ACIT, NEW DELHI vs. MS. SEEMA JAIN, DELHI

2. The Ld. CIT(A) erred in not appreciating the facts of the case that, the loans taken by the assessee are not genuine. The close relationship/nexus between the assessee and the parties from whom loan has been taken is a mere facade to route unaccounted money. It is a fact that the husband of the assessee and several other family members are engaged in the business of real estate. It is apparent that channeling money through entities is only a means to reintroduce unaccounted money generated through the family business. It is pertinent to note that, the Ld. CIT(A) has upheld that the loans advanced to the assessee by various other parties (Sh. Bhawgan Singh., Sh. Sudam Chauhan, Sh. Vishwanath, Sh. Manak chand) are not genuine.

The brief facts qua the issue raised in the grounds are that the assessee is an individual. A search and seizure action was carried out u/s.132(1) on 19.10.2011 at the premises of Agarwal Associates and Jainco Group of cases. During the course of search certain material was found and seized which related to the assessee and accordingly, the proceedings u/s.153C read with Section 153A were initiated.

M/s. Abhinav 50,00,000/- Colonizers Pvt. Ltd.

He observed that during the previous assessment proceedings, these parties have been shown as sundry creditors and not as unsecured lenders. He further observed that assessee had taken money from her husband Shri P.K. Jain in Financial Year 2007-08 and was also shown as a sundry creditor in her books of accounts and this amount later on has been squared up by treating it as a gift given by her husband. Thus, he presumed that this is some kind of modus operandi carried out by the assessee for treating loans as gift in her books and accordingly, he treated the sums aggregating to Rs.1,67,40,000/- as gift from unrelated persons and treated as assessee’s income u/s.56(vi).

Ld. CIT (A) has deleted the said addition after observing and holding as under:- “10.2 Assessment cannot be made on the basis of presumption. Just because the husband has treated his loan as a gift cannot be a reason for drawing a conclusion that other person will also convert their loan to a gift, especially when the books reflect the same as a loan. The same cannot be treated as a gift to bring it within purview of Section 56(2)(vii) of the Act and section 56(vii) deals with receipt of money without any obligation to repay. A loan cannot be treated as a sum of money received without consideration because the assessee was only a custodian of money with an obligation to repay the same on demand as has been held in the following case law.

After hearing both the parties and on perusal of the material placed on record, we find that Assessing Officer has made the addition in respect of unsecured loan as a gift purely on the basis of surmises and presumption, because her husband, Shri P.K. Jain, has also given unsecured loan which has been subsequently treated as gift by the assessee. Inferring the same yardstick, Assessing Officer has treated the loan taken from unrelated person for sums aggregating to Rs.1,67,40,000/- as gift and has taxed u/s.56(vi). We concur with the finding and the observation of the ld. CIT(A) that, simply because husband has treated his loan as a gift to his wife, cannot be the reason for drawing a similar conclusion for unrelated parties that the other persons will also convert their loan to gift, especially when in the books of account amount has been reflected as loan. The ld. counsel for the assessee has brought on record that, these loans has been repaid back in the subsequent year, and therefore, amount which has been treated as loan in the books of account and has also been repaid back as a loan, same cannot be treated as a gift. We do not find any reason to interfere in the order of the ld. CIT (A), and therefore, the appeal of the Revenue is dismissed.

In the result, the appeal of the Revenue is dismissed.