THE DCIT, 1(1), UJJAIN vs. SMT. NAMITA PATWA, DEWAS

PER SHRI C.M. GARG, JM

The revenue has filed these appeals whereas the assessee has

filed cross objections challenging the orders of the first appellate

authority, Ujjain, dated 25.2.2013 and 28.3.2013 for the

assessment years 2008-09 and 2009-10, respectively. Since

common grounds are involved, these appeals and cross objections

are being disposed of by this consolidated order for the sake of

convenience.

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 2. Following grounds have been taken by the revenue in the

appeal for the assessment year 2008-09 :-

“1. Whether on the facts and in the circumstances of the case the ld. CIT(A) was justified in deleting the addition of Rs.27,86,037/- out of the addition of Rs. 34,82,537/- made by the A.O. on account of bogus commission payment even when assessee failed to establish the genuineness of such claim. It is to be noted that as per the settled judicial principles payment has to be proved by the assessee while claiming an expenditure. 2. The ld. CIT(A) sustained the addition of Rs.11,52,168/- instead of the total addition of Rs. 36,44,271/- made by the A.O. on account of disallowance of travelling expenses. Whether on the facts and in the circumstances of the case the ld. CIT(A) was justified in giving partial relief to the assessee even when assessee failed to discharge her responsibility to prove the genuineness of travelling expenses. It is to be noted that as per the settled judicial principles payment has to be proved by the assessee while claiming expenditure. 3. Whether on the facts and in the circumstances of the case the ld. CIT(A) was justified in deleting the addition of Rs. 5,45,822/- under section 68 without examining the creditworthiness and genuineness of the said transaction. 3. Following grounds have been taken by the assessee in the

cross objection for the assessment year 2008-09 :-

“1. The ld. CIT(A) has erred in maintaining the addition of Rs.6,96,500/- in respect of commission paid to various parties. 2. The ld. CIT(A) has erred in maintaining the addition of Rs.11,52,168/- out of travelling expenses. It was proved

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 before the ld. CIT that the said expenses incurred were genuine and for the purposes of the business. The addition may please be deleted. 3. The order of the ld. CIT(A) be maintained on grounds allowed by him.” 4. Following grounds have been taken by the revenue in the

appeal for the assessment year 2009-10 :-

“1. Whether on the facts and in the circumstances of the case the ld. CIT(A) was justified in deleting the addition of Rs.34,55,809/- out of the addition of Rs. 43,19,761/- made by the A.O. on account of bogus commission payment even when assessee failed to establish the genuineness of such claim. It is to be noted that as per the settled judicial principles payment has to be proved by the assessee while claiming an expenditure. 2. Whether on the facts and in the circumstances of the case the ld. CIT(A) was justified in giving partial relief to the assessee of Rs.33,66,941/- out of total addition of Rs.48,27,028/- made by the A.O. even when assessee failed to discharge her responsibility to prove the genuineness of travelling expenses. It is to be noted that as per the settled judicial principles payment has to be proved by the assessee while claiming an expenditure. 3. Whether on the facts and in the circumstances of the case the ld. CIT(A) was justified in deleting the addition of Rs.75,000/- on account of interest on unsecured loan u/s 68 without examining the creditworthiness and genuineness of the said transaction. It is to be noted that on the same issue department is in appeal in the case of the same assessee for A.Y. 2008-09 before Hon'ble ITAT, Indore.

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 5. Following grounds have been taken by the assessee in the

cross objection for the assessment year 2009-10 :-

“1. The ld. CIT(A) has erred in maintaining the addition of Rs.8,63,952/- in respect of commission paid to various parties. 2. The ld. CIT(A) has erred in maintaining the addition of Rs.14,60,087/- out of travelling expenses. It was proved before the ld. CIT that the said expenses incurred were genuine and for the purposes of the business. The addition may please be deleted. 3. The order of the ld. CIT(A) be maintained on grounds allowed by him.” 6. Since common grounds are involved in all these appeals and

cross objections, we would like to dispose of ITA No. 297/Ind/2013

for the assessment year 2008-09 first as a model.

ITA No. 297/Ind/2013 : A.Y.2008-09 7. Ground no. 1 of the revenue’s appeal relates to deletion of

addition of Rs. 27,86,037/- out of the addition of Rs.34,82,537/-

made by the Assessing Officer on account of bogus commission

payment.

commission expenditure amounting to Rs. 34,82,537/- to the P&L

account. It was the claim of the assessee that she had paid

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 commission to agents on account of material supplied in differente

industries through them. The Assessing Officer found that the

assessee has not entered into any written agreement with the

agents and commission was said to be based on some specified

percentage on sales as per the oral terms and conditions. The

Assessing Officer required the assessee to explain the same in

response to which it was stated by the assessee that commission

was paid for procuring orders and supplying material in different

factories. It was also stated that the employees of the assessee

approach persons working in the purchase departments of client

companies and contact persons who are in a position to give orders

or influence the orders after making payment of commission to

them. On consideration of the submissions of the assessee, the

Assessing Officer did not find any force in the same and accordingly

disallowed the entire commission expenses claimed by the assessee.

assessee approached the Commissioner of Income Tax (Appeals) by

way of filing first appeal before him. On consideration of the

submissions of the assessee in the wake of the facts of the case and

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 the legal position, the Commissioner of Income Tax (Appeals)

deleted the addition of Rs. 27,86,037/- out of the total addition of

Rs. 34,82,537/-. Now the assessee is in appeal before the Tribunal.

considered the relevant material placed on record of the Tribunal,

inter alia, paper books filed by the assessee and the impugned

assessment order and the first appellate order. From the order of

the Commissioner of Income Tax (Appeals) dated 25.2.2013 we

observe that the Commissioner of Income Tax (Appeals) has granted

relief to the assessee by observing as under :-

“ 3.2.5 I have considered the finding of the A.O. and the

written submission of the appellant carefully. The A.O. has

disallowed entire commission expenditure which is not justified.

The A.O. has called for independent information from the parties

during the A.Y. 2008-09 in the case of the appellant and they

have confirmed the involvement of commission agent except four

parties who have denied involvement of any liaison agent. The

turnover of the appellant company was increased during the

year under consideration whereas expenses were increased

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 slightly on account of commission compared to preceding eyar in

proportion to sales. A.O. could not decide the business need of

the appellant he has only to see that expenses should be

incurred wholly and exclusively for the business purposes. In

the absence of written agreement with the commission agent

and sales to the same parties in the subsequent year could not

make the expenses ingenuine or not incidental to business. The

appellant hjas furnished evidences in support of the expenses

incurred on account of commission which was not considered by

the A.O. It has also filed the confirmation and copies of the

return of the major commission agents. The appellant has

placed reliance on the various decision of Hon'ble Apex Court,

Hon'ble M.P. High Court, Hon'ble ITAT Indore Bench, Indore etc.

In the case of CIT vs. Dhanrajgiri Raja NMarsingirji (1973) 91

ITR 544 (SC) Hon'ble Apex Court held that :

“It is not open to prescribe what expenditure an assessee

should incurred and in what circumstances he should

incur expenditure. Every business businessman knows his

interest best.”

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 3.2.6 In the case of Hemraj Nabhomal Sons vs. CIT(2005)

278 ITR 345 (MP) Hon'ble M.P. High Court has taken a view

that –

“Once the aforementioned conditions are found satisfied,

then it is not proper on the part of A.O. i.e. taxing

authorities to probe on the question as to whether the

expenditure was legitimate or necessary etc. This type of

inquiry is neither contemplated nor called for. It is only

when the A.O. finds that claim so made is bogus or false

or not incurred as a fact, it can be disallowed, else not.”

3.2.7 In the case of Ravi Marketing (P) Ltd. vs. CIT on 18

January, 2005 equivalent citations : (2005) 198 CTR Cal 354,

2006 280 ITR 519 Cal. Hon'ble Court held that :

“Whether an expenditure, expedient for the purpose of

promotion of sales or the business and the amount and the

manner in which to be expended is to be looked at by the

authorities below under the IT Act or the Court from the

viewpoint of the assessee not from its armchair the assessee

knows his business. It is his success or failure in the business 9

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 which is material to him. It is not for the Court or the IT

authority to suggest or advice to presume or surmise as to the

expedience. What the authorities under the Act can do is that

they can examine the genuineness of the expenditure and the

purpose for which it was expended. Once it is established that

the amount was genuinely expended and it was expended for

a particular purpose, the only discretion that is left to the

authority under the Act is to apply the law on the basis of

such established fact or finding. If the purpose for which it is

expended is eligible for deduction under a particular head no

discretion is left to the authority either to surmise with the

quantum that ought to have been spent or to surmise or

presume the purpose differently and convert the same under

some other head”

3.2.8In the case of Prochem Laboratories Pvt. Ltd. vs. ACIT

(Trib Indore) Hon'ble ITAT, Indore Bench, Indore held that :-

“U/s 37 of the Income Tax Act, 1961 – Commission paidby

assessee to unrelated concern (agent) for procuring order –

A.O. held that there was no written agreement for such

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 payment, agent had its own business and was not

engaged in providing agency service and the manager of

one of the customer did not knew the agent – Commission

was also paid by sister concern to same agent which was

disallowed by A.O. but addition in case of sister concern

was deleted by cIT(A) – Held – There is no need of written

agreement – turnover has substantially increased due to

agent – Agent is an unrelated party who is regularly

assessed to tax and has offered the commission in its

return – Commission is allowable.”

3.2.9 The appellant has also placed reliance on the

decision of Hon'ble ITAT, Indore Bench, Indore in the case of

Sahani Trading Co. vs. ACIT (2012) 20 ITJ 773 in which

Hon'ble ITAT has allowed payment of commission as turnover

of the appellant company was substantially increased and

commission was paid by cheque after deducting TDS.

3.1.10 It is not the case of A.O. that appellant has not paid

any commission on sales. The appellant has paid commission

in earlier and subsequent years. The nature of the appellant’s

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 business requires such commission payment in a competitive

market for achieving higher sales and for ensuring realisation

of its sale process. Nothing has been brought on record by the

A.O. to sugtest that payment of commission was without

business needs and payment of the commission a supported

by the material placed on as discussed above. Considering the

facts there was denial of four parties of involving any liason

agent in A.Y.2008-09 when A.O. has called for the information

u/s 133(6) and non production of commission agents whom

appellant has paid commission more than Rs. 1,00,000/-

inspite of asking for the same by the A.O., although appellant

has filed confirmations and copy of the returns of some of the

commission agents, disallowance to the extent of 20% of

commission expenses will meet end of justice. On the similar

facts disallowance of 20% confirmed in the case of appellant in

previous year 2008-09. Hence, add made by the A.O. is

confirmed to the extent of Rs. 8,63,952/- and appellant will

get relief of Rs. 34,55,809/-”

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 11. The learned DR supporting the action of the Assessing

Officer submitted that the Assessing Officer has rightly held that

merely because the assessee established the existence of agreement

between him and his agents and the actual payment therein,it

would not take away the jurisdiction or discussion of the Assessing

Officer to consider whether the expenditure was genuinely and

exclusively incurred for the purpose of business and whether the

expenditure was commercially expedient. He further submitted that

the Assessing Officer has elaborately dealt with the issue and the

conclusion in para 3.15 of the assessment order as to why the

expenditure was not incidental to or expedient for the purpose of

business of the assessee. Therefore, the Commissioner of Income

Tax (Appeals) was quite unjustified in granting part relief to the

assessee.

submitted that it was not the case of the Assessing Officer that the

assessee has not paid any commission on sales and undisputedly

the assessee has paid commission in earlier and subsequent

assessment years on the identical facts and circumstances as the

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 nature of the assessee’s business required commission payment in

the competitive market for achieving higher sales and for achieving

realisation of sale process. The learned counsel for the assessee

pointed out that the Assessing Officer has not brought on rcord any

allegation to establish that the payment of commission was without

business needs and it was supported by relevant material on

record. The learned counsel for the assessee further submitted that

despite the Commissioner of Income Tax (Appeals) accepting all the

contentions of the assessee, he made ad hoc disallowance of 25% of

total commission paid without any basis. Therefore, the part

deletion made by the Commissioner of Income Tax (Appeals) may

kindly be confirmed and part confirmation of disallowance made by

the Commissioner of Income Tax (Appeals) without any reasoning

and basis may kindly be allowed to the assessee.

are of the view that while granting part relief to the assessee the

Commissioner of Income Tax (Appeals) has followed the ratio of the

decision of ITAT, Indore Bench in the case of Sahni Trading

Company vs. ACIT (supra) wherein the Tribunal has allowed

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 payment of commission by taking note of the fact that the turnover

of the assessee company was substantially increased and the

commission was paid by cheque after deducting TDS. In the

present case, undisputedly the assessee made payment of

commission on sales in the line of earlier and subsequent

assessment years and the Assessing Officer has not disputed the

fact that as per the requirement of the nature of the assessee’s

business, commission payment is a must to achieve higher sales in

competitive market for realisation of sale proceeds. It is not the

allegation of the Assessing Officer that the payment of commission

was without any business need and per contra it is clear that the

assessee submitted best possible material and evidence on record to

support his claim. However, we cannot ignore the fact that four

parties denied having involved as liasoning agents of the assessee

and the assessee could not produce confirmations from two alleged

commission agents on being specifically asked by the Assessing

Officer. In the totality of facts and circumstances of the case, the

Commissioner of Income Tax (Appeals) was quite correct and

justified in allowing part relief to the assessee and in confirming the

disallowance to the extent of 20% of commission expenses. 15

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 Therefore, in our considered opinion, we are unable to see any

perversity or any other valid reason to interfere with the order of the

Commissioner of Income Tax (Appeals) on this count and, hence, we

uphold the same. Ground no. 1 of the revenue and ground no. 1 of

the cross objection of the assessee are dismissed.

of Income Tax (Appeals) was not justified in restricting the

disallowance to Rs. 11,52,168/- instead of the total addition of

Rs.36,44,271/- made by the Assessing Officer on account of

disallowance of travelling expenses whereas ground no. 2 of the

cross objection of the assessee is that the Commissioner of Income

Tax (Appeals) has erred in maintaining the addition of Rs.

11,52,168/- out of travelling expenses.

Rs.46,08,669/- on the ground that the travelling expenses have

been incurred by her employees in connection with the assessee’s

business. On being asked by the Assessing Officer to produce the

relevant bills and vouchers, the assessee could produce the

supporting bills and vouchers to the extent of Rs.8,64,398/- which

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 were impounded by the Assessing Officer. The Assessing Officer

again issued show cause notice asking the assessee as to why the

remaining claim should not be disallowed in the absence of

supporting bills and vouchers. In response, the assessee submitted

that the remaining expenses had been incurred by way of internal

vouchers submitted by the employees and the employees were

carrying out the business on the assessee’s vehicles also. The

Assessing Officer did not accept this submission of the assessee

and after allowing further allowance of Rs.1,00,000/- for the

expense without supporting third party vouchers, the Assessing

Officer allowed total travelling expenses at Rs. 9,64,398/- and

balance expenses of Rs. 36,44,271/- were added back to the total

income of the assessee.

Commissioner of Income Tax (Appeals). It was the contention of the

assessee that the Assessing Officer has not taken any cognizance

on the self-made vouchers which contained the details of the

payments and travelling undertaken. The Commissioner of Income

Tax (Appeals) on consideration of the submissions of the assessee,

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 restricted the disallowance to Rs.11,52,168/- after granting relief of

Rs.34,56,501/-. Now the revenue is in appeal against the relief

granted by the Commissioner of Income Tax (Appeals).

in making the disallowance of Rs.46,08,669/- as the assessee was

able to produce supporting bills and vouchers to the extent of

Rs.8,64,398/- only. The learned DR further submitted that the

Assessing Officer was quite correct in allowing travelling expenses

of Rs.9,64,398/- and balance expenses were rightly added back to

the total income of the assessee. The learned DR further submitted

that the Commissioner of Income Tax (Appeals) restricted the

disallowance to the extent of Rs.11,52,168/- and granted part relief

to the assessee without any basis. Therefore, the order of the

Commissioner of Income Tax (Appeals) may kindly be set aside and

that of the Assessing Officer restored.

submitted that the assessee placed bills and vouchers before the

Assessing Officer and the Assessing Officer has not taken any

cognizance of the self made vouchers, which were containing details

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013

of payment and travelling undertaken by the assessee and staff

members and complete vouchers were prepared and the books of

the assessee contained all the necessary details of the journeys

undertaken and payment made to respective persons. The learned

counsel for the assessee strongly contended that the Assessing

Officer in the remand report has accepted this fact. Therefore, the

Commissioner of Income Tax (Appeals) was not correct and justified

in making the disallowance of 25% of total travelling expenses

without any basis.

that the Commissioner of Income Tax (Appeals) has granted part

relief to the assessee with the following observations :-

“3.3.3 I have considered the finding of the A.O. and the

written submission of the appellant carefully. The appellant has

filed the comparative chart showing G.P./NP and relevant

expenses as under :-

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013

S.No. Particulars F.Y. F.Y. F.Y. F.Y.

1 Turnover 2005-06 2006-07 2007-08 2008-09

2 G.P. 64.57 129.52 203.17 251.67 (18.67%) (19.44%) (18.23%) (19.26%) 3. NP. 4.44 17.51 53.51 55.92 (1.28% (2.63%) (4.80) (4.28%) 4. Travelling 11.52 23.45 46.7 58.40 Expenses (3.33%) (3.52%) (4.13%) (4.47%) 5. Commission 10.06 33.76 34.82 43.20 agents (2.91%) (5.07%) (3.12%) (3.31%)

The travelling expenses are increased from 4.13# to 4.47% of

total turnover compared to last year. The reason for increase

was given by the appellant was increase in transportation cost.

Turnover of the appellant was also increased during the year.

The appellant has not maintained supporting vouchers forn all

these expenses. The travelling expenses claimed by the

appellant with supporting bills and vouchers were to the extent

ofRs.9,72,365/- and remaining travelling expenses were

incurred through internal vouchers. The appellant has filed

some of such vouchers and affidavit of Shri Kamalkant Patwa

in support of her contention. The appellant has maintained

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 internal vouchers for travelling expenses but they were not

supported with 3rd party voucher. The appellant must have

incurred the expenses for travelling but in absence of proper

bills and vouchers they could not be allowed fully. Further,

payments were also made in cash and genuineness of these

expenses was not cross verifiable. Considering the above facts,

disallowance made by the A.O. out of travelling expenses at

Rs.58,40,348/- up to 25% is hereby confirmed i.e.

Rs.14,60,087/- and appellant will get relief of Rs., 33,66,941/-

In view of the above, it is apparent from the facts of three

consecutive years i.e. F.Ys. 2005-06 to 2007-08 that travelling

expenses were increased from 3.5% to 4.15% on total turnover in

comparison to immediately preceding F.Y. 2006-07 and the reason

or increase was obviously due to increase in the transportation cost

which cannot be disbelieved. However, the learned counsel for the

assessee could not controvert this finding of the authorities below

that the assessee is not maintaining supporting vouchers for all the

claim expenses on travelling and only supporting bills and vouchers

to the extent of Rs.11,66,350/- were placed on record and

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013

Rs.2,84,310/- were claimed was without any supporting bills and

the remaining travelling expenses were incurred only through

internal vouchers. However, the Commissioner of Income Tax

(Appeals) rightly noted that the assessee has filed some vouchers

and affidavits of certain employees on whom major part of travelling

expenses was incurred and these vouchers and affidavits have not

been controverted by the authorities below. In a peculiar situation

when the assessee has claimed higher travelling expenses mainly

on the basis of internal vouchers for travelling expenses without

any supporting third party billls or any other document then the

Commissioner of Income Tax (Appeals) was quite correct and

justified in making the disallowance of 25% of total travelling

expenses claimed by the assessee. In view of the above, we are

unable to see any ambiguity, perversity or other valid reason to

interfere with the order of the Commissioner of Income Tax

(Appeals) who granted part relief to the assessee and the remaining

part was confirmed. Accordingly, ground no. 2 of the revenue’s

appeal and cross objection of the assessee is dismissed.

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 CO No. 77/Ind/2013 : A.Y. 2008-09

objection of the assessee for the assessment year 2008-09 is

dismissed.

objection of the assessee for the assessment year 2008-09 is

dismissed.

ITA No. 410/Ind/2013 : A.Y. 2009-10

of the revenue is dismissed.

of the revenue is dismissed.

nos. 3 for the assessment year 2009-10 relate to the deletion of

addition of Rs. 5,45,822/- and Rs. 75,000/- on account of interest

on unsecured loan u/s 68 of the Act.

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 25. Briefly stated, facts pertaining to these grounds are that the

the assessee claimed interest of Rs. 45,622/- & Rs. 75,000/- on

unsecured loan of Rs. 5 lacs claimed to have taken from Smt. Geeta

Roy. The Assessing Officer observed that during the assessment

year 2008-09 the assessee has shown loan atRs. 5 lacs from M/s

Geeta Rao and has also paid interest of Rs. 45,822/- thereon

during F.Y. 2007-08 and thus the Assessing Officer made

disallowance at Rs.5,00,000/- on account of unsecured loan from

Smt. Geeta Rao and Rs. 45,822/- of adjustment paid thereon by

holding that on being asked to produce the creditor by show cause

dated 15.11.2010, the assessee did not furnish any reply to the said

notice and sought adjustment, thus he failed to produce the

creditor showing her existence, creditworthiness and genuineness

of the loan transaction. The Assessing Officer in the assessment

year 2009-10 also observed that in the assessment year 2008-09

also the Assessing Officer had treated this loan as unexplained cash

credit in the books of the assessee and was treated as income of the

assessee. The Assessing Officer, therefore, disallowed the entire

claim of the assessee and added back the same to the total income

of the assessee. 24

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 26. Aggrieved, the assessee went in appeal before the

Commissioner of Income Tax (Appeals). The learned first appellate

authority after considering the issue deleted both the additions.

Now the Revenue is in appeal before the Tribunal for both the years.

first appellate order and submitted that the Commissioner of

Income Tax (Appeals) granted relief to the assessee ignoring the fact

that the assessee did not produce the lender and her credit

worthiness and existence was not established by the assessee. The

learned DR strenuously pointed out that the Commissioner of

Income Tax (Appeals) granted relief to the assessee by considering

the irrelevant facts. Therefore, the first appellate order may kindly

be set aside by restoring that of the Assessing Officer for both the

years.

submitted that Smt. Geeta Rao is filing her income tax return

regularly and the amounts have been credited by way of

cheque/transfer entry to her bank account and confirmation letter

was also given by her to the assessee. The learned counsel for the

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 assessee further submitted that the assessee has filed her affidavit

in support of the confirmation of the transaction and this fact

cannot be challenged that the amount given to the assessee was

credited in the bank account of the assessee from Smt. Geeta Rao

by way of cheque/transfer, therefore, the existence and

creditworthiness of the creditor/lender cannot be challenged in any

manner and, therefore, the Commissioner of Income Tax (Appeals)

was right in granting relief to the assessee by following the ratio of

the decision of the Hon'ble M.P. High Court in the case of CIT vs.

Metachem Industries (supra) and the order of the Tribunal in the

case of Sanjay Khatri (supra).

by the Bench, the learned DR could not controvert this finding that

the lender, Smt. Geeta Rao, is having PAN and regularly filing

return with the department. It has also not been controverted by

the learned DR that the amounts given to the assessee as loan were

credited to the bank account of Smt. Geeta Rao by way of

cheque/transfer and thus existence, creditworthiness and

genuineness of the transaction cannot be challenged without any

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 supporting adverse material. Therefore, in our view, the

Commissioner of Income Tax (Appeals) was right in granting relief to

the assessee and we are unable to see any valid reason to interfere

with the same and, hence, we uphold the same.

relates to deletion of addition of Rs. 75,000/- on account of interest

on unsecured loan u/s 68 of the Act.

unsecured loan of Rs. 5 lacs claimed to have taken from Smt. Geeta

Roy. The Assessing Officer observed that in the assessment year

2008-09 also the Assessing Officer had treated this loan as

unexplained cash credit in the books of the assessee and was

treated as income of the assessee. The Assessing Officer, therefore,

disallowed the entire claim of the assessee and added back the

same to the total income of the assessee. Aggrieved, the assessee

went in appeal before the Commissioner of Income Tax (Appeals).

The learned first appellate authority after considering the issue

deleted the addition. Now the assessee is in appeal before the

Tribunal.

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 32. The learned DR submitted that the Commissioner of Income

Tax (Appeals) was not justified in deleting the addition of

Rs.75,000/- on account of interest on unsecured loan u/s 68 of the

Act without examining the creditworthiness and genuineness of the

said transaction. The learned DR submitted that the Assessing

Officer has rightly treated the interest as unexplained cash credit in

the books of the assessee. He further submitted that the order of

the first appellate authority may kindly be set aside and that of the

Assessing Officer restored.

submitted that for the assessment year 2008-09 the loan taken

from Mrs. Geeta Roy has been accepted by the Commissioner of

Income Tax (Appeals) after considering the totality of facts and

circumstances of the case and he also granted relief to the assessee

for the assessment year 2008-09 on justified basis and the same

cannot be disturbed without any basis for assessment year 2009-10

for disallowing interest paid on the same loan.

By the earlier part of this order we have dismissed ground no. 3 of

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013 the revenue for the assessment year 2008-09 pertaining to

unsecured loan taken by the assessee from Smt. Geeta Roy and

payment of interest has been accepted by the Commissioner of

Income Tax (Appeals) and we have already confirmed the findings of

the Commissioner of Income Tax (Appeals). Therefore, interest

payment in the assessment year 2009-10 cannot be disputed and,

therefore, in our opinion, the Commissioner of Income Tax (Appeals)

was right in granting relief to the assessee for the assessment year

2009-10 and in view of our findings recorded for the assessment

year 2008-09, we uphold the same. Accordingly, ground no. 3 of the

revenue is dismissed.

objections of the assessee stand dismissed.

The order has been pronounced in open Court on 25th May,

2017.

Sd/- sd/- लेखा सद�य �या�यक सद�य (O.P.Meena) (C.M. Garg) Accountant Member Judicial Member May 25th , 2017 Dn/

DCIT vs. Smt. Namita ITA Nos.297 & 410/IND/2013