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Income Tax Appellate Tribunal, SMC Bench, Mumbai
Before: Shri G.S. Pannu
This appeal by the assessee has been filed against the order of the CIT(A)-10, Mumbai dated 28.10.2015 for A.Y. 2010-11.
In this appeal the solitary grievance of the assessee is against the action of the income tax authorities in treating the loans raised from four parties totalling to `14,00,000/- as unaccounted cash credit within the meaning of section 68 of the Act.
Briefly put the relevant facts are that the assessee company is engaged in the business of development of properties and in the course of assessment proceedings the AO noted that the assessee has received loans during the year from the following parties: - Amount (`) Sr. No. Name of the person 1 R.K. Enterprises 10,00,000 2 Sumit K. Bafna 1,50,000 3 Yogesh Bafna 1,00,000 4 Akshita K. Bafna 1,50,000 Total 14,00,000 ========
M/s. Kshirsagar Construction Co. P. Ltd. In the assessment order the AO noted that so far as the loan of `10,00,000/- taken from M/s. R.K. Enterprises is concerned the assessee has not furnished any details and, therefore, he treated it as unexplained cash credit under section 68 of the Act. With regard to the other three creditors, namely Sumit Bafna, Yogesh Bafna and Akshita Bafna it was noticed that they were minors and the relatives of the Directors of the assessee company. The AO noted from the bank statements of the three creditors that cash was deposited in their bank accounts just before issuing of loan cheques. The AO was not satisfied with the credit worthiness of the three creditors and therefore he assessed the unsecured loans of `1,50,000/-, `1,00,000/- and `1,50,000/- in the names of Sumit Bafna, Yogesh Bafna and Akshita Bafna respectively as unexplained cash deposits under section 68. Hence an addition of `14,00,000/- under section 68 of the Act.
The CIT(A) noted that the cash deposits in the accounts of the three minor creditors were not appropriately substantiated. According to him though the assessee claimed that gifts have been received by the minors but there was no evidence to show the receipt of gifts and their deposits in the respective bank accounts. In the case of R.K. Enterprises the CIT(A) noted that in the absence of any details the addition was justified. Accordingly the entire addition of `14,00,000/- by the AO under section 68 of the Act has been affirmed.
Before me the learned A.R. of the assessee pointed that before the lower authorities the assessee could not obtain the requisite confirmation from R.K. Enterprises. By referring to pages 13 to 17 of the paper book the learned A.R. pointed out that R.K. Enterprises has duly confirmed the statement of account and also the account of subsequent period where the loan has been repaid by the assessee through banking channels. The learned A.R. pointed out that the entire transactions are verifiable and R.K. Enterprises has also communicated the PAN in the confirmation filed. The learned A.R. prayed that the aforesaid additional evidence may kindly be admitted and that the matter may be set aside for proper verification. With regard to the three minor creditors the learned A.R. has referred to their
M/s. Kshirsagar Construction Co. P. Ltd. confirmation pointing out the respective PAN and the fact that they have received gifts against with the impugned loans to assessee has sought to be explained.
On the other hand, the learned D.R. appeared for the Revenue pointed out that the lower authorities have decided the issue on the basis of the material before them and that it was for the assessee to properly explain the credits appearing in the account books.
I have carefully considered the rival submissions. In so far as the loans of `4,00,000/- received from the three minors are concerned, I find that no specific explanations regarding the source of income have been given. Apart from making a generalised observation about the minors receiving the gifts at different points of time no specific instances have been brought out. Therefore, in my view the CIT(A) made no mistake in treating the loans of `4,00,000/- from the three minors as unexplained cash credits within the meaning of section 68 of the Act.
In so far as the receipt of `10,00,000/- from R.K. Enterprises is concerned I haves perused the additional evidence now sought to be relied upon by the assessee. Ostensibly, confirmation obtained from R.K. Enterprise is a verifiable document and is relevant to decide the tax liability of the assessee and therefore I deem it fit and proper to direct the AO to consider the same and thereafter decide the issue afresh as per law. Needless to mention that the AO shall allow the assessee reasonable opportunity of being heard and to produce such material in support of the credit of `10,00,000/- appearing in the name of R.K. Enterprises. Thus, on this aspect the assessee succeeds.
In the result, the appeal filed by the assessee is partly allowed.