VIPIN KUMAR PITLIYA HUF,RATLAM vs. ITO, RATLAM
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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI VIJAY PAL RAO & SHRI B.M. BIYANI
आदेश / O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by appeal-order dated 12.10.2023 passed by learned
Commissioner of Income-Tax (Appeals)-Addl/JCIT (A)-2, Mumbai [“CIT(A)”]
which in turn arises out of assessment-order dated 29.12.2019 passed by
learned ITO-1, Ratlam [“AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”]
for Assessment-Year [“AY”] 2017-18, the assessee has filed this appeal on
following grounds:
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Shri Vipin Kumar Pitliya HUF, Ratlam ITA No. 507/Ind/2023 – AY 2017-18
“1. On facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the addition u/s 68 of the Act as against section 69A of the Act was made by the ld. AO. Thus, the action of the Ld. CIT(A) in changing the section 68 is wrong and contrary to the facts of the case and the provisions of the Act. Thus, the order of the Ld. CIT(A) and the order of the AO is liable to be quashed. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the addition of Rs. 6,30,000/- made by the ld. AO, needs to be deleted.” 2. The background facts leading to present appeal are such that the
assessee-HUF filed return of income of relevant AY 2017-18 declaring a total
income of Rs. 3,40,090/- which was subjected to scrutiny through notices
u/s 143(2)/142(1). During assessment-proceeding, the AO noted that the
assessee deposited cash of Rs. 15,00,000/- in bank a/c during
demonetization period (09.11.2016 to 30.12.2016). On examination of books
of account produced by assessee, the AO found that the assessee had shown
cash loans of Rs. 13,50,000/- having been taken from different persons
through two brokers, namely Shri Ajay Madan Lal (Rs. 6,48,000/-) and Shri
Vimal Chand Agarwal (Rs. 7,02,000/-) on 04.04.2016, 10.05.2016 and
05.04.2016. The AO has extracted details of such loans in Para 9 of
assessment-order. Thereafter, in Para 10 of assessment-order, the AO has
made another details of certain persons (out of the persons noted in the
details in Para 9) for which the assessee failed to furnish Addresses, PANs,
contract details, A/c Confirmations to establish genuineness of loans
pertaining to broker Shri Ajay Madan Lal (Rs. 3,78,000/-) and Shri Vimal
Chand Agarwal (Rs. 2,52,000/-) aggregating to Rs. 6,30,000/- and for this
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Shri Vipin Kumar Pitliya HUF, Ratlam ITA No. 507/Ind/2023 – AY 2017-18
amount of Rs. 6,30,000/-, the AO made addition u/s 69A by passing
following order:
“The assessee had taken loan in cash thereafter he provided loan to various persons and received back on 31/10/2016 which he deposited in his bank account on 11/11/2016 in SBN during demonetization period. From the above concluded that loan taken has been deposited in bank during demonetization period and out of which Rs. 6,30,000/- is remained unverified as discussed above and added to the total income of the assessee u/s 69A of the Income- tax Act.” 3. Aggrieved by AO’s order, the assessee carried matter in first-appeal
before CIT(A). The assessee made two-fold claims before CIT(A), namely (i)
the merit of the addition was challenged and (ii) it was also claimed that the
books of account were maintained by assessee, therefore the AO cannot
make addition u/s 69A. The CIT(A) rejected assessee’s first claim of merit for
the reason that no documentary evidences had been filed by assessee to
prove the source of deposits in bank a/c or to establish the genuineness of
loans taken. So far as second claim of assessee is concerned, the CIT(A)
changed the applicable section from 69A to 68 placing reliance on decision
of Hon’ble Supreme Court in ITA No. 1247/Del/2014 Civil Appeal No. 2099
arising out of SLP (Civil) No. 2308 of 2009 in P.K. Palanisamy Vs. N
Arunugham and another holding that the mentioning of wrong provision or
non-mentioning of provision does not invalidate an order.
Still aggrieved by CIT(A)’s order, the assessee has come in next appeal
before us.
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Shri Vipin Kumar Pitliya HUF, Ratlam ITA No. 507/Ind/2023 – AY 2017-18
During hearing before us, Ld. AR for assessee submitted that the case
of assessee was selected for limited scrutiny to examine “cash deposited
during demonetization period”. Then, Ld. AR drew our attention to the bank-
statement of assessee filed at Page No. 14 of Paper-Book to show that the
assessee has made cash withdrawals of Rs. 8,00,000/- on 27.09.2016, Rs.
5,00,000/- on 04.11.2016 and Rs. 3,00,000/- on 08.11.2016 which were
the immediate sources for making deposit of Rs. 15,00,000/- in bank a/c on
11.11.2016. Ld. AR submitted that the assessee took loans of Rs.
13,50,000/- from different persons in early months of financial year 2015-
16 and those funds were rotated by way of giving loans to various debtors,
recoveries made from those debtors, deposits made in bank a/c,
withdrawals made from bank and ultimately re-deposited in bank a/c on
11.11.2016 in specified bank notes. Thus, the assessee had explainable
source of making deposits in bank a/c during demonetization period which
was the precise issue of limited scrutiny. But the AO has made addition qua
the loans taken by assessee in earlier part of financial year which was not
an issue of limited scrutiny. Therefore, the addition made by AO is bad and
not sustainable, the same must be deleted. Alternatively, the case of
assessee may be remanded to AO for a deeper examination of facts.
Per contra, Ld. DR for revenue submitted that the AO has noted in
assessment-order that the assessee explained that loans were given to
various persons and received back on 31.10.2016 which was deposited on
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Shri Vipin Kumar Pitliya HUF, Ratlam ITA No. 507/Ind/2023 – AY 2017-18
11.11.2016. The AO has further noted that the loans taken by assessee had
remained unexplained to the extent of Rs. 6,30,000/-. Hence, the AO is very
much justified in making addition of Rs. 6,30,000/-. While arguing, Ld. DR
submitted that the assessee is now claiming that the deposit was made out
cash withdrawals made from bank a/c, this claim is against AO’s noting
that the recoveries made by assessee from debtors on 31.10.2016 were
deposited in bank a/c. Therefore, the assessee’s explanation deserves to be
rejected.
We have considered rival submission of both sides and perused the
orders of lower authorities as well as the documents held in Paper-Book to
which our attention has been drawn. Admittedly, the case of assessee was
selected for limited scrutiny to verify cash deposits made in bank a/c during
demonetization period. In Para 7 of assessment-order, the AO has noted that
the assessee deposited cash of Rs. 15,00,000/- in bank a/c during
demonetisation period, this figure is also evident from bank statement filed
by assessee at Page No. 14 of Paper-Book where a cash deposit of Rs.
15,00,000/- is appearing on 11.11.2016. From the very same bank a/c, it is
also verifiable that the cash withdrawals of Rs. 8,00,000/- on 27.09.2016,
Rs. 5,00,000/- on 04.11.2016 and Rs. 3,00,000/- on 08.11.2016 were in
fact made by assessee. The assessee is claiming that these cash withdrawals
were the immediate source of re-deposit in bank a/c on 11.11.2016. At the
same time, it is also a fact that the assessee claimed to have taken loans of
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Shri Vipin Kumar Pitliya HUF, Ratlam ITA No. 507/Ind/2023 – AY 2017-18
Rs. 13,50,000/- from different persons in earlier part of the same financial year (the AO has noted dates of taking loans as 04.04.2016, 10.05.2016,
05.04.2016 in Para 9 & 10 of assessment-order). The funds taken by assessee by way of loans have rotated by way of giving loans to debtors and then making deposits/withdrawals from bank a/c. The AO has ultimately
made addition of Rs. 6,30,000/- in respect of loans taken by assessee u/s 69A. The CIT(A) has changed section 69A to section 68 and upheld addition
by accepting that the loans taken by assessee remained unverified. Therefore, in the situation, we feel it appropriate to remand this matter back to the file of AO for a proper adjudication of the issue of limited scrutiny as
well as complete facts after giving necessary opportunity to assessee. Needless to mention that the AO shall pass an appropriate order without
being influenced by his previous order and the assessee shall also make adequate representation before AO.
Resultantly, this appeal is allowed for statistical purpose.
Order pronounced in open court on 14.10.2024 Sd/- Sd/-
(VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक /Dated : 14.10.2024 Dev/Sr. PS Copies to: (1) The appellant
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Shri Vipin Kumar Pitliya HUF, Ratlam ITA No. 507/Ind/2023 – AY 2017-18
(2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore
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