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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
आदेश / ORDER आदेश आदेश आदेश
PER SUSHMA CHOWLA, JM:
The appeal filed by the assessee is against the order of Commissioner of Income Tax (Appeals) – 1, Pune dated 26.09.2017 relating to assessment year 2008-09 against order passed 143(3) of the Income Tax Act 1961 (in short ‘the Act’).
2 ITA No.3011/PUN/2017 Dr. Ramchandra P. Shinde
The assessee has raised the following grounds of appeal :
“1. Ld.CIT Appeal-1, Pune has erred in dismissing appeal and confirming additions to the total income of Rs.10,00,000/- without appreciating facts of the case in proper perspective. 2. The appellant craves leave to add, amend, modify, alter, revise, substitute, delete any or all grounds of appeal if deemed necessary at the time of hearing of the appeal. 3. The appellant craves leave to produce such further evidence as and when occasion demands.
The only issue raised in the present appeal is against the addition made
by the Assessing Officer under section 68 of the Act of Rs.10 lakhs.
Briefly in the facts of the case, the case of the assessee was picked up
for scrutiny. The Assessing Officer noted that the assessee had purchased the
land at Dhumalwadi, Taluka Koregaon, Dist. Satara for a consideration of Rs.32
lakhs. The assessee explained the source of investment made in the purchase
of the said land and claimed to have obtained a loan from his father-in-law Shri
S. G. Kadam for Rs.10 lakhs. The assessee filed PAN of his father-in-law. But
the Assessing Officer did not accept the same as the assessee failed to
establish the credit worthiness of the creditor and hence, the genuineness of
the transaction was not proved. The Assessing Officer held that mere
confirmation by the creditor was not sufficient since the assessee had failed to
file the copies of the income-tax returns filed by the creditor explaining the
source from which the aforesaid loan was given. The assessee also claimed
that the loan amount was repaid by cheque but the same was held to be not
sacrosanct by the Assessing Officer and hence, the addition of Rs.10 lakhs was
made in the hands of the assessee under section 68/69 of the Act.
3 ITA No.3011/PUN/2017 Dr. Ramchandra P. Shinde
Before the CIT(A), the assessee furnished the bank statement of his
father-in-law which was received from him from Belgaum, Karnataka. The
assessee filed the same as an additional evidence on the ground that when the
same was received from his father-in-law and filed before the Assessing
Officer, he had already passed the assessment order under section 143(3) of
the Act. The CIT(A) in view of Rule 46A of the Act confronted the loan
confirmation along with the copies of the bank account wherein payment of
Rs.10 lakhs was made through cheque to the assessee was reflected. The
Assessing Officer noted in the remand report that the assessee had appeared
in the remand proceedings and furnished the bank passbook of Shri S.G.
Kadam and also the copies of the agreements of development in which, he as
a promoter was the consenting party on behalf of the society. The Assessing
Officer was of the view that where the assessee had not furnished the returns
of income of his father-in-law who was a retired person since last 15 years, the
deposits in the bank account are not proved and hence, he did not accept the
explanation of the assessee. The assessee in the rejoinder before the CIT(A)
stressed that the entries in the bank passbook of Shri S.G. Kadam clearly
reflect the sum of Rs.10 lakhs and the subsequent withdrawal by cheque
No.521195 on 11-06-2007, which was deposited to the other account. It was
also evidenced from the said bank account that the said amount was debited in
the name of the assessee. The said amount was paid out of the available
balance in the bank account out of deposits of Rs.28 lakhs by way of three
cheques. The assessee also filed the bank account with Bank of Maharashtra
at Karve Road Branch, Pune wherein the said cheque No.521195 was
deposited. The assessee also explained the source of the deposit in the
account of his father-in-law which was received on account of transaction
entered into by him on 20-02-2007 and also furnished the registered agreement
4 ITA No.3011/PUN/2017 Dr. Ramchandra P. Shinde
in respect of the said amount. However, the CIT(A) did not accept the plea of
the assessee as per Para No.11 of the appellate order and questioned the
source of source in the hands of the assessee. The CIT(A) made observations
in respect of explanation of the assessee, vis-à-vis the source of deposits in the
account of Shri S.G. Kadam and upheld the addition made by the Assessing
Officer. The assessee is in appeal against the order of CIT(A).
The only issue raised before the Tribunal is against loan of Rs.10 lakhs
received by the assessee from his father-in-law Shri S.G. Kadam. The said
transaction was through banking channels. The assessee had in the first
instance filed the confirmation letter and also PAN of his father-in-law. The
explanation of the assessee was that, initially his father-in-law was staying in
Pune and in later years he settled in Belgaum town of Karnataka State.
However, he had the Bank account in Pune in which certain deposits were
made through cheques which were received on behalf of Cooperative Society
in which he was a promoter and the advances were received. All these
advances were received in cheques. Out of the aforesaid deposits, the loan
creditor advanced sum of Rs.10 lakhs by cheque through banking channel to
the assessee. Necessary entries were clearly available in the bank account of
the loan creditor and the evidences were furnished by the assessee in this
regard before the authorities below. In such a scenario, where the assessee
has proved the identity of the creditor, credit worthiness of the creditor, then the
genuineness of the transaction cannot be objected on the ground that source of
source has not been proved by the assessee. The Courts have time and again
held that when complying the conditions of section 68 of the Act, it is not open
to the recipient of the loan to establish the source of source. Accordingly, I find
5 ITA No.3011/PUN/2017 Dr. Ramchandra P. Shinde
no merit in the orders of the authorities below and the same are reversed. The addition of Rs.10 lakhs made under section 68 of the Act is thus deleted.
In the result, the appeal of the assessee is allowed.
Order pronounced on this 28th day of December, 2018.
Sd/- (SUSHMA CHOWLA) �याियक �याियक सद�य �याियक �याियक सद�य सद�य / JUDICIAL MEMBER सद�य
पुणे / Pune; �दनांक Dated : 28th December, 2018 Satish
आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to : अ�ेिषत
अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. आयकर आयु�(अपील) / The CIT(A)-1, Pune; 3. �धान आयकर आयु� / The Pr.CIT-1, Pune; 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे, एक-सद�य 5. मामला / DR ‘SMC’, ITAT, Pune; 6. गाड� फाईल / Guard file.
आदेशानुसार/ BY ORDER, आदेशानुसार आदेशानुसार आदेशानुसार स�यािपत �ित //TRUE COPY//
Senior Private Secretary, आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune
6 ITA No.3011/PUN/2017 Dr. Ramchandra P. Shinde
Date 1. Draft dictated on 26-12-18 Sr.PS 2. Draft placed before author 27-12-18 Sr.PS 3. Draft proposed & placed before the AM second member 4. Draft discussed/approved by Second AM Member. 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order.