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Facts
The assessee, an individual proprietor of a jewelry business, filed a return of income which was revised. The Assessing Officer (AO) made additions based on a cash loan repayment under Section 69D and an increase in house property income disclosed in the revised return. The CIT(A) confirmed these additions.
Held
The Tribunal held that the addition under Section 69D was not sustainable as there was no evidence of borrowing on Hundi and the loans were old opening balances from related parties. The second addition regarding increased house property income was also deleted as it was offered in the revised return and should not have been added again.
Key Issues
Whether the additions made by the AO under Section 69D and for increased house property income were justified, and whether the CIT(A) correctly confirmed these additions.
Sections Cited
143(2), 143(3), 69D, 271E, 271(1)(c), 154
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
PER PRASHANT MAHARISHI, AM:
ITA No. 506/Mum/2024, is filed by Sagarmal Sohanlal Jain, against the appellate order passed by the National Faceless Appeal Centre, Delhi [the learned CIT (A)], dated 19th January, 2024, for A.Y. 2012-13, wherein the appeal filed by the assessee against the assessment order passed under Section 143(2) of the Income-tax Act, 1961 (the Act) dated 17th March, 2015, by the Income Tax Officer, Ward 3(4), Kalyan, was dismissed.
The assessee aggrieved with that has preferred the appeal raising following grounds :-
The CIT (A) not minutely gone through the order passed by the Assessing Officer and the grounds of appeal placed before him, thus, his observations cannot be considered.
the grounds placed under Section 69D, 271E, 271(1)(c) and the application placed under Section 154 before the Assessing Officer though on his record not considered. Thus, his order not maintainable, even the CIT (A) not considered our submissions in this context physically placed before them.
Thus requested to set aside both the orders before the eyes of law as the matter be decided on merit with judicial view before your honor.”
The brief facts of the case shows that the assessee is an individual proprietor M/s Roop Sangam Jewelers filed its return of income on 15th March, 2013 at a total income of ₹14,22,320/-. This was revised on 2nd January, 2014, at a total income of ₹15,34,320/-. The business of the assessee is selling of gold and gold jewellery in his proprietary ship concern. The return of income was picked up for scrutiny and under Section 143(2) of the Income-
The second issue, it was found that the revision of return made by the assessee was to show the income under the Act income from house property. The assessee in original return of income has shown income from house property of ₹4,62,000/-, however, in the revised return same was shown at ₹5,74,000/-. This return was revised after the issue of notice under Section 143(2) of the Act on 27th September, 2013. The return was revised on 2nd January, 2014. Thus, the learned Assessing Officer held that the assessee has taken undue advantage of revision of return by disclosing more of 1,12,000/-. He made the addition of the above sum. At the time of passing of the order under Section 143(3) of the Act, he ignored revised return filed by the assessee disclosing income of ₹15,34,320/- but started the computation of total income in the assessment order by taking the income offered in the original return of income of ₹14,22,320/-. He made the addition of ₹12,04,971/- and ₹1,12,000/- and by order passed under Section 143(3) of the Act dated 17th March, 2015, assessed the total income of ₹27,39,291/-.
The learned Authorized Representative submitted the detailed submissions in the appeal and reiterated the submissions.
The learned Departmental Representative supported the orders of the lower authorities.
We have carefully considered the rival contentions and perused the orders of the lower authorities. The first addition is with respect to the amount of loan repaid in cash by the assessee to two persons. The assessee has repaid ₹3,40,781/- to Smt. Sapana Jain in 20 tranches of small amounts. Similarly, Smt. Sukhidevi Jain was repaid ₹8 lacs in 8 tranches of ₹1 lac each. The learned Assessing Officer made the addition under Section 69D of the Act.
According to Section 69D of the Act, where assessee borrows amount on Hundi or any amount due thereon is repaid but any person otherwise than through an account payee cheque then such amount shall be deemed to be income of the assessee. It is clarified by the Central Board of Direct Taxes that borrowal on Hundi arises without a
The second issue is with respect to the addition of ₹1,12,000/- which has already been offered to income by the assessee in the revised return filed and therefore,
In the result, both the additions are directed to be deleted and the orders of the lower authorities are reversed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 09.07. 2024.
Sd/- (PRASHANT MAHARISHI) (ACCOUNTANT MEMBER) Mumbai, Dated: 09.07. 2024 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: The Appellant 1. The Respondent 2. CIT 3. DR, ITAT, Mumbai 4. 5. Guard file. BY ORDER, True Copy//
Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai