GANGADHAR B. GUNJITE,MUMBAI vs. INCOME TAX OFFICER, RANGE-31(1)(5), MUMBAI

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ITA 5735/MUM/2017Status: DisposedITAT Mumbai31 January 2018AY 2011-124 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal restored the issue to the Assessing Officer (AO) with a direction to issue a commission to verify loan repayments with the concerned parties. If repayments are confirmed, no addition will be called for, and the AO will pass a fresh order.

What were the facts?

The assessee, an individual with no regular source of income, deposited a significant sum of cash into his bank account. He claimed these deposits were from loans from 33 individuals, providing confirmations for 28. However, many confirmations lacked PAN and creditworthiness proof, and most lenders could not be produced for verification.

What were the issues?

The primary issue was the genuineness and creditworthiness of unsecured loans received by the assessee, and whether the AO had adequately verified the source of cash deposits.

Which sections of the Income-tax Act were involved?

Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI

Before: SHRI D.T. GARASIA

For Appellant: Shri K. Gopal, A.R. &, Shri Jitendra Singh, A.R
For Respondent: Ms. N. Hemalatha, D.R
Hearing: 08.01.2018Pronounced: 31.01.2018

Per D.T. Garasia, Judicial Member:

1.

The present appeal has been preferred by the assessee against the order dated 02.05.2017 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2011-12.

2.

The assessee is an individual. The assessee was an employee of the State Bank of India earlier but he was dismissed from service in 2005 for official lapses. Admittedly the assessee has no job and no regular source of income. The assessee had filed his return of income for AY 2011-12 on 28/04/2014 declaring a total income of Rs.75,242/-. Subsequently, the Assessing Officer (hereinafter

2 Mr. Gangadhar B. Gunjite referred to as the AO) received information from the office of the Addl. DIT(I&CI), Mumbai to the effect that the assessee has deposited cash of Rs.46,55,800/- in his bank account maintained with the State Bank of India, Goregaon (West) Branch. Since the assessee was unable to explain the source of these cash deposits the matter was referred to the AO who proceeded to issue a notice under section 148 of the Act dated 25/03/2014. In the course of the assessment proceedings the assessee claimed that the cash was received from 33 persons and he filed confirmations in respect of 28 persons. On verification of the said loan confirmations, it was found that the same do not carry any PAN and no other supporting document was attached to prove the creditworthiness of the lenders. The assessee furnished certain documents to the AO concerning the repayment of the loans subsequently. The AO directed the assessee to produce the unsecured loan creditors but the assessee was unable to do so. The AO issued notices under section 133(6) of the Act to 19 such parties to verify their source, genuineness as well as their creditworthiness but only two loan creditors viz. Shri S A Gunjite and Shn Santosh M Rahtod appeared personally or through their relatives before the AO. The rest did not respond. After considering the submissions of the assessee, the loan confirmations filed by the assessee in respect of other loan creditors and the declarations of the loan creditors who appeared before the AO, the AO accepted that the assessee has established the nature and source of loan from 10 loan creditors who had advanced in all a sum of Rs 11,85,000/- to the assessee and held that the remaining amount of Rs. 34,70,800/- was not satisfactorily

3.

Matter carried to the Ld. CIT(A) and the Ld. CIT(A) has dismissed.

4.

Aggrieved by the order of the Ld. CIT(A) the assessee is in appeal before me.

5.

During the course of hearing, the Ld. A.R. submitted that assessee has deposited Rs.46,55,800/- in the bank. The assessee has received this cash from 33 persons and has filed confirmations in respect of 28 persons. During the assessment proceedings, assessee has submitted the detail to whom this amount is repaid which is mentioned on page 18-19 of the paper book but AO did not examine the same. The persons who have repaid the loan are from villages and they had not come up before the AO. Therefore, matter may be restored to verify the same. The Ld. A.R. also further requested that this loan confirmation is from the villages and they are staying outside the jurisdiction of the AO. Therefore, it may be verified by issuing the commission to respective jurisdiction and matter may be restored to AO.

6.

The Ld. D.R. objected to it.

7.

I have heard the rival contentions of both the parties. Looking to the facts and circumstances of the case, the assessee was asked to produce the parties from whom the loan was repaid. However,

4 Mr. Gangadhar B. Gunjite assessee could not produce the party and other parties did not remain present before the AO. Therefore, in the interest of justice and fairplay, I restore this issue back to the file of AO. AO is directed to issue commission to the Latur District and if the parties confirm that the loan is repaid, then no addition is called for. AO is further directed to pass the order afresh, as per law.

8.

In the result, appeal of the assessee is allowed.

Order pronounced in the open court on 31.01.2018.

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