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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH
Before: Shri T.R. Senthil Kumar & Shri Narendra Prasad Sinha
Date of hearing : 16-04-2025 Date of pronouncement : 10-06-2025 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-
This appeal is filed by the Revenue as against the appellate order dated 20.05.2024 passed by the Commissioner of Income Tax (Appeals)-11, Ahmedabad arising out of the assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2016-17.
A.Y. 2016-17 Page No 2 DCIT Vs. Shani Prahladbhai Patel
Brief facts of the case is that the assessee is an individual filed his Return of Income for the Asst. Year 2016-17 on 15-10-2016 declaring total income of Rs. 35,99,630/-. The return was taken for scrutiny assessment, the Assessing Officer found that the assessee received unsecured loan of Rs.8,28,60,000/- from Rudra Enterprise and made repayment of Rs. 1,86 crores during the year. For the remaining outstanding loan, the assessee has not given proper explanation, the same was added as the unexplained income u/s. 68 of the Act.
On appeal against that assessment order, the assessee explained that the loan is continuing one as on 31-03-2016 and had been repaid back in April 2016 and furnished copy of ledger account, bank account of the assessee and that of the lender. Ld. CIT(A) considered the above submissions of the assessee and deleted the additions by observing as follows: 4.2 During the course of appellate proceedings, the appellant has filed written submission (reproduced supra). On perusal of the submission, it is seen that the appellant has taken various contentions. But, the main contention of the appellant is that the relationship with the said lender party M/s. Rudra Enterprise has been continuing one and the outstanding loan of Rs.6,42,60,000/- as on 31.03.2016 had been repaid back to the lender party in the month of April, 2016. The appellant has also furnished the copy of ledger account as well as his bank accounts & also bank account of lender party, in which the relevant transactions were reflected. The appellant has also relied on the various case laws and requested to delete the addition made by the AO. 4.3 I have perused the reassessment order and submission of the appellant, it is seen that the claim of the appellant is correct because it is an undisputed facts as revealed from the assessment order that the assessee had received unsecured loan of Rs.8,28,60,000/- from M/s. Rudra Enterprise in the month of March, 2016 i.e. Rs.1,10,00,000/- on 07.03,2016, Rs.60,00,000/- on 07.03.2016, Rs.1,94,00,000/- on 11.03.2016, A.Y. 2016-17 Page No 3 DCIT Vs. Shani Prahladbhai Patel
Rs.1,50,50,000/- on 21.03.2016, Rs.98,00,000/- on 21.03.2016, Rs.1,12,10,000/- on 31,03.2016 & Rs.1,04,00,000/- on 31.03.2016. It is also revealed from the assessment order that the appellant had made repayment of Rs. 1,86,00,000/- on 11.03.2016. thus, the amount outstanding as on 31.03.2016 was Rs. 6,42,60,000/- and the A.O. had made only addition of outstanding amount but not for the whole unsecured loan received from M/s. Rudra Enterprise, which shows that the A.O. himself admitted the genuineness of the lender M/s. Rudra Enterprise. 4.4 Further, on perusal of ledger account for A.Y.2016-17 & A.Y.2017-18, it is clearly seen that the appellant was engaged in regular transaction with the lender party M/s. Rudra Enterprise. Further, the appellant had repaid the entire outstanding unsecured loan of Rs.6,42,60,000/- on 05.04.2016 & 08.04.2016 to M/s. Rudra Enterprise. Thus, it is observed that the appellant has taken the unsecured loan in the month of March, 2016 and repaid the said amount in the month of April, 2016 i.e. within less than one month. It is relevant to reproduce the copy of ledger account and copy of relevant page of bank statement as under: …………………………… 4.8. In view of the factual discussions and legal matrix of the case, the A.O. is directed to delete the addition made. Thus, the grounds of appeal nos. 1 to 4 are allowed.”
4. Aggrieved against the appellate order, the Revenue is in appeal before us raising the following Grounds of Appeal: 1) In the facts and on the circumstances of the case and in law, the ld.CIT(A) has erred in deleting the addition of Rs.6,42,60,000/- on account of unsecured loan treated as unexplained credit u/s.68 of the 1.T.Act ignoring the facts of the case that lender had no such capacity to give such huge loans and even loans were given without charging any interest.
2. The Revenue craves leave to add/alter/armed and/or substitute any or all of the grounds of appeal. 4.1 Except the Grounds of Appeal, no new material filed by the Revenue to dispute the repayment of loan by the assessee.
A.Y. 2016-17 Page No 4 DCIT Vs. Shani Prahladbhai Patel
Per contra the Ld. Senior Counsel Shri S.N. Soparkar appearing for the assessee reiterated the arguments made before first appellate authority and pleaded that the findings arrived by the Ld. CIT(A) does not require any interference, since the addition made by the A.O. is not sustainable in law and heavily relied upon Jurisdictional High Court Judgments in the case of CIT vs. Ayachi Chandrashekhar Narsangji [2014] 42 taxmann.com 251, CIT vs. Shri Mahavir Crimpers [2018] 95 taxmann.com 323 and Rohini Builders and ITO vs. Shanti Enterprise [2016] 71 taxmann.com 275.
5.1. Thus the Ld. A.R. argued that the onus on the assessee lies only to the extent of establishing the identity of the lenders, whereas in the present case the assessee has submitted the evidences to establish prima facie, the name of the lender, PAN Number, full Address, unsecured loan received during the year, contra confirmations, bank statements, Income-tax returns, interest amount, opening balance, loans received during the year and closing balance which proves that the assessee has duly discharged his primary onus to prove identity of lender, credit worthiness and genuineness of the transactions. Thus the Assessing Officer failed to establish that the above unsecured loans as not genuine. Thus the Ld. CIT(A) is correct in law in deleting the addition made by the Assessing Officer. Further the Ld. CIT(A) had duly considered repayment of the loan during the year and subsequent assessment year. Therefore the order passed by the Ld. CIT(A) does not require any interference and the Revenue appeal is liable to be dismissed.
A.Y. 2016-17 Page No 5 DCIT Vs. Shani Prahladbhai Patel
The Ld. CIT-D.R. Shri A.P. Singh appearing for the Revenue strongly supported the order passed by the Assessing Officer and pleaded to sustain the addition made u/s. 68 of the Act and thereby allow the Revenue appeal.
We have given our thoughtful consideration and perused the materials available on record. The addition made by the Assessing Officer invoking Section 68 does not hold it good, since the assessee has filed the confirmation letter from the lender, Bank statements, Income Tax Return and statement of total income of the lender. Thus the assessee has discharged its initial onus namely identity of the creditors, genuineness of the transactions and creditworthiness of the creditor. Further the Assessing Officer has disbelieved the same, but has not doubted the partial repayment of loan by the assessee during this assessment year and subsequent assessment year with appropriate TDS. Therefore the addition made by the Assessing Officer u/s. 68 of the Act is not sustainable in law.
7.1. Further the Hon’ble Jurisdictional High Court in the case of Ayachi Chandrashekhar Narsangji (cited supra) it was held as follows: Section 68, read with section 143, of the Income-tax Act, 1961 - Cash credit [Loans] -Assessment year 2006-07 - Assessing Officer framed assessment under section 143(3) wherein he made addition of Rs. 1.45 crore under section 68 on ground that loan taken from one ‘IA’ was not explained satisfactorily - On appeal, Commissioner (Appeals) was satisfied with respect to genuineness of transaction and creditworthiness of MA' and, therefore, deleted addition - It was found that total loan of Rs. 1.60 crore was advanced to assessee, out of which Rs.15 lakh was repaid - Therefore, an amount of Rs.1.45 crore remained outstanding to be paid to ‘IA’ - Balance loan amount was repaid by assessee in immediately next financial year - Whether when Department had accepted same, addition A.Y. 2016-17 Page No 6 DCIT Vs. Shani Prahladbhai Patel made by Assessing Officer was to be deleted - Held, yes [Para 6] [In favour of assessee] 7.2. In the case of CIT Vs. Shri Mahavir Crimpers, [2018] 95 taxmann.com 323 (Guj.) wherein it has been held as follows:
"5. We have heard both the parties. There is no dispute so far as identity of the creditor party M/s. Raj Capital & Finance Pvt. Ltd. is concerned. There is further no quarrel that the Assessing Officer does not dispute the fact that the assessee has not availed any cash loan from the said entity. His only case is that the assessee has not been able to prove source along with genuineness and creditworthiness of the above stated entity. It emanates from above extracted portion that the assessee has filed all relevant details along with assessment records of the said entity explaining source of the loans to the above entity's balance sheet indicating sufficient reserves, surplus and share premium as followed by repayment in succeeding assessment year. Learned Departmental Representative fails to rebut CIT (A)'s conclusion that the assessee has been having regular loan transactions with the said entity. We notice in this backdrop that Hon'ble Jurisdictional high court's decision in DCIT v. Rohini Builders, (2002) 256 ITR 360 (Guj) upholding tribunal's conclusion deleting Section 68 addition in view of identical details; squarely applies here. So in their lordships' latter decision in CIT v. Ayachi Chandrashekhar Narsangji (2014) 42 taxmann.com 251 (Guj) confirming this tribunal's another decision reversing Section 68 addition wherein the department head accepted repayment of loan in subsequent year to be correct. We take into account all these facts and judicial precedents to affirm CIT(A)'s findings under challenge deleting the impugned addition. This first substantive ground is accordingly declined." 7.3. In the case of DCIT Vs. Rohini Builders, [2002] 256 ITR 360 (Guj.) wherein it has been held as follows:
Once primary documents are given, onus shifts from assessee to revenue. In absence of anything contradictory brought on the table, it wouldn't be fair to confirm addition u/s 68 of the Act. Gujarat High Court went on to the extent of confirming that even if creditors didn't turn up on issue of summons, even then, the transaction can't be termed as bogus because preliminary documents have been put forth by the assessee and nothing contradictory is observed by the revenue. It was contended by revenue that "creditworthiness" continues to remain unproved because a few alleged parties were i having a meagre income as against hefty deposits made. To this argument, the court held that assessee's duty is discharged once it shows the bank statement of the depositor. It is not assessee's look out to find out source to source, and get into the subject of how the creditor could afford that money. Source is what is required to be proved by the A.Y. 2016-17 Page No 7 DCIT Vs. Shani Prahladbhai Patel assessee, and the onus immediately gets discharged on submission of preliminary documents like a bank statement of the depositor. Also, if the revenue seriously felt that the source to source was bogus, in which case the resultant addition would fall in the hands of the depositors or investors u/s 69 of the Act. As far as assessee is concerned, he is required to prove that the alleged depositor or creditor, as the case be, had legitimate monies which were given to assessee through banking channel. How that monies were earned and whether or not the depositor is showing it in his personal return of income is beyond the scope of the assessee; if there are any doubts on the source to source then revenue can always approach the depositor." 7.4. In the case of ITO Vs. Shanti Enterprise, [2016] 71 taxmann.com 275 wherein it has been held as follows:
".....amounts were received by the assessee by account payee cheques and initial burden of proving the credits was discharged. It is held that the assessee need not prove the source of the credits and the fact that the explanation was not satisfactory would not automatically result in deeming amounts as income of the assessee...." 7.5. Respectfully following the above ratio of the judgments rendered by the Jurisdictional High Court, we have no hesitation in confirming the order passed by the Ld. CIT(A), who deleted the addition made by the Assessing Officer u/s. 68 of the Act. Thus the grounds raised by the Revenue does not hold good on merits and the same is dismissed.
In the result, the appeal filed by the Revenue is hereby dismissed.