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Facts
The assessee, Sharad Goel (M/s Aarson Motors), filed his Return of Income for AY 2013-14. The Assessing Officer (AO) made two additions: Rs. 18,00,000/- for unexplained cash credits under section 68, received as unsecured loans, and Rs. 2,69,315/- as a 5% ad-hoc disallowance of Discount, Repair & Maintenance, and Workshop Expenses. The Commissioner of Income Tax (Appeals) upheld both additions, leading to the current appeal before the ITAT.
Held
The ITAT found that the CIT(A) failed to conduct necessary inquiries using powers under sections 133(6) or 131 regarding the unsecured loans and did not properly exercise powers under section 250(4) and (6) for both issues. Consequently, the ITAT remitted both the addition for unexplained cash credits and the ad-hoc disallowance back to the CIT(A) for fresh adjudication after making proper inquiries.
Key Issues
1. Whether the addition of Rs. 18,00,000/- as unexplained cash credits under section 68 for unsecured loans was justified. 2. Whether the ad-hoc disallowance of 5% amounting to Rs. 2,69,315/- on Discount, Repair & Maintenance, and Workshop Expenses was justified.
Sections Cited
Section 250, Section 143(3), Section 68, Section 133(6), Section 131, Section 250(4), Section 250(6)
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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY, JM & SHRI ARUN KHODPIA, AM
आयकरअपीलीयअिधकरण, रायपुर "ायपीठ,रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR "ी पाथ" सारथी चौधर", "ाियक सद" एवं "ीअ"ण खोड़िपया, लेखा सद" के सम" । BEFORE SHRI PARTHA SARATHI CHAUDHURY, JM & SHRI ARUN KHODPIA, AM आयकर अपील सं. / ITA No: 310/RPR/2025 (िनधा"रण वष" Assessment Year: 2013-14)
Sharad Goel, v Asstt. Commissioner of Income Tax, Aarson Motors, Lodhipara chowk, s Central Circle-1, CBD Building, Raipur-492001, C.G. Sector-21, Nava Raipur, Atal Nagar, Raipur-492015, C.G. PAN: AGVPG5894M (अपीलाथ"/Appellant) . (""थ" / Respondent) . िनधा"रती की ओर से / Assessee by : Shri Ravi Agrawal, CA राज" की ओर से / Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई की तारीख / Date of Hearing : 30.06.2025 : 03.07.2025 घोषणा की तारीख / Date of Pronouncement आदेश / O R D E R Per Arun Khodpia, AM: The captioned appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeal), ADDL/JCIT(A), Kochi, [in short “Ld. Addl/JCIT(A)”], passed on 13.03.2025, u/s 250 of the Income Tax Act, 1961 (in short “the Act”), for the Assessment Year 2013-14, which in turn arises from the order of Assistant Commissioner of Income Tax, Circle-3(1), Raipur (in short “Ld. AR”), passed u/s 143(3) of the Act, dated 30.03.2016. 2 Sharad Goel vs. ACIT, Central Circle-1, Raipur 2. The grounds of appeal raised by the assessee are as under: 1. That, on the facts and circumstances of the case and in law, the appellant denies his liability to pay the amount of tax demanded vide order dt. 30.03.2016. 2. That, on the facts of the case and in law, Ld. ADDL/JCIT(A) is not justified in confirming the addition of Rs. 18,00,000.00 under section 68 made by Ld. ACIT, Circle-3(1), Raipur, without appreciating the facts and therefore the impugned addition is liable to be deleted. 3. That, on the facts of the case and in law, Ld. ADDL/JCIT(A) is not justified in confirming the addition of Rs. 2,69,315.00 which has been made by Ld. ACIT, Circle-3(1), Raipur, by way 5 % adhoc disallowance in Discount, Repair and Maintenance and Workshop expenses, without appreciating the facts and therefore the impugned addition is liable to be deleted. 4. That the appellant reserves the right to add, alter or modify any ground of appeal.
Brief facts of the case are that the assessee herein is an individual running a proprietary firm in the name of M/s Aarson Motors, Raipur. The assessee filed his Return of Income (ROI) for AY 2013-14 on 30.10.2013, disclosing total income of Rs. 59,52,680/-. The assessment u/s 143(3) of the Act in the case of assesse has been completed on 30.03.2016, with the addition of Rs. 18,00,000/- on account of unexplained cash credits u/s 68 in the garb of unsecured loans, and for Rs. 2,69,315/- by way of lump sum disallowance of 5% of the Discount, Repair & Maintenance and Workshop Expenses aggregating to Rs. 53,86,279/-. Ld. AO found that most of the expenses debited in aforesaid account heads are incurred in cash and also based on self-made vouchers which could not be substantiated by the 3 Sharad Goel vs. ACIT, Central Circle-1, Raipur assessee. Finally, the assessment was completed with the determination of total assessed income at Rs. 80,21,995/-.
Aggrieved with the aforesaid order of Ld. AO, the assessee preferred an appeal before Ld. CIT(A), wherein he reiterates the facts and submissions akin to his explanations before Ld. AO. However, Ld. CIT(A) have not found any substance in the submissions of the assessee, therefore, have dismissed the appeal of the assessee with the following observations:
5.3.1 During the appellate proceedings, in respect of addition of Rs. 18,00,000/- towards unsecured loans treated as unexplained as per section 68 of the I. T. Act, 1961, the appellant has furnished the written submissions, cited some case laws and furnished some evidences like confirmation of accounts, copy of ITR- V, some portion of bank statement of Punjab National Bank, trial balance of Smt. Banti Agrawal, R. K. Agrawal(HUF) and Harsh Goel Welfare Trust. These have been perused. The appellant himself in his written submissions has stated that all the above furnished details have been submitted by him during the course of assessment and all the details of above persons have been duly checked and verified by the assessing officer during the course of assessment. The appellant has not furnished any other valid evidence to substantiate his claim.
5.3.2 During the appellate proceedings in respect of addition of Rs. 2,69,315/- towards 5% disallowance of the expenses such as (i) Discount; (ii) Repairs & Maintenance; and (iii) Workshop expenses, the appellant has not filed any valid evidences or proof to substantiate his claim. He has merely stated that the books of account along with expenses vouchers, bills, credit notes etc. were produced before the A.O. and the same has been checked/verified by the A.O. He has stated that merely on the ground that expenses incurred in cash and made by 4 Sharad Goel vs. ACIT, Central Circle-1, Raipur self-made vouchers, 5% disallowance of expenses have been made. He has also stated that the turnover as well as the Net Profit has increased from immediately preceding previous year. Apart from the above written contentions, the appellant has failed to furnish any valid evidence or proof during the appellate proceedings to substantiate his claim. All the details stated as above in respect of bills, vouchers, etc. turnover, N. P. ratio etc. have been duly verified and also have been duly discussed and brought out clearly and correctly in the assessment order u/s 143(3) dated 30.03.2016 passed by the ACIT, Circle-3(1), Raipur.
5.4 Hence in the light of these observations, on merits, facts and circumstances of the case as. well as considering the assessment order u/s 143(3) of the I. T. Act, 1961 dated 30.03.2016, appellant's written submissions, case laws, some evidences filed but which have been already duly considered by the A.O. during the course of assessment, no fresh evidences having been filed during the appellate proceedings and the appellant has not substantiated his claim during the course of appellate proceedings also, etc., it is held that the assessing officer has rightly made the above addition of Rs. 18,00,000/- and Rs. 2,69,315/- in the assessment order u/s 143(3) dated 30.03.2016, and hence the grounds of appeal of the appellant is dismissed.
In the result, the appeal is dismissed. 5.5
Being dissatisfied with the order of Ld. CIT(A), the assessee preferred to carry the matter before us, therefore, has instituted the present appeal which is under consideration.
At the outset, Shri Ravi Agrawal, Ld. Authorized Representative on behalf of the assessee (in short “Ld. AR”), submitted that the order passed
5 Sharad Goel vs. ACIT, Central Circle-1, Raipur by Ld. Addl/JCIT(A) is not justified as the addition of Rs. 18,00,000/- made u/s 68 by the Ld. AO was sustained without properly appreciating the facts. It is further submitted by the Ld. AR that the addition of Rs. 2,69,315/- by way 5% disallowance in Discount, Repair & Maintenance and Workshop Expenses was also sustained by the Ld. Addl/JCIT(A) without appreciating the facts, therefore, the impugned additions are liable to be deleted. Ld. AR also relied upon various judgments placed in the paper book.
Per contra, Dr. Priyanka Patel, Ld. Sr. DR submitted that the unsecured loans are extended by certain parties, namely Harsh Goel Welfare Trust, R. K. Agrawal (HUF) and Smt. Banti Agrawal for Rs.5,00,000/-, Rs. 5,00,000/- and 8,00,000/-, respectively. Ld. Sr. DR drew our attention to the assessment order and submitted that all the aforesaid loans which are pointed out by Ld. AO are extended to the assessee by the respective lenders after depositing cash in their respective bank account and the assessee was failed to establish the genuineness of transaction in terms of provisions of Section 68 of the Act. Before, Ld. Addl/JCIT(A) also there were no additional submissions or corroborative evidence furnished by the assessee, which is rightly noted by the Ld. Addl/JCIT(A) based on assessee’s own submission that the details furnished by assessee before the First Appellate Authority are the same as were furnished before the Ld. AO during assessment proceedings. It is submitted that under such circumstances, Ld. Addl/JCIT(A)
6 Sharad Goel vs. ACIT, Central Circle-1, Raipur had rightly adjudicated the issue and have sustained addition u/s 68. Regarding lump sum, the addition of 5% from Discount, Repair & Maintenance and Workshop Expenses of Rs. 2,69,315/-, Ld. Sr. DR submitted that the assessee failed to furnish any valid evidence or proof before the Ld. AO as well as before the first appellate authority to substantiate his claim. Accordingly, on the grounds that expenses incurred in cash which were supported by self-made vouchers only, the assessee squarely failed in substantiating his claim, therefore, the order of the revenue authorities and additions made therein deserve to be sustained.
We have considered rival submissions, perused the material available on record and case laws relied upon by the assessee. In the present matter, Ld. AO has made two additions to the income of assessee. The first addition was Rs. 18,00,000/- towards unsecured loans received by the assessee u/s 68, wherein the assessee had furnished certain documents before the Ld. AO like confirmation of accounts, ITR, trial balance, bank statement of the lenders. On perusal of such documents, it is emanating that the lenders had provided unsecured loan to the assessee by depositing cash on same day and in one case two months prior to the date of loan but there was no transaction in between the transaction of cash deposits and the transaction of loan. Ld. AO decided the issue based on documents furnished by the assessee under his conviction that the cash deposited by the lenders in their
7 Sharad Goel vs. ACIT, Central Circle-1, Raipur bank account was assessee’s cash, which in turn has been received back by him in the grab of unsecured loans. Ld. Addl/JCIT(A) also validated the findings of Ld. AO, as the assessee has made written submissions along with documents, as furnished by Ld. AO, there was no further explanation or clarification made by the assessee before the First Appellate Authority. Though, as per the order of Ld. Addl/JCIT(A), there was no further clarification or explanation sought from the assessee. Herein, we may observe that Ld. Addl/JCIT(A) should have conducted necessary inquiries or caused such enquiries through the Ld. AO by using the powers available to them u/s 133(6) or u/s 131 of the I. T. Act, from the lenders from whom the unsecured loans are received and only after such inquiries certain conclusive decision should have been arrived at. However, since exercising such powers of inquiries and obligations entrusted upon the First Appellate Authority u/s 250(4) and (6) of the Act which are not adhered to by him, we find it appropriate to restore this matter back to the file of Ld. Addl/JCIT(A) for fresh adjudication.
Adverting to the second issue regarding ad-hoc disallowance of 5% from Discount, Repair & Maintenance, Workshop Expenses amount to Rs.2,69,315/- and herein also the First Appellate Authority had sustained the addition based on findings of the Ld. AO and in absence of any further clarifications by the assessee. Apart from written submission which cannot
8 Sharad Goel vs. ACIT, Central Circle-1, Raipur convinced the First Appellate Authority, we observed that the First Appellate Authority has all the material on record before him and also authority to enquire the assessee to substantiate the same further so as to arrive at a conclusive finding. However, nothing is exercised by the Ld. Addl/JCIT(A) as emanating from impugned order, accordingly, the matter needs to be revisited by the First Appellate Authority, therefore, the same merits to be remitted to the file of Ld. Addl/JCIT(A).
Regarding judicial pronouncement relied upon by the Ld. AR of the assessee, we find that such decisions are of no help at this stage for the assessee, in absence of the necessary actions to be taken by the Ld. JCIT(A) under the provisions of section 250(4) & (6) to interpret and infer upon the factual aspect of the case, so as to arrive at the rational findings, the applicability of jurisprudence would be premature.
Our aforesaid observations are supported by the judgment of Hon’ble Mumbai High Court in the case of CIT vs. Premkumar Arjundas Luthra (HUF) reported in [2016] 240 taxman 133, wherein it has been held that in disposing of the appeal, CIT(A) is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act. Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing
9 Sharad Goel vs. ACIT, Central Circle-1, Raipur after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support.
In backdrop of the aforesaid facts and circumstances and observations, we are of the considered view that the matter qualifies to be restored back to the file of Ld. Addl/JCIT(A) to revisit the issues, in terms of our observations.
Needless to say, the assessee shall be provided with reasonable opportunity of being heard in the set aside appellate proceedings, to which the assessee is directed to comply proactively, failing which the issues may be decided within a reasonable time, in accordance with the mandate of law.
In result, the appeal of assessee is allowed for statistical purposes.
Order pronounced in the open court on 03/07/2025. (PARTHA SARATHI CHAUDHURY) (ARUN KHODPIA) "ाियक सद" / JUDICIAL MEMBER लेखा सद" / ACCOUNTANT MEMBER रायपुर / Raipur; िदनांक Dated 03/07/2025 Vaibhav Shrivastav आदेशकी "ितिलिप अ"ेिषत / Copy of the Order forwarded to : 1. अपीलाथ"/ The Appellant- Sharad Goel, Raipur 2. ""थ"/ The Respondent- ACIT, Central Circle-1, Raipur 3. The Pr. CIT, Raipur (C.G.)
10 Sharad Goel vs. ACIT, Central Circle-1, Raipur िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, 4. ITAT, Raipur 5. गाड" फाईल / Guard file. // स"ािपत "ित//
आदेशानुसार/ BY ORDER,
(Senior Private Secretary) आयकर अपीलीय अिधकरण, रायपुर / ITAT, Raipur