AMIT KANHAIYALAL GIDWANI,,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE - 1,, SANGLI

From perusal of Form No.36, we notice that the amount disputed in the appeal is mentioned in Column 7(c) raising the following issues :

Addition of Rs.6,70,740.00 made being deemed dividend u/s.2(2)(e) of the I.T. Act 1961 from M/s. Apeksha Impex Pvt. Ltd.

Addition of Rs.1,00,000.00 on account of household expenses.”

1 Whereas Column No.10 provides the grounds of appeal raised by the assessee and the same read as under :

The appellant craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of appeal, if deemed necessary at the time of hearing of the appeal.”

During the course of hearing, when ld. Counsel for the assessee was confronted with this situation about grounds of appeal mentioned in Column No.7(c) and Column No.10, he made a request for not pressing disputed amount mentioned in Sl.No.2 and 3 of Column No.7(c). Accordingly, the said ground are dismissed as ‘not pressed’.

The only effective issue assailed in the instant appeal is whether ld.CIT(A) erred in confirming the addition made by AO u/s.68 of the Act for the loan of Rs.12,50,000/- received from Jai Maharashtra Consumer Private Limited (in short ‘JMCPL’).

On the other hand, ld. Departmental Representative vehemently argued supporting the orders of the lower authorities.

We have considered the rival submissions and perused the record placed before us. The only issue for our consideration is whether under the given facts section 68 can be invoked for the unsecured loan of Rs.12,50,000/- received by the assessee from JMCPL. We notice that the assessee is having regular transactions with the alleged creditor and there is opening balance of Rs.60,64,394/-. Further, the transaction during the year was duly explained by the assessee giving following details :

The above details with specific information about the source of funds as well as the sale proceeds for machinery and other transactions clearly indicate that the Identity, creditworthiness of JMCPL is proved and the genuineness of the transaction is also verifiable. It is also noticed that the assessee holds the Equity shares of JMCPL and therefore is well connected with this concern. Considering the overall facts and circumstances of the case, we find that ld.AO erred in invoking section 68 of the Act as the assessee has discharged primary onus by explaining the nature and source of the alleged sum received from JMCPL. Finding of ld.CIT(A) is reversed and ground of appeal raised by the assessee on this issue is allowed.

In the result, appeal of the assessee is partly allowed.

From perusal of Form No.36, we notice that the amount disputed in the appeal is mentioned in Column 7(c) raising the following issues :

Addition of Rs.15,40,000.00 made u/s. 68 of the I.T. Act 1961 on account of unproved loans received from Sunil Gidwani.

Addition on account of notional interest Rs.2,52,000.00. 4. Addition of Rs.1,00,000.00 on account of household expenses.”

1 Whereas in Column No.10 provides the grounds of appeal raised by the assessee and the same read as under :

The appellant craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of appeal, if deemed necessary at the time of hearing of the appeal.”

During the course of hearing, when ld. Counsel for the assessee was confronted with this situation about grounds of appeal mentioned in Column No.7(c) and Column No.10, he made a request for not pressing disputed amount mentioned in Sl.No.1, 3 and 4 of Column No.7(c). Accordingly, the said grounds are dismissed as ‘not pressed’.

The only effective in this appeal is regarding the addition made u/s.68 of the Act by the ld. AO at Rs.15,40,000/- with the loan received from Sunil K.Gidwani.

In the instant appeal, we notice that assessment of the assessee namely Kailash Kanhaiyalal Gidwani through legal heir of Late Kanhaiyalal Vishindas Gidwani for A.Y. 2010-11 was completed on 20.03.2013 u/s.143(3) of the Act. Scrutiny proceedings were carried out after selecting the return of income for A.Y. 2010-11 filed by the assessee on 08.02.2011 declaring income of Rs.1,79,300/- and after validly serving statutory notices the assessment proceedings were carried out. Ld. AO observed that the assessee received loan of Rs.15,40,000/- from Sunil K. Gidwani. Though the submissions were filed before the ld. AO he was not satisfied and made the impugned addition u/s.68 of the Act.

Aggrieved assessee preferred appeal before ld.CIT(A) where it is stated that the sources of funds available with Sunil K. Gidwani was from the business of Turmeric trading but ld.CIT(A) had observed that since the Turmeric trading business is unsubstantiated, sources of alleged sum fails the test check of creditworthiness and the impugned addition was confirmed.

Now the assessee is in appeal before this Tribunal.

Ld. Counsel for the assessee submitted that Sunil K.Gidwani had sufficient funds available with him and even the income of Rs.13,19,928/- has been offered to tax by Sunil K. Gidwani for A.Y. 2010-11. Reference was made to the decision of Coordinate Bench in the case of Kailash Kanhaiyalal Gidwani Vs. ACIT for A.Y. 2010-11 in ITA No.631/PUN/2015 and Sunil Kanhaiyalal Gidwani Vs. ACIT in ITA No.326/PUN/2017 order dated 02.03.2022 wherein the Turmeric business was found to be disclosed by the assessee and profits declared therein was accepted. It was also submitted that sufficient income was declared by Sunil K. Gidwani and which in itself is a source to explain the alleged sum.

On the other hand, ld. Departmental Representative supported the orders of the lower authorities.

We have considered the rival submissions and perused the record placed before us. Loan of Rs.15,40,000/- received by the assessee from Sunil K. Gidwani has been added by the AO invoking section 68 of the Act. We notice that the assessee is related to Sunil K. Gidwani and they are part of the same family. Sunil K. Gidwani has offered income of Rs.13,19,928/- in the income-tax return for A.Y. 2010-11. As far as the balance sheet

In the result, appeal of the assessee is partly allowed.

अपीलाथ / The Appellant. 2. यथ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, “SMC” बच, पुणे / DR, ITAT, “SMC” Bench, Pune.

गाड फ़ाइल / Guard File. आदेशानुसार / BY ORDER,