DCIT, CIRCLE-1, MEERUT vs. MODERN CHEMICALS, MEERUT

The appellant, DCIT, Circle 1, Meerut (hereinafter referred to as ‘the Revenue’) by filing the present appeal, sought to set aside the impugned order dated 15.03.2018 passed by Ld. CIT (Appeals), Meerut qua the Assessment Year 2015-16 on the grounds inter alia that :- “1. Whether in the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred in deleting the addition of Rs.1,28,55,852/- made by the A.O. on account of unexplained unsecured

Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessing Officer made addition of Rs.1,39,21,000/- on account of failure of the assessee to prove the creditworthiness of the transactions qua availing of unsecured loan from Smt. Rajni Agarwal, Smt. Kavita Singhal & Smt. Nitasha Singhal of Rs.18,23,000/-, Rs.11,71,000/- & Rs.1,09,27,000/- respectively.

Assessee carried the matter by way of an appeal before the ld. CIT (A) who has restricted the addition to the tune of Rs.4,50,400/- on account of unexplained cash credit u/s 68 of the Income-tax Act, 1961 (for short ‘the Act’) by partly allowing the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeal.

We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.

Undisputedly, the assessee has availed of unsecured loan to the tune of Rs.1,39,21,000/- from Rajni Agarwal, Smt. Kavita Singhal & Smt. Nitasha Singhal of Rs.18,23,000/-, Rs.11,71,000/- & Rs.1,09,27,000/- respectively. During the year under assessment, it is also not in dispute that the aforesaid creditors have declared their total income including agricultural income as under:-

So far as case of Rajni Agarwal who has lent Rs.18,23,000/- to the assessee firm is concerned, she has brought on record her bank accounts, balance sheet, profit & loss account & assessment details which have been tabulated by the ld. CIT (A) at page 7 of the impugned order. It is proved on record that Rajni Agarwal is having saving bank account in Union Bank and agricultural income account with Central Bank of India. AO has noticed that the income of Rajni Agarwal was Rs.4,55,600/- while her agricultural income at Rs.11,38,509/- who has not disputed the opening cash- in-hand, thus disputed the agricultural income only.

So, when the ld. CIT (A) has examined the bank statements of the lenders and other details furnished by Rajni Agarwal before AO as well as ld. CIT (A), he has concluded that except agricultural income of Rs.3,16,319/-, the remaining income is duly proved from her opening balance of Rs.1,83,681/-, cane agricultural income of Rs.77,000/-, sales of shares of Rs.11,68,000/- and cheque reversed of Rs.39,000/-, but the assessee has failed to prove her agricultural income with supporting evidence in the shape of bills of sale of crops, purchase of seeds, fertilizers, pesticides, manures, irrigation of agricultural crops etc. and thereby reached to the conclusion that the addition to the extent of Rs.3,16,319/- remained unexplained cash credit in the hands of the assessee pertaining to Rajni Agarwal and confirmed the addition to that extent.

Similarly, in case of Kavita Singhal and Nitasha Singhal, ld. CIT (A) has duly examined their bank accounts, balance sheet, profit & loss account & assessment details which has been duly explained in tabulated form in the impugned order and after getting himself satisfied, came to the conclusion that in case of Kavita Singhal, she was having opening balance of Rs.2,01,571/-, cane agricultural income of Rs.1,32,000/-, sale of shares of Rs.5,00,000/- and amount transferred from Delhi office of Rs.39,000/-, but she has also failed to prove the genuineness of the loan and her creditworthiness to the extent of agricultural income of Rs.2,98,429/-.

Likewise, in case of Nitasha Singhal, from the perusal of her bank accounts, balance sheet, profit & loss account & assessment details, it is proved on record that she was having opening balance of Rs.1,99,600/-, cane agricultural income of Rs.1,88,000/-, sale of shares of Rs.99,50,000/-, amount transferred from Delhi office of Rs.39,000/- and amount received from mother of Rs.1,00,000/- and thereby confirmed the addition of Rs.4,50,400/- on account of agricultural income of which the assessee has failed to prove the genuineness and creditworthiness of the lender.

Even the bank statements of all the three creditors, namely, Rajni Agarwal, Smt. Kavita Singhal & Smt. Nitasha Singhal, have been duly verified/tallied by ld. DR for the Revenue with assistance of the ld. AR for the assessee during the arguments and found to be correct. Moreover, the entire amounts available in the hands of sundry creditors have been duly shown in the income-tax return by them accepted by the Revenue.

In view of what has been discussed above, when the assessee has categorically proved on record that his lenders, namely, Rajni Agarwal, Smt. Kavita Singhal & Smt. Nitasha Singhal were having creditworthiness, whose identity is not in question, to lend the amount to the assessee except the amount of Rs. Rs.3,16,319/-, Rs.2,98,429/- and Rs.4,50,400/- respectively, the ld. CIT (A) has rightly restricted the addition to that extent. So, finding no illegality or perversity in the impugned order of the ld. CIT (A), present appeal filed by the Revenue is hereby dismissed. Order pronounced in open court on this 16th day of January, 2019.