AMIT KUMAR NATHANI,BANGALORE vs. ITO, W- 1(1), MUZAFFARPUR

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ITA 120/PAT/2016Status: DisposedITAT Patna05 March 2018AY 2012-133 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 the assessee had provided loan confirmations, bank statements, and PAN of the depositors, and the AO did not ask for the production of the depositors. Since the entries were reflected in the books and the depositors had sufficient bank balances, the addition was deleted.

What were the facts?

The assessee received two loans of Rs. 5,00,000/- each from Sankalp Dalmia and Poonam Mawandia. The Assessing Officer (AO) made an addition under Section 68 as cash credit, considering the loans unverified and the creditors to have insufficient funds. The CIT(A) sustained this addition.

What were the issues?

Whether the addition on account of cash credit under Section 68 is justified when the assessee has provided loan confirmations and the AO has not asked for production of depositors?

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PATNA BENCH ‘SMC’, PATNA

Before: Sh. N. K. Saini

Hearing: 05.03.2018Pronounced: 05.03.2018

IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH ‘SMC’, PATNA Before Sh. N. K. Saini, Accountant Member ITA No. 120/Pat./2016 : Asstt. Year : 2012-13 Amit Kumar Nathani, Vs Income Tax Officer, Flat No.-38, Maruthi Avenue, Ward-1(1), Basavanna Lane, Bangalore, Muzaffarpur Karnataka-560028 (APPELLANT) (RESPONDENT) PAN No. AANPN0477H Assessee by : Sh. Ashish Agarwal, Adv. Revenue by : Sh. Abhay Kumar, Sr. DR Date of Hearing : 05.03.2018 Date of Pronouncement : 05.03.2018 ORDER This is an appeal by the assessee against the order dated 14.09.2016 of ld. CIT(A), Muzaffarpur.

2.

Following grounds have been raised in this appeal: “1.For that the ld. CIT(A) has erred in sustaining the addition of Rs.5,00,000/- on account of loan received from Sankalp Dalmia u/s 68 of the Income Tax Act under the head cash credit. 2. For that the ld. CIT(A) has erred in sustaining the addition of Rs.5,00,000/- on account of loan received from Poonam Mawandia u/s 68 of the Income Tax Act under the head cash credit. 3. For that the ld. CIT(A) has erred in sustaining the disallowance of interest on unsecured loan of Rs.13,414/-. 4. For that other grounds, if any, shall be urged at the time of hearing of the appeal.”

3.

The only grievance of the assessee in this appeal relates to the sustenance of addition of Rs.10,00,000/- made by the AO u/s 68 of the Income Tax Act, 1961

ITA No. 120/Pat./2016 2 Amit Kumar Nathani (hereinafter referred to as the Act) on account of loan of Rs.5,00,000/- each received from Sh. Sankalp Dalmia and Smt. Poonam Mawandia and the disallowance of Rs.13,414/- on account of interest on the aforesaid loans.

4.

Facts of the case in brief are that the assessee e-filed the return of income on 17.08.2013 declaring an income of Rs.4,90,150/- which was processed u/s 143(1) of the Act. Later on, the case was selected for scrutiny. The AO observed that the assessee received the loan of Rs.5,00,000/- from Sh. Sankalp Dalmia and furnished loan conformation, copy of ITR-V, Computation of income, copy of bank statement, capital a/c and balance sheet. The AO observed that Sh. Sankalp Dalmia deposited the amount in cash on various dates before giving the loan to the assessee. According to him, the loan creditor did not have sufficient fund to give the loan. He, therefore, made the addition in the hands of the assessee. Similar addition was made on account of loan of Rs.5,00,000/- received from Smt. Poonam Mawandia. The AO was of the view that the loans remained unverified. He also disallowed the interest credited to Sh. Sankalp Dalmia amounting to Rs.4,044/- and Smt. Poonam Mawandia amounting to Rs.9,370/-.

5.

Being aggrieved the assessee carried the matter to the ld. CIT(A) who sustained the addition made by the AO.

6.

Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the assessee furnished all the documents in the form of confirmation, ITR number, Bank statements, the AO did not ask the assessee to produce the depositors who were the persons of means having sufficient amount in their bank account. Therefore, the ld. CIT(A) was not justified in confirming the addition made by the AO.

7.

In his rival submissions, the ld. Sr. DR supported the orders of the authorities below.

ITA No. 120/Pat./2016 3 Amit Kumar Nathani 8. I have considered the submissions of both the parties and perused the material available on the record. In the present case, it appears that the assessee received loans through account payee cheque from Sh. Sankalp Dalmia and Smt. Poonam Mawandia. The assessee also filed copy of bank account, confirmation of loan and PAN number of the depositors. The AO did not ask the assessee to produce the persons who had given the loan to the assessee. The entry of receiving the loan was reflected in the books of account which were not rejected. The depositors were having sufficient balance in their respective bank account, if there was any doubt in the mind of the AO, he could have asked the assessee to produce the depositors or could have obtained the report from the concerned AO where the loan givers were assessed and the assessee furnished the addresses of the persons from whom he had received the loans. I, therefore, deem it appropriate to delete the addition made by the AO and sustained by the ld. CIT(A) on account of loans taken by the assessee amounting to Rs.5,00,000/- each from Sh. Sankalp Dalmia and Smt. Poonam Mawandia. Since, the interest was also disallowed by the AO on the aforesaid loans, therefore, the same is also directed to be deleted.

9.

In the result, the appeal of the assessee is allowed. (Order Pronounced in the Court on 05/03/2018)

Sd/- (N. K. Saini) ACCOUNTANT MEMBER Dated: 05/03/2018 *Subodh* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5.DR: ITAT ASSISTANT REGISTRAR

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