SHRI POPATBHAI BHUDARBHAI PATEL,AHMEDABAD vs. ITO, WARD-6(1)(3), AHMEDABAD

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ITA 493/AHD/2018Status: DisposedITAT Ahmedabad30 November 2022AY 2014-155 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that Section 68 of the Income Tax Act is not attracted if the assessee does not maintain books of account. It also found that the assessee had discharged the initial onus by providing confirmations, PAN, and bank statements for the loan transactions.

What were the facts?

The assessee purchased property for Rs. 50,00,000/- and explained the source of funds through loans from various individuals. The Assessing Officer made additions totaling Rs. 42,00,000/- as unexplained cash credits, which were confirmed by the CIT(A).

What were the issues?

Whether additions under Section 68 are valid when the assessee does not maintain books of account and whether the assessee discharged the initial onus regarding the genuineness and source of loans.

Which sections of the Income-tax Act were involved?

Section 68

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Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH, AHMEDABAD

Before: Ms. SUCHITRA KAMBLE

For Appellant: Shri D.K. Parikh, A.R
For Respondent: Shri Mukesh Sharma, Sr. DR
Hearing: 15.11.2022Pronounced: 30.11.2022

This appeal is filed by the Assessee against the order dated 25.01.2018 passed by the CIT(A)-6, Ahmedabad for the Assessment Year 2014-15.

2.

The assessee has raised the following grounds of appeal :-

“1. The Id. ClT (Appeals) has erred both in law and on facts in confirming addition of Rs.42,00,000/- in respect of alleged unexplained cash credits ignoring the submissions that there were no cash credit as appellant had only source of income from house property , capital gain and other sources and no amount credited in any books of appellant. The Id CIT(A) ought to have accepted the submissions and deleted addition made.

2. The Id. CIT (Appeals) further erred in confirming the addition of Rs.42,00,000/- in respect of receipts through banking channel from various persons whose confirmation, with PAN and Bank statements as well as Income tax Returns were furnished. The addition made merely on suspicion and without discharging onus by the AO ought o have been deleted. It be so held now and addition be deleted.

3.

The Id. CIT (Appeals) failed to appreciate that the appellant had discharged initial onus proving identity, genuineness of transactions and also the sources of the lender hence the addition made by AO without

Page 2 of 5 any inquiry to discharge the onus that shifted on to him is wholly against the sanction of law. It be so held now and entire addition of Rs.42,00,000/- be deleted.

4.

The Id CIT (Appeals) failed to appreciate that even with regard to debit balance of a lender from whom the amount advanced by appellant was received back is wrongly added by AO when the confirmation by the said lender was directly filed with the AO. It be so held now and addition made be deleted.

5. The Id CIT (Appeals) failed to consider the submissions made and to comment on the binding judgments cited before her , while applying the judgments not relevant to the facts of the appellant's case. The order passed by her suffers from vice of application of mind and deserves to be quashed. It be quashed now.

6. On the facts and in the circumstances of the appellant's case, considering the sources of income of appellant and also, as nature and source of receipts of loans is fully and satisfactorily explained, the addition made and confirmed is patently wrong and unjustified. The same be deleted now.”

3. The assessee filed return of income for Assessment Year (A.Y.) 2014-15 on 03.06.2015 declaring total income at Rs.6,34,450/-. The assessee earns income from house property, capital gain and from other sources. The Assessing Officer observed that during the year under consideration, the assessee purchased property at Rs.50,00,000/-. The Assessing Officer asked the assessee to furnish the source of investment in property for which the assessee vide letter dated 12.08.2016 submitted the source of the funds as well as confirmation from the depositors except Shri Bharatbhai Thakkar who has made payment of advance along with copy of ITR and bank statement. The Assessing Officer made addition of Rs.18,00,000/- in respect of loan taken from Bharatbhai Thakkar as cash credit as there was no confirmation filed by the assessee. The Assessing Officer further made addition of Rs.10,00,000/- towards unsecured loan and treated the same as cash credit and also addition of Rs.5,00,000/- as the depositors’ has not established their creditworthiness as per the observation of the Assessing Officer. The Assessing Officer further made addition of Rs.9,00,000/- in respect of Rinkal Corporation as cash credit. Thus, the Assessing Officer made addition of Rs.42,00,000/-.

Page 3 of 5 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

5.

The Ld. AR submitted that as regards aground no.1, the assessee was not required to maintain any books of account and, therefore, addition under Section 68 cannot be attracted as the pre-condition of the said Section is that the sum is credited in the books of account. The Ld. AR relied upon the following decisions:-

1) Smt. Ramilaben B Patel vs. ITO (ITA No.3393/Ahd/2014) 2) Vijaykumar Prop. VK Medical Hall vs. ITO (ITA No2483/Delhi/2015) 3) Sri Halimpure Sharanappa Premsagar vs. ITO (ITA No.3070/Bang/2018)

6.

As regards ground nos.2 & 3, the Ld. AR submitted that the assessee discharged its initial onus by submitting confirmation, PAN and Bank Statements and the onus was shifted to Assessing Officer. The Ld. AR relied upon the decision of the Hon’ble Gujarat High Court in the case of DCIT vs. Rohini Builders, 256 ITR 360 wherein SLP was dismissed by the Hon’ble Supreme Court. The Ld. AR also relied upon the decision of Hon’ble Gujarat High Court in the case of CIT vs. Ranchhod Jivabhai Nakhava, 208 Taxman 35 and decision of Hon’ble Supreme Court in the case of CIT vs. Orissa Corporation, 159 ITR 78.

7.

As regards Ground no.4, the Ld. AR submitted that the CIT(A) erred in not appreciating submission of the assessee that in respect of loan from Bharatbhai Thakkar there was debit balance as on 01.04.2013 of Rs.13,44,992/- filed on 09.10.2019 as per confirmation sent by him directly to the Assessing Officer. The said debit balance amount receivable by the assessee is proved as per Bank Statement attached at page nos.99 to 102 of the Paper Book which could not be earlier obtained being related to very old period and now received and, therefore, the ld. AR requested to admit the same. The Ld. AR further submitted that when amount is received against opening balance (debit balance in credit) receipts during the current year cannot be treated as fresh cash credit. The Ld. AR relied upon the following decisions 1) CIT vs. Rajesh M. Odedara, 35 taxman.com 603 2) JCIT vs. M/s Radhe Developers (India) Ltd. (ITA No.1226/Ahd/2018) 3) ITO vs. Atulkumar Mittal (ITA No.885/Delhi/2012)

Page 4 of 5 8. The Ld. DR submitted that Section 68 can be invoked when there is cash credit which is unexplained by the assessee. The Section does not depend solely upon books of account. In the present case, the assessee has not established creditworthiness & genuineness of the transactions. Therefore, the Ld. DR submitted that the Assessing Officer as well as the CIT(A) has rightly confirmed the addition of Rs.42,00,000/-.

9.

Heard both the parties and perused all the relevant material available on record. The contention of the assessee that in the absence of maintenance of books of accounts no addition can be made under Section 68 of the Act on account of cash deposits in bank account appears to be correct as the assessee is not maintaining any books as mentioned in Section 68 of the Act, rather the assessee is not required to maintain books of account. Ground no.1 is allowed.

10.

In respect of ground nos.2 &3, the assessee has given the details related to the cash deposits and also explained the source of the cash deposits. In fact, the assessee has filed confirmation which shows genuineness of transactions as well as income tax return of the said parties and also the identity of the said lender and, therefore, creditworthiness as well as identity was also established by the assessee during the assessment proceedings. Thus, ground nos. 2 & 3 are allowed.

11.

As regards ground no.4, from the perusal of additional evidence filed by the assessee before the Tribunal, it can be seen that the loan was repaid to the lender and the details of the copy of account was there on record. Therefore, the assessee has discharged his onus. Hence ground no.4 is allowed.

12.

In the result, appeal of the assessee is allowed. Order pronounced in the open Court on this 30th day of November, 2022.

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