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Facts
The assessee received a cash loan of INR 10,00,000 from Shri Hargovandas Kalabhai Koli Patel, an agriculturist who had received substantial compensation for land acquisition and made large cash withdrawals. The Assessing Officer treated this loan as unexplained income because the assessee failed to furnish complete details and comply with statutory notices during the inquiry.
Held
The Tribunal found that the source of the loan was genuinely established and well-documented through the AO's own inquiries into the lender's finances, including land acquisition compensation and cash withdrawals. Therefore, the addition of INR 10,00,000 to the assessee's income was unwarranted, and no addition was called for.
Key Issues
Whether a cash loan received by the assessee can be treated as unexplained income when the source, including the lender's identity and financial capacity, was subsequently verified and established by the Assessing Officer himself.
Sections Cited
250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-SHRI T.R. SENTHIL KUMAR
(Assessment Year: 2012-13) Vs. Abhubhai Nagarbhai Koli Patel, Income Tax Officer, 105, Lekhamba, Vahanivas, Ward 3(2)(1), At-Lekhamba, Tal. Sanand, Ahmedabad Ahmedabad-382110 [PAN : CNJPK 3391 J] (Appellant) .. (Respondent) Assessee by : Shri Dhinal Shah, AR Revenue by: Shri Rohit Aasudani, Sr DR Date of Hearing 11.11.2025 Date of Pronouncement 12.11.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT : Delay Condoned. This appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as "CIT(A)" for short) dated 30.01.2025 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as "the Act" for short], for Assessment Year (AY) 2012-13.
The assessee has raised the following grounds of appeal :- “1 The Learned Commissioner of Income Tax (Appeals) ['CIT(A)'] has erred in not allowing condonation of delay in filing the appeal, despite the Appellant having demonstrated sufficient and reasonable cause, being an illiterate person residing in a remote village with no timely delivery of postal communications; and thereby failed to adopt a liberal approach as mandated by law, resulting in denial of substantial justice.
2. That the Learned Assessing Officer ("AO") / Learned Commissioner of Income Tax (Appeals) has erred in treating the loan of INR 10,00,000 received from Shri Hargovandas Kalabhai Koli Patel as unexplained income, despite the fact that the very source of such loan was identified and brought on record by the AO himself on the basis of inquiries conducted by the DDIT (Inv.), Unit-1(1). Accordingly, the addition made is unjustified, invalid, and contrary to law.”
The brief facts of the case are that the assessee is an individual who has not filed his return of income for the year under consideration. Another fact relevant for adjudication of the issue is that Shri Hargovandas Kalabhai Koli Patel, who is an agriculturist and his land was acquired by the GIDC, Ahmedabad. In turn, he has received an amount of Rs.3,07,66,301/- from GIDC, Unit-I, Ahmedabad as compensation for land acquisition. Subsequently Shri Hargovandas Kalabhai Koli Patel withdrew an amount of Rs.2,17,22,600/- in cash. Out of these cash withdrawals, the following expenditures/investments were recorded by the Assessing Officer.
Sr. No. Nature of Expenditure/Investment Amount (Rs.) 1 Agricultural land purchased 20,01,200 2 Vehicles purchased 22,38,123 3 Gold purchased 8,28,161 4 Loan given to Abhubhai Nagarbhal Koli Patel 10,00,000 (The Asseseee ) 5 Expenditure incurred on building construction 45,00,000 6 Amount given to 8 family members 85,00,000 7 Marriage expenses of his son 6,50,000 8 Cash on hand 20,05,116 TOTAL 2,17,22,600
During the course of inquiry, the assessee, Shri. Abhubhai Nagarbhal Koli Patel could not furnish complete details, namely the name, address, confirmation, and PAN of Shri Hargovandas Kalabhai Koli Patel from whom a loan of Rs.10,00,000/- was taken in cash. Since the assessee did not comply with the statutory notices issued by the Revenue Department, the Assessing Officer treated the amount of Rs.10,00,000/-, which was received by the assessee from Shri Hargovandas Kalabhai Koli Patel, as unexplained income of the assessee and added to his total income.
We have heard both the parties and carefully perused the material available on record. It is evident that the assessee received a cash loan of Rs.10,00,000/- from Shri Hargovandas Kalabhai Koli Patel, an agriculturist whose land was acquired by GIDC, Ahmedabad. Shri Hargovandas Kalabhai Koli Patel had received Rs.3,07,66,301/- as compensation for the acquisition and subsequently withdrew Rs.2,17,22,600/- in cash, out of which the loan of Rs.10,00,000 was extended to the assessee. The Revenue Authorities have treated this loan amount as unexplained income. The genuineness of the source has been clearly established on record now and is not in dispute. Considering the detailed inquiry conducted, the verified source of funds, the documented cash withdrawals and expenditures of Shri Hargovandas Kalabhai Koli Patel as mentioned by the AO himself, we hold that the addition of Rs.10,00,000/- to the assessee’s income is unwarranted. No addition in the hands of the assessee is called for.
In the result, the appeal of the assessee is allowed.
The order is pronounced in the open Court on 12.11.2025