SANJAY KETAN HUF,MUMBAI vs. ITO 30(3)(2), MUMBAI

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ITA 3105/MUM/2017Status: DisposedITAT Mumbai30 January 2019AY 2012-135 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that while the assessee provided basic details, the creditors did not respond or verify the documents. Therefore, the matter was set aside to the AO for further verification and decision, allowing the assessee an opportunity to be heard.

What were the facts?

The assessee appealed against the CIT(A)'s order confirming additions made by the AO for unexplained cash credits under Section 68 of the Income Tax Act. The additions were for unsecured loans from Ganesh Fabric, Sanjay Enterprises, and Shri Rajesh Khetan HUF.

What were the issues?

Whether the additions made under Section 68 for unexplained cash credits were justified when the loan creditors failed to verify the transactions, despite the assessee providing some documentation.

Which sections of the Income-tax Act were involved?

Section 68,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

For Appellant: Shri Shankarlal Jain, AR

AadoSa / O R D E R महावीर स िंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM:

This appeal filed by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-41, Mumbai [in short CIT(A)], in Appeal No. CIT(A)-41/IT-66/15-16 vide order dated 24.02.2017. The Assessment was framed by the Income Tax Officer, Ward 30(3)(2), Mumbai (in short ‘ITO’/ AO’) for the A.Y. 2012-13 vide order dated ITAs No. 3105/Mum/2017 12.03.2015 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).

2.

The only issue in this appeal of assessee is against the order of CIT(A) confirming the addition made by the AO of unexplained cash credits under section 68 of the Act in totaling to ₹ 6.30 lacs in respect to the following parties (i) M/s Ganesh Fabric of ₹ 5.50 lacs (ii) Sanjay Enterprises of ₹ 5,80 lacs (iii) Shri Rajesh Khetan HUF of ₹ 5 lacs. For this assessee raised the following grounds: - “1. Ld. CIT(A) erred in confirming the addition of Rs.16,30,000/- under provision of section 68 of the Income Tax Act, without properly appreciating the facts of the case and law applicable thereto.

2. Ld. CIT(A) erred in not deleting the addition made U/S.68 in case of MIs. Ganesh Fabric of Rs.5,50,000/- and in case of Mis. Sanjay Enterprises of Rs.5,80,000/- merely on the plea that notices served on these two loan creditors u/s.133(6) were not replied without considering the evidences furnished in the form of confirmation letters, transactions being by Account payee cheques, the loan creditors being on PAN of the department and other evidences.

3. Ld. CIT(A) erred in confirming the addition of Rs.5,00,000/- being loan borrowed by appellant from MIs. S. S. Fashions, proprietor, ITAs No. 3105/Mum/2017 Shri Rajesh Khetan HUF being the amount borrowed of Rs.2,60,000/- on 03/08/11 and Rs.2,40,000/- on 10/08/11 merely on the plea that bank statement does not reveal the narration but it reflects only as transfer without appreciating that fact of borrowing is duly proved by confirmation filed as well as bank statement of the appellant and of loan creditors.”

3.

We have heard the rival contentions and gone through the facts and circumstances of the case. We will deal with the above credits individually.

Ganesh fabrics of Rs. 5.50 lacs

4.

The assessee has not provided any basic details in respect to this cash credit, hence, AO framed assessment under section 144(b) of the Act and added this unsecured loan under section 68 of the Act. Before the CIT(A), the assessee filed paper book containing new evidence with a request to admit these evidences. The CIT(A) admitted these evidences under section 46A of the Income Tax Rules, 1962 (hereinafter, the ‘Rules’) and the same was sent to the AO for remand report. The AO submitted the remand report as mentioned vide letter dated 27.01.2017. In respect of Ganesh Fabrics, during the assessee remand proceedings before the AO, no reply was filed by assessee or the loan credit, hence, he noted that verification of these unsecured loan could not be done. The CIT(A) also confirmed this addition on the very basis that M/s Ganesh Fabrics is not complying with the requirements of the AO. Accordingly, he confirmed this addition.

ITAs No. 3105/Mum/2017

5.

Before us, the learned counsel for the assessee filed paper book consisting details in respect of Ganesh Fabrics i.e. confirmation (enclosed at page 16 of assessee’s paper book) Bank statement of loan (enclosed in assessee’s paper book at page 17) bank statement of assessee (enclosed at page 18 of assessee’s paper book).

Sanjay Enterprises

6.

The second party in respect of unsecured loan is Sanjay Enterprises and similar is the position as in the case of Ganesh Fabrics and hence, CIT(A) confirmed the addition. The assessee also filed similar details in respect of Sanjay Enterprises. The details are confirmation, acknowledgement of return and Bank statements.

7.

Another addition of Rs. 5 lacs as unsecured loan from S. S. Fashions, proprietor, Shri Rajesh Khetan HUF and the amount borrowed of Rs. 2.60 lacs on 03.08.2011 and raised 2.40 lacs on 10.08.2011.

8.

Similar is the position in the case of SS Fashion, proprietor, Shri Rajesh Khetan HUF. The assessee ha filed the assessee’s bank statement and bank statement of SS Fashion from where the entries were debited.

9.

We noted that all of these three creditors, the assessee has filed the basic details but these parties did not responded or did not verified the documents.

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