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Income Tax Appellate Tribunal, DELHI BENCH ‘S.M.C’, NEW DELHI
Before: MS. SUSHMA CHOWLA
PER SUSHMA CHOWLA, JM: Both these appeals filed by assessee are against the order of CIT(A), Muzaffarnagar, New Delhi, dated 14/11/2017 and 26/03/2018, relating to assessment years 2009-10 & 2010-1, respectively against order passed under section 143(3) of the Income-tax Act, 1961 (in short ‘the Act’).
Both these appeals relating to the same assessee were heard together and are being disposed of by this consolidated order for the sake of convenience.
The assessee in assessment year 2009-10 has raised the following grounds of appeal:-
1) That the Authorities below have erred in law in not accepting the explanation filed by the appellant during the course of hearing before the Learned Assessing Authority & Learned CIT (Appeals) regarding the unsecured loan and advances received from the Various person. 2) That the prejudicial observations contained in the body of the Asst. Order passed by the Learned ITO and the appellant order passed by the Learned CIT (Appeals) are either unfounded and the same are not susceptible giving rise to any adverse conclusion. 3) That the Learned CIT (Appeals) is not justified confirming the addition made by the Learned ITO regarding the deposit made by Shri Pankaj Kumar Rs. 2,50,000/- and Smt. Shaifali Jain Rs. 10,00,000/- and advance received from Shri Virendra Kumar Jain Rs. 5,00,000/- against sale of plot as all the persons are assessed to Income Tax and file all the material evidences regarding the deposits and advances.
The only issue raised in the present appeal is against the addition made u/s 68 of the Act at Rs.17,50,000/-.
Briefly in the facts of the case, the assessee’s case was reopened u/s 147/148 of the Act. The reasons recorded for reopening the assessment were cash deposits in the savings bank account with Bank of India, Raj Nagar, Ghaziabad. The assessee was asked to explain the source of cash deposits of Rs.48,49,000/-. The explanation of the assessee was that such cash was deposited out of sale of immovable property and cash available in the books of account. The Assessing Officer further noted during the assessment proceedings, that the assessee had shown unsecured loans from various persons and also cash advance from various persons against sale of property.
The assessee was asked to prove the creditworthiness of the aforesaid persons. A sum of Rs.9 lakhs was received from Smt. Shaifali Jain and various amounts from different persons. The Assessing Officer noted there were cash deposits in the bank account of the assessee, however, the assessee failed to prove the genuineness of transactions and creditworthiness of the persons as tabulated in the table at page 2 of the assessment order and hence addition of Rs.22,50,000/- was made in the hands of the assessee.
Before the CIT(A), the assessee again filed the details to prove the creditworthiness of persons and genuineness of transactions. However, the CIT(A) did not accept the explanation in respect of loan received from Shri Pankaj Jain, advance from Smt. Shaifali Jain and Shri Virendra Kumar Jain totaling Rs.17,50,000/-. Thus, upheld the addition of Rs.17,50,000/- and deleted the addition of Rs.5 lakhs.
The assessee is in appeal against the said addition made by the CIT(A).
The Ld. AR for the assessee pointed out that the assessee had received Rs.2,50,000/- from Shri Pankaj Jain who was tax payer and all the details were filed. However, because of the cash deposits in his bank account, such explanation of the assessee was not accepted. Similar was the case in respect of Rs.10 lakhs received from Shaifali Jain, where she had paid the said amount against her share in the property. In respect of Rs.5 lakhs received from Shri Virendra Kumar Jain, the source was explained to be out of sale of plot by him and in support copy of ITR and balance sheet were filed. The Ld. AR for the assessee thus pointed out that the source of source cannot be asked and there was no merit in the said addition.
The Ld. DR for the revenue however strongly relied on the orders of authorities below.
On perusal of the record and after hearing both the representatives, the limited issue which arises in the present appeal is against the addition made on account of loans/advances received from different parties. The assessee had received Rs.2,50,000/- from Shri Pankaj Jain on 30/03/2009. The said person is assessed to tax and all the particulars in respect thereof were filed.
The copy of bank account and income tax return filed by him were also filed.
The said person explained that the deposits in his bank account were out of his savings and income of the year. In such facts and circumstances, there is no merit in making any addition on account of said loan received from Shri Pankaj Jain as the Courts have time and again held that source of source cannot be gone into. Similar is the position in respect of Shri Virendra Kumar Jain from whom, the assessee had received Rs.5 lakhs on 03/12/2008. The said person explained that it had received advances against sale of his plot situated at V. Shahpur, Dist. Muzaffarnagar and had filed a copy of the income tax return and other relevant documents. Once, the source has been explained, there is no merit in going into the source of source of the creditors.
As far as Shaifali Jain is concerned, she had advanced Rs.10 lakhs on 24/08/2009 and the source was loan received by her from Shri Virendra Kumar Jain. All the above transactions were reflected in her bank account and she had also filed a copy of assessment order. In such case, where the person is assessed to tax and has explained the source of the deposits in the bank account, the source of source cannot be enquired into. Hence, there is no merit in making the aforesaid addition in the hands of the assessee.
Accordingly, the addition of Rs.11,50,000/- is deleted.
The assessee in assessment year 2010-11 is aggrieved by similar addition of Rs.19 lakhs, which was out of withdrawal from his books of account. In support, the assessee had produced the books of accounts, copy of cash book, copy of bank statement, etc. before the Assessing Officer.
However, the case of the department is that the assessee had failed to produce any documentary evidence for the source of said cash deposits of Rs.19 Lakhs.
Once, the assessee was maintaining books of accounts and had duly produced the same before the Assessing Officer, then there is no merit in making the aforesaid addition in the hands of the assessee. Accordingly, the addition made of Rs.19 lakhs is deleted in the hands of the assessee. Both the grounds of appeals raised by the assessee are allowed.
In the result, both appeals of the assessee are allowed.
Order pronounced in the open court on 30th day of December, 2019.