AZIZUR FAIZUR RAHMAN,MUMBAI vs. JCIT RG 17(3), MUMBAI

This is an appeal filed by the assessee. The relevant assessment year is 2009-10. The appeal is directed against the order of the Commissioner (Appeals) – 32, Mumbai and arises out of order u/s 143(3) of the Income Tax Act, 1961 (the ‘Act’).

The ground of appeal filed by the assessee reads as under:-

In a nutshell the facts are that during the course of assessment proceedings, the Assessing Officer (AO) requested the assessee to file loan confirmations of the parties who had advanced loan during the year under consideration. No confirmation was filed by the assessee in respect of loan of 6,00,000/- received from Mr. Shantaram Dattu. As per the assessee Mr. Dattu was a farmer and not assessed to tax. The AO asked the assessee to produce the said party along with supporting evidence regarding source of his income. The assessee filed a copy of application filed before the Manager, Satara Sahakari Bank requesting for a bank statement of Mr. Dattu. As the assessee failed to file before the AO the address of the party nor could explain the source of investment supported by evidence, the AO made an addition of Rs. 6,00,000/- u/s 68 of the Act.

Aggrieved by the order of the AO, the assessee filed an appeal before the learned CIT(A). The AR of the assessee filed before the learned CIT(A) the loan confirmation of the lender Mr. Shantaram Dattu and filed the same as additional evidence under Rule 46A of the Income Tax Rules, 1962. The learned CIT(A) remanded the matter to the AO to verify the additional evidence. During the remand proceedings on 25.02.2014, the AO took the statement of Mr. Dattu. At point no 7-9 of the statement, Mr. Dattu confirmed that he had given loan of Rs. 6,00,000/- to the assessee. He received the funds from M/s. Suzlon Ltd. who had acquired his ancestral agricultural land for installation of a windmill. However, he was not having any proof of receiving the funds from M/s . Suzlon Ltd. The learned CIT(A) took into account the finding of the AO in the remand report that Mr. Dattu was working in Vashi and Khadk, Mumbai as a labourer and earned Rs. 9,000/- p.m. A perusal of the bank statement shows that apart from the loan transactions, Mr. Dattu’s bank balance rarely crossed Rs. 5,500/- and therefore, he was not having the capacity to give loan of Rs. 6,00,000/-. The learned CIT(A) observed that Mr. Dattu had received meagre interest of Rs. 18,000/- in cash even though the loan was advanced for more than one year. The learned CIT(A) further observed from the bank statement of the lender Mr. Dattu that there were two withdrawals of Rs. 3,00,000/- each on 08.05.2008. The assessee had not furnished the transactions prior to May, 2008 and, therefore, he had not proved the source of earning of Rs. 6,00,000/-. For the subsequent one year upto April, 2009, there were normal transactions undertaken in the said bank account. Not on one occasion had any transaction being in excess of Rs. 5,000/-. There was hardly any balance in the account. In view of the above, the learned CIT(A) upheld the addition of Rs. 6,00,000/- made by the AO u/s 68 of the Act.

Before us, the learned counsel of the assessee files a Paper Book (PB) containing (i) copy of confirmation and PAN Card of the lender, (ii) copy of bank statement issued by Satara Sahakari Bank Ltd. of the lender, (iii) copy of assessee’s bank account, (iv) copy of assessee’s letter dated 12.02.2014 filed before the A.O. (v) copy of remand report dated 03.11.2014 and (vi) copy of return of income filed by the assessee with financial statement for the year ended 31.03.2014.

On the other hand, the learned DR relies on the order of the learned CIT(A).

We have heard the rival submissions and perused the relevant material on record. We find that a perusal of the bank statement of the lender Mr. Dattu (p-3 of P/B) shows that there were two withdrawals of Rs. 3,00,000/- each on 08.05.2008. The assessee has not furnished the transactions prior to 04.04.2008. In the statement recorded by the AO (point no 7-9 of the statement) Mr. Dattu confirmed that he had given loans of Rs. 6,00,000/- to the assessee. Mr. Dattu stated before the AO that he received the funds from M/s. Suzlon Ltd. who had acquired his ancestral agricultural land for installation of a windmill. However he had not proof of receiving the funds from M/s. Suzlon Ltd. Mr. Dattu has stated before the AO that he was working in Vashi and Khadk, Mumbai as a labourer and was earning Rs. 9,000/- p.m. It is inconceivable that with such meagre income Mr. Dattu could give a loan of Rs.6,00,000/- to the assessee.

As the Hon'ble Supreme Court laid down in Kalekhan Mohammed Hanif vs. CIT 50 ITR 1 (SC), the onus is on the assessee to explain the nature and source of cash credits, whether they stand in the assessee’s account or in the account of a third party. At para 7 here-in-above, we have delineated that the assessee has failed to prove the genuineness of the transaction.

In the result, the appeal is dismissed.