,250/-. Further, it is also an admitted fact that the money has been withdrawn from one bank account and deposited in the other bank account for issuing cheques / transfer of funds to the oil companies for purchase of goods. Since the order of the Ld. CIT(A) / NFAC is based on the remand report of the Assessing Officer and the Ld. DR could not bring on record any contrary material to our notice to take a different view other than the view taken by the Ld. CIT(A) / NFAC, therefore, we do not find any infirmity in the order of the Ld. CIT(A)/ NFAC on this issue. The grounds raised by the Revenue challenging the order of the Ld. CIT(A) / NFAC in deleting the addition of Rs.3,68,76,096/- are dismissed.
So far as the assessee’s appeal is concerned, the first issue raised by the assessee in the grounds of appeal relates to the order of the Ld. CIT(A) / NFAC in restricting the addition on account of provision for routine expenses to Rs.83,000/- as against Rs.15,92,941/-.
We find the Ld. CIT(A) / NFAC on the basis of remand report of the Assessing Officer and the submissions of the assessee to such remand report has restricted the addition to Rs.83,000/- out of Rs.15,92,941/- by observing as under: “8. Ground No.3:- In this ground the appellant has contested the addition of Rs.15,92,941/-on account of disallowance of the provisions made in the balance sheet. 8.1 During the course of appellate proceedings, the appellant has submitted the additional evidences and explained that the provision of current year is only Rs.83,000/- and remaining amount is outstanding balance of earlier years. 8.2 I have perused the assessment order, grounds of appeal, submission filed by the appellant including additional evidences, remand report submitted by the AO and counter comments submitted by the appellant on the remand report carefully I find from the remand report that the contentions raised by the appellant is found to be correct by the AO and the current year's provision is only to the extent of Rs.83,000/-. Therefore the addition to the extent of Rs.83,000/- is confirmed and balance addition of Rs.15,09,941/- is hereby deleted. Thus the ground of appeal raised by the appellant is partly allowed.”
11. We find the Assessing Officer on this issue has in his remand report observed as under: “ii) Addition on account of disallowances of Provisions of Rs.15,92,941/-: The addition was made on account of disallowances of provisions of Rs.15,92,941/- made in balance sheet during the year under consideration. In this regard the assessee has made submission and stated that:
"The Appellant has made Provisions for Expenses of Rs.15,92,941/- in the Balance Sheet as on 31/03/2012 details of the relevant opening balances as on 01/04/11, payments made during the Financial Year 2011/12, Provisions made during Financial Year 2011/12, closing balances as on 31/03/12 and date of Final payments made are given as under-
Particulars Opening Payments Provisions Closing Date of Final Balance as on made during made during Balance as on Payment 01/04/2011 the year 2011- the year 2011- - 31/03/2012 12 12 Accounting 48,000/- 48,000/- 96,000/- Paid on 17- Charges 12-2013 vide Payable Cheque number 000838 Audit Fees 25,000/- 25,000/- 50,000/- Payable Interest on 2,27,831/- 2,27,831/- 06/11/2012 TDS AY 2011-12 Interest on 1,15,940/- 1,15,940/- -- 15/09/2011 TDS on Commission Professional 10,000/- 10,000/- 20,000/- Fees Payable TDS on 11,99,110/- 11,99,10/- 06/11/2012 Commission AY 2011-12 TDS on 6,81,998/- 6,81,998/- -- 15/09/2011 Commission Total 23,07,879/- 7,97,938/- 83,000/- 15,92,941/-
We find the order of the Ld. CIT(A) / NFAC is on the basis of remand report which in turn is on the basis of various documents filed by the assessee before the Assessing Officer during the remand proceedings. The Ld. Counsel for the assessee could not point out any mistake in the order of the Ld. CIT(A) / NFAC on this issue. The ground raised by the assessee on this issue is accordingly dismissed.
The second issue raised by the assessee in the grounds of appeal relates to the order of the Ld. CIT(A) / NFAC in restricting the addition to Rs.50 lakhs out of Rs.54 lakhs made by the Assessing Officer u/s 68 of the Act on account of unsecured loans.
After hearing both the sides, we find the Assessing Officer made addition of Rs.54 lakhs u/s 68 of the Act on account of unsecured loans out of which the Ld. CIT(A) / NFAC deleted an amount of Rs.4 lakhs but sustained the balance amount of Rs.50 lakhs by observing as under: “9.2 I have perused the assessment order, grounds of appeal, submission filed by the appellant including additional evidences, remand report submitted by the AO and counter comments submitted by the appellant on the remand report carefully. I find from the remand report that the appellant has produced the evidences in respect of unsecured loan of Rs.4,00,000/- only which has been accepted as genuine by the AO in the remand report proceedings However for the remaining unsecured loan of Rs50,00,000/- obtained from Shri. Janardan Anat Patil, the additional evidences produced by the appellant are not found to be acceptable since only PAN and bank statement is submitted but the creditworthiness of the lender is not proved with supporting documents. Therefore the addition of Rs.4,00,000/- is deleted and balance addition of Rs.50,00,000/- is confirmed. Thus the ground of appeal raised by the appellant is partly allowed.”
15. We find it is an admitted fact that the assessee has furnished PAN number and the bank statement of the loan creditor. It is the submission of the Ld. Counsel for the assessee that the assessee has provided the PAN number and the bank statement of the loan creditor along with the confirmation statement. No doubt the bank statement shows sufficient credit balance on the dates of transfer of money as loan. However, the allegation of the Assessing Officer was that the assessee has not submitted the copies of ITR and Balance Sheet of the lender. Relying on various decisions, it is the submission of the Ld. Counsel for the assessee that the addition is uncalled for. However, we are unable to accept the above contention of the Ld. Counsel for the assessee. It is the settled proposition of law that for accepting any cash credit, the onus is always lies on the assessee to substantiate with evidence to the satisfaction of the Assessing Officer regarding the identity and creditworthiness of the loan creditor and the genuineness of the transaction. In the instant case, although the assessee has filed the bank statement of the loan creditor and PAN number, however, neither his balance sheet nor his income tax returns were filed and therefore there was only part compliance. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one opportunity to the assessee to substantiate his case by filing the requisite documents before him which were not filed during the remand proceedings. The Assessing Officer shall decide this issue afresh and in accordance with law after providing due opportunity of being heard to the assessee. The ground raised by the assessee on this issue is accordingly allowed for statistical purposes.
The third issue raised by the assessee in the grounds of appeal relates to the order of the Ld. CIT(A) / NFAC in restricting the disallowance of expenses from Rs.6,75,285/- to Rs.3,23,704/-.
17. After hearing both the sides, we find the Assessing Officer in absence of any documents produced by the assessee, disallowed an amount of Rs.6,75,285/- being 20% of total expenses claimed at Rs.33,76,425/-.
In appeal, the Ld. CIT(A) / NFAC restricted the disallowance to Rs.3,23,704/- by observing as under: “10.2 I have perused the assessment order, grounds of appeal, submission filed by the appellant including additional evidences, remand report submitted by the AO and counter comments submitted by the appellant on the remand report carefully. I find from the remand report that the appellant has claimed other expenses of Rs.33,76.425/, however no documentary evidences were produced before AO during assessment proceedings to prove the genuineness of the said expenses. Therefore AO had made disallowance of 20% expenses amounting to Rs.6.75,285/-. During appellate proceedings, the appellant has produced the evidences in respect of the said expenses. During remand report proceedings, the AO after examination of the additional evidences reported that the expenses of Rs.16,99,897/- are found to be in order with supporting evidences but the expenses of Rs.16,18,250/- are not found to be supported by any evidences. Therefore the AO worked out the correct disallowance at Rs.3,23,704/- as against Rs.6,75,285/- made by the AO during assessment proceedings. Therefore considering the finding of the AO in remand report, the addition of Rs.3,51,581/- is deleted and balance addition of Rs.3,23,704/- is confirmed. Thus the ground of appeal raised by the appellant is partly allowed.”
19. It is the submission of the Ld. Counsel for the assessee that such disallowance is on the higher side. Since the assessee during the course of assessment proceedings did not make any submission and has filed certain additional evidences before the Ld. CIT(A) / NFAC based on which he has called for a remand report and after considering the contents of the remand report and rejoinder of the assessee to such remand report restricted the addition to Rs.3,23,704/- by passing a speaking order on this issue, therefore, in absence of any distinguishable factors brought before us, we do not find any infirmity in the order of the Ld. CIT(A) / NFAC on this issue. Accordingly the same is upheld and the ground raised by the assessee on this issue is dismissed.
In the result, the appeal filed by the Revenue is dismissed and the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open Court on 31st July, 2025.