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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI B.M. BIYANI & SHRI PARESH M. JOSHI
आदेश/ O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by order of first appeal dated 24.03.2023 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A) / CIT(A), NFAC”] which in turn arises out of assessment-order dated 30.03.2016 passed by learned ITO-2(3), Bhopal [“AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2013-14, the assessee has filed this appeal.
2. There is a delay of 553 days in filing present appeal. Ld. AR for submitted that the assessee has filed a condonation-application supported
Page 1 of 10 The affidavit filed by assessee is scanned and re-produced below:
Page 3 of 10 evidences filed by assessee. After discussions, the Ld. DR for revenue is satisfied with the reasoning of delay explained by assessee. Therefore, the reasoning given by assessee is accepted, the delay is condoned and hearing is proceeded.
4. The background facts leading to present appeal are such that the assessee-individual is a doctor by profession. For AY 2013-14, the assessee filed his return of income u/s 139 declaring a total income of Rs. 6,12,553/-.
The case was selected for scrutiny and the AO issued notices u/s 143(2)/142(1) which the assessee complied. During proceeding, the AO wanted to scrutinize the hundi loans taken by assessee and in this regard, asked assessee to submit income-tax returns and bank a/cs of six (6) lenders from whom the assessee took loans aggregating to Rs. 13,70,000/-.
In response, the assessee made submission which is re-produced by AO in Para 4.1 of assessment-order. In the submission so filed, the assessee stated that the hundi loans were taken through brokers and the lenders were not in direct touch with assessee and therefore the lenders were reluctant to give their tax returns and bank statements because they did not want to divulge their personal information. The assessee also requested the AO to call information directly from lenders u/s 131/133(6) at the cost of assessee.
The assessee filed information of jurisdictional A.O., addresses, etc. of lenders. Acting upon assessee’s request, the AO issued notices u/s 133(6) to respective lenders but the notices sent by AO were either returned back or Page 4 of 10 addition of Rs. 13,70,000/- as unexplained credit u/s 68. In response, the assessee filed bank statements and a/c confirmation of all lenders except one ‘Shri Ajay Agarwal’ from whom the assessee took loan of Rs. 5,00,000/-.
Ultimately, the AO noted that the assessee had failed to discharge onus cast upon him to satisfy the creditworthiness of ‘Shri Ajay Agarwal’ and made addition of Rs. 5,00,000/- as unexplained credit u/s 68. The AO further noted that the assessee had shown withdrawals of Rs. 70,486/- for household expenses but the assessee’s family had three members and the assessee was a doctor by profession. Considering assessee’s family size and living status, the AO estimated further household expenses at Rs. 2,00,000/- and accordingly made another addition of Rs. 2,00,000/- on account of low household withdrawals. This way, the AO made twin additions of Rs. 5,00,000/- and Rs. 2,00,000/- aggregating to Rs. 7,00,000/- and completed assessment. Aggrieved, the assessee carried matter in first-appeal but did not get any relief. Still aggrieved, the assessee has come before us in next appeal.
The assessee has raised following grounds:
“1. On the facts and in the circumstances of the case and in law the findings and the decision of learned CIT(A) in holding that the transaction of loan for Rs. 5,00,000 from Ajay Agrawal is wholly unjustified and unlawful and therefore the said addition of Rs. 5,00,000/- be deleted.
On the facts and in the circumstances of the case and in law it be held that having regard to explanation furnished along with the documents before the authorities below it be held that the loan from Ajay Agrawal Rs. 5,00,000/- is a genuine transaction of loan and it does not represent the undisclosed
Page 5 of 10 AY 2013-14 income of the assessee u/s. 68 of the Act. And therefore, the addition of Rs. 5,00,000/- be kindly deleted.
On the facts and in the circumstances of the case and in law the findings of learned CIT(A) that the assessee has not discharge its onus are neither justified nor lawful hence such findings be quashed and it be held that having regard to the explanation furnished along with the documentary evidences before the learned lower Authority, the assessee has discharged its onus and therefore the addition of Rs. 5,00,000/- be kindly deleted.
On the facts and in the circumstances of the case and in law the addition for the alleged household expenses Rs. 2,00,000/- be kindly held as unsustainable in law and unjustified on the facts of the case and therefore the said addition be kindly deleted.
5. On the facts and in the circumstances of the case and in law it be held that the findings of the learned CIT(A) in para 5.5 of the order are factually wrong and incorrect. As may be seen from the assessment order of the A.O that the addition for loan was made.
On the facts and in the circumstances of the case and in law it be held that the findings of the learned CIT(A) in para 5.5 of the order are factually wrong and incorrect. As may be seen from the assessment order of the A.O that the addition for loan was made.”
6. By means of Ground No. 1 to 3, the assessee has challenged the addition of Rs. 5,00,000/- u/s 68 on account of unexplained loan taken from Shri Ajay Agarwal; by Ground No. 4, the assessee has challenged the addition of Rs. 2,00,000/- on account of low household withdrawals; by Ground No. 5 & 6, the assessee claims that the order passed by CIT(A) is factually wrong or incorrect.
We have heard learned Representatives of both sides and carefully perused the documents held on record including the orders of lower- authorities.
At first, we re-produce the order of first-appeal passed by CIT(A), reading as under:
“5. Finding of the CIT(A): 5.1 I have gone through the Assessment Order and submissions of the appellant. The learned AO carried out addition of Rs. 7,00,000/- on account of unexplained unsecure loan and low withdrawals of household expenses. 5.2 During the year under consideration the appellant had taken unsecure loan to the tune of Rs. 7,00,000/- from the following loan creditors:
S.No. Name Amount 1 Ramsakhi Agrawal 1,00,000/- 2 Ajay Agrawal 5,00,000/- 3 Suman Garg 1,00,000/-
Further, to test the genuineness and correctness of the transaction the learned AO called for supporting documents. In response to the same the appellant was failed to furnish the sufficient documentary evidences and submitted details of applicant such as name, address, PAN number, date wise break up of amount received, bank statement reflecting underlined transactions along with the confirmation from the loan creditors. On perusal of confirmations the applicants have also provided source of money which they have invested in appellant. 5.3 The learned AO has also carefully considered above documents and have provided its findings as under: - It is also pertinent to mentioned here that merely submitting the confirmation of lender in respect of loan cannot be substantiate the creditworthiness of the lender. - The primary burden of proof lies upon the assessee who substantially asserts the affirmative of the issue and it is not upon the Revenue to disapprove its claim. 5.4 I have gone through the contentions of appellant and supporting documents filed the appellant has not submitted the documentary evidences to verify the creditworthiness of loan creditors. 5.5 In view of the above it is observed that the appellant has not discharged its onus to showcase the creditworthiness of the loan creditors. Therefore, the addition carried by learned AO for sum of Rs. 7,00,000/- is upheld. 5.6 Accordingly, the appeal of the appellant is dismissed.”
Page 7 of 10 the CIT(A) has clearly narrated thus: “The learned AO carried out addition of Rs. 7,00,000/- on account of unexplained unsecured loan and low withdrawals of household expenses”. But in immediately next para 5.2, the CIT(A) has noted the details of three loans of Rs. 1,00,000/- (+) Rs.
5,00,000/- (+) Rs. 1,00,000/- taken by assessee from three lenders although the dispute between assessee and AO was qua the loan of Rs. 5,00,000/- taken from Shri Ajay Agarwal. Thus, the CIT(A) has picked wrong data.
Thereafter, in next para 5.3, the CIT(A) has merely noted the AO’s observation at assessment stage. Ld. AR pointed out that the assessee filed a detailed reply dated 26.11.2018 to CIT(A) [Paper-Book Page 1-4]; the assessee submitted additional evidences to CIT(A) through an Application under Rule 46A of Income-tax Rules, 1962 dated 26.11.2018 [Paper-Book Page 26-27]; the CIT(A) forwarded assessee’s evidences to AO for remand- report and the AO filed remand-report dated 21.12.2018 [Paper-Book Page 32]; the CIT(A) shared remand-report to assessee vide letter dated 01.02.2019 inviting assessee’s re-joinder [Paper-Book Page 31]; the assessee filed re-joinder to CIT(A) [Paper-Book Page 33]. However, the CIT(A) has not made any whisper of these proceedings in his order. Further, in last para 5.5 of his order, the CIT(A) has upheld addition of Rs. 7,00,000/- on account of unsecured loans which is patently wrong and incorrect because there were two components of addition, namely (i) loan of Rs. 5,00,000/- and (ii) household expenses of Rs. 2,00,000/-. The CIT(A) has not adjudicated the component of household expenses. Thus, the order passed
Page 8 of 10 however, observe that the appeal was originally filed by assessee under physical system to CIT(A)-1, Bhopal in the year 2016 and subsequently migrated to CIT(A), NFAC under faceless regime. Ultimately, the appeal is decided by CIT(A), NFAC through order dated 24.03.2023. Thus, the case of assessee was originally dealt by CIT(A)-1, Bhopal and entire proceeding of additional evidences; remanding to AO and filing of re-joinder by assessee as noted earlier, were at the level of CIT(A)-1, Bhopal and not before CIT(A), NFAC who has passed impugned order. Hence, there is a communication gap resulting into non-consideration of earlier proceedings by CIT(A), NFAC.
Be that as it may, we find that the impugned order passed by CIT(A) does not deal the case of assessee properly. Faced with this situation, we have no alternative except to remand this matter back to the file of CIT(A) for adjudication afresh. Needless to mention that the CIT(A) shall give necessary opportunities to assessee and consider assessee’s case judiciously without being influenced by his previous order in any manner. In doing this exercise, the CIT(A) would be free to seek another remand-report from AO also, if thought fit.
Order pronounced in open court on 15/10/2025