Loading judgment…
Facts
The assessee received unsecured loans totaling Rs.1,57,50,000/- from six parties for property investments. The Assessing Officer (AO) treated these as unexplained cash credits under Section 68 of the Income Tax Act, 1961, and made an addition. The CIT(A) subsequently deleted this addition.
Held
The Income Tax Appellate Tribunal (ITAT) upheld the CIT(A)'s deletion of the addition. It found that the CIT(A)'s decision was based on detailed submissions and documents provided by the assessee regarding the genuineness and creditworthiness of the lenders, judicial precedents, and the AO's failure to discharge his duty to verify confirmations under Section 133(6). The ITAT noted that no additional evidence was accepted by the CIT(A).
Key Issues
Whether the CIT(A) erred in deleting the addition made by the AO under Section 68 concerning unsecured loans, without affording the Revenue an opportunity to examine additional evidence or properly verifying the creditworthiness of lenders.
Sections Cited
Rule 46A of I T Rules, Section 56(2), Section 68, Section 133(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘H’, NEW DELHI
Before: Dr. B. R. R. KumarSh. Sudhir Kumar
Asstt. Year : 2017-18 ACIT, Vs Usha Gupta, Circle-28(1), D-7/5, Vasant Vihar, New Delhi-110001 New Delhi-110057 (APPELLANT) (RESPONDENT) PAN No. AAIPG0549G Assessee by : Sh. Anil Jain, CA Revenue by : Ms. Monika Dhami, CIT-DR Date of Hearing: 30.07.2023 Date of Pronouncement: 06.09.2023 ORDER Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the Revenue against the order of National Faceless Appeal Centre (NFAC), Delhi dated 20.11.2023.
Following grounds have been raised by the Revenue:
“1 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not affording an opportunity to Revenue to examine the additional evidence submitted by assessee during course of appellate proceedings thereby violating provision of Rule 46A of I T Rules.”
As per the AO, during the year under consideration, the assessee has made investments in three properties amounting to Rs.3,49,50,000/-. The assessee has taken loan of Rs.3,64,83,000/- from various relatives for making investment in the above said properties. After enquiry, the AO made addition of Rs.1,57,50,000/- received from 6 parties out of the Sr. No. Name of Lender AMOUNT 1 Parul Gupta 85,00,000 2 Arun Kumar Jain 40,00,000 3 Ishwar Chand 6,00,000 4 Mukesh Kumar Badani 15,00,000 5 Jay Shree Badani 5,00,000 6 Ranjeet Badani 6,50,000 TOTAL 1,57,50,000
The ld. CIT(A) deleted the addition made by the AO with regard to the 6 parties.
Aggrieved, the Revenue filed appeal before us.
During the arguments before us, the ld. DR relied on the Assessment Order and the ld. AR supported the order of the ld. CIT(A).
Heard the arguments of both the parties and perused the material available on record.
The reasons given by the ld. CIT(A) for deleting the addition in respect of each party are as under:
Parul Gupta Rs.85,00,000 The assessee is relative of Mrs. Parul Gupta [relative as per section 56(2)] of income Tax Act-1961. As the assessee is Tayas in law (Bhabhi of Father in law) of the lender.
3 Usha Gupta The depositor is aged about 31 year, and regularly assessed to income tax vide having PAN- AHSPG9276F and she has earned an income of Rs.11.30 lacs (including exempted income and rebate u/s 24(a) during the F.Y. 2016-17 instead of Rs. 6,70,123/- as alleged by the AO in Assessment order.
The lender is also designated partner in Newgen Artifex LLP.
That Mr. Sumit Gupta and Mr. Nimit Gupta are the Nephew of the assessee.
The assessee has received Rs. 85 lacs from Mrs Parul Gupta in three Trans as per details as follows
Rs. 43,00,000 vide Cheque No.051988 dated 28-04- 2016, ICICI Bank Limited out of which Rs. 10,67,000/- was receivable from Mr. Sumit Gupta (her husband) and Rs. 24,33,000/- was taken as unsecured loan from her husband Mr. Sumit Gupta and Rs. 7,00,000/- was funded by refund of her unsecured loan receivable from Mr. Nimit Gupta (Brother in Law) and balance of Rs.1,00,000/- was funded from the available balance in her bank.
Rs.27,00,000/- vide Cheque No.081989 dated 02-05- 2016, ICICI Bank limited out of which Rs.25,00,000/- was funded by refund of her unsecured loan receivable from M/s Newgen Artiflex LLP and Rs.2,00,000/- was taken as unsecured loan from Mrs. Chanchal Gupta (Sister in Law).
4 Usha Gupta Rs. 15,00,000 vide Cheque No.051990 dated 04-05- 2016, ICICI Bank Limited out of which Rs.13,50,000/- was taken as unsecured loan from her husband Mr. Sumit Gupta and Rs.1,50,000/- was funded by refund of her Unsecured loan Receivable from Mr. Nimit Gupta (Brother in Law).
The Entire Loan of Rs. 85,00,000/- has been refunded by the assessee on 16-08-2016 i.e. within three month of the loan. The assesse has refunded. This loan out of loan taken from the ICICI bank.
The lender has also replied to notice receive u/s 133(6) of income Tax Act but the Assessing office has ignored the reply.
Arun Kumar Jain Rs.40,00,000 Mr. Arun Kumar is aged 58 year old, regularly assessed to Income Tax vide Pan AAAOH1302J and he has filed his income tax return for Rs. 72.75 lacs and Rs.78.57 lac for assessment year 2016-17 and 2017-18 respectively.
The lender is Director in M/s Bon Lon Steel Private Limited L27108DL1998PLC097397 since 1998.
The Assessee has received Rs. 40 lacs from Mr Arun Kumar Jain per details as follows:
Rs. 40,00,000 vide RTGS dated 02-05-2016, HDFC BANK Limited out of which Rs. 40,00,000/- was funded by refund of his unsecured loan which is receivable from M/s Bon Lon Steel Private Limited The Entire Loan of Rs. 40,00,000/- has been refunded by the assessee on 08-07-2019.
The lender has also replied for notice receive u/s 133(6) of income Tax Act. The Assessing Officer has ignored the reply saying that “notice under section 133(6) was issued to Sh. Arun Kumar Jain dated 30.11.2019. However, no response of the said notice is received in this office. Hence, on inquiry, creditworthiness of the lender is not verified.”
Ishwar Chand Rs.6,00,000 Mr. Ishwar chand was real brother [relative as per section 2(41)] of the assessee as income Tax Act-1961.
The assessee has received Rs.11 lacs from his brother Late Sh. Ishwar Chand in two transactions.
The depositor was aged about 72 year, and regularly assessed to income tax vide having PAN- AETPG2692H and he has filed income tax return for Rs.11.82 lacs for the assessment year 2017-18.
The first transaction of Rs.6.00 lacs received through NEFT dated 28.04.2016 from HDFC Bank out of fund available in bank. And second transaction of Rs.5.50 lacs has been received through NEFT dated 10.05.2016 from HDFC bank out the funds available in the bank.
6 Usha Gupta Out of Rs. 11.00 lacs, the assessee has returned Rs.5 lacs during the year. Outstanding balance was Rs. 6.50 Lacs. has also refunded by the assessee on 21-02-2020. Mr. Ishwar chand has died in the year 2021. Copy of Account confirmation along with PAN has been furnished before the AO.
Mukesh Kumar Badani Rs.15,00,000 Mr. Mukesh Kumar Bhadani is aged about 31 year old, Indian resident person vide Income Tax vide PAN AAAOH1302J.
The Assessee has received Rs. 15.00 lacs at the rate of Interest 12% for the purpose of investment in property.
The entire loan of Rs.15,00,000/- has been refunded by the assessee till on 21-02-2020 along with interest payable thereon.
The assessee has replied for notice receive u/s 133(6) of the Act.
Jay Shree Badani Rs.5,00,000 Ms. Jay Shree Badani Indian resident person vide Income Tax vide Pan AHTPB6840K.
The Assessee received loan of Rs.5.00 lacs from Ms Jayshree Bhadani at a rate of Interest 12% for the purpose of investment in property and the lender has provided the same as per her bank statement.
7 Usha Gupta The entire loan of Rs. 5,00,000/- has been refunded by the assessee till on 10-09-2018 along with interest payable thereon. Copy of Account Statement is enclosed herewith for your ready perusal.
Account confirmation statement filed before the AO.
Ranjeet Badani HUF Rs.6,50,000 M/s. Ranjeet Kumar Bhadani HUF Indian resident person vide Income Tax vide Pan AAIHR3477A. The Assessee received loan of Rs.6.50 lacs from M/s Ranjeet Kumar Bhadani HUF at a rate of Interest 12% for the purpose of investment in property and the lender has provided the same as per her bank statement. Rhe Entire Loan of Rs. 6,50,000/- has been refunded by the assessee till on 31-10-2019 along with interest payable thereon. Account confirmation statement filed before the AO.
The ld. CIT(A) relied on the following case laws:
CIT Vs. Shiv Dhooti Pearls & Investment Ltd. (2016) 237 TAXMAN 104 (Del. HC) CIT Vs. Real Time Marketing (P) Ltd. (2008) 173 TAXMAN 41 (Del. HC) CIT-1 Vs. Apex Therm Packaging (P) Ltd. (2014) 222 TAXMAN 125 (Guj. HC) CIT Vs. Agarwal (2015) 229 TAXMAN 532/54 (All. HC) CIT Vs. Vijay Kumar Jain (2014) 221 TAXMAN 180 (All. HC) CIT Vs. Mark Hospitals (P) Ltd. (2015) 232 TAXMAN 197/58 (Mad. HC) CIT Vs. Oasis Hospitalities Pvt. Ltd. (2017) 392 ITR 28 (Del. HC)
8 Usha Gupta 10. The ld. CIT(A) deleted the addition holding that the Assessing Officer erred in making the additions by taking into consideration the ITR of the lenders and concluded that the lenders don’t have creditworthiness to advance the loan as claimed by them. The ld. CIT(A) held that the AO has also stated that several lenders haven’t provided confirmation in response to the notice issued u/s 133(6) of the Act. Based on these grounds the AO has made the addition of Rs.1,57,50,000/- by treating the unsecured loans as unexplained cash credits u/s 68 of the Act. However, as per record the assessee has made detailed submissions and has provided the documents to support the claim of genuineness & creditworthiness of the lenders. The ld. CIT(A) held that the AO has considered only the income declared in the return of income and has ignored the exempt income which is part and parcel of the return filed. The ld. CIT(A) further held that the AO has also not considered the genuine transactions wherein the lenders have received the amount from some other persons through banking channel and which was later advanced to the assessee. The AO has also not brought on record several confirmations which were submitted by the lenders in response to notice u/s 133(6) of the Act. The ld. CIT(A) held that in the present case the AO has not discharged this basic duty and hence the addition made of Rs.1,57,50,000/- u/s 68 of the Act as unexplained cash credit is not tenable in the eyes of law.
On going through the entire records, we find that the decision of the ld. CIT(A) is not solely based on any additional evidences but based on the submission filed before the AO himself and based on judicial precedences. There was no observation by the ld. CIT(A) with regard to acceptance of additional evidence which formed the basis of deletion of the
In the result, the appeal of the Revenue is dismissed. Order Pronounced in the Open Court on 06/09/2024.