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Facts
The assessee received a loan of Rs. 13,74,000 from her son through banking channels. The assessee repaid part of the loan and provided necessary documentation to prove the genuineness of the transaction. However, the AO and CIT(A) treated the entire loan amount as unexplained income.
Held
The Tribunal held that the assessee had provided sufficient evidence, including the son's PAN, Adhar, ITR, bank details, and confirmation certificate, to prove the genuineness and creditworthiness of the loan transaction. The partial repayment was also through banking channels.
Key Issues
Whether the addition of Rs. 13,74,000 as unexplained cash credit under section 68 of the Income Tax Act is justified when the assessee has provided sufficient evidence of the loan transaction.
Sections Cited
147, 144, 144B, 28, 68
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Income Tax Appellate Tribunal, DELHI
PER YOGESH KUMAR, U.S. JM: The present appeal is filed by the Assessee against the order of Ld.
Commissioner of Income Tax (Appeals/ National Faceless Appeal Centre (‘Ld. CIT(A)/NFAC’ for short), New Delhi dated 18/03/2025 for the Assessment Year 2019-20.
The grounds of Appeal are as under:-
“1. That in facts and circumstances of the case, the initiation of re- opening proceedings relying upon the borrowed satisfaction is illegal and against the jurisdictional pronouncements. 2. That in facts and circumstances of the case, there is no independent satisfaction recorded by the higher authorities prior to given the approval is unwarranted and uncalled for.
That in facts and circumstances of the case, the approval has been granted mechanically & without any application of mind as the AO has taken the entire credit in the bank does not automatically tantamount to the income of the assessee.
That in facts and circumstances of the case, the assessee took a loan from her son Rs.13,74,000/ - through banking channel out of which she has refunded of Rs,2,8L,L45/ - and balance Rs.10,92,855/- was outstanding whereas the CIT(A) slated " since the source of the source is not prooed of a person zlho is separately assessed to tax therefore, he confirmed the addition of Rs.1,3,74,000/-" and totally ignored the refund amount, the addition to the income is arbitrary and against the principal of accountancy. 5. That in facts and circumstances of the case, appellant is not liable to prove source of source when he is amount has been transferred tfuough banking channel , certificate and income tax acknowledgement is filed, this act of the AO is illogical. 6. That in facts and circumstances of the case, treating the loan amount of Rs.13,74,000/ - as unexplained cash credit without deducting the amount paid during the year is erroneous and bad at law. 7. That in facts and circumstances of the case, that the addition o1Rs.13,74,000/- as sustained by the CIT(A) may please be deleted.”
Brief facts of the case are that, an assessment order came to be passed u/s 147 r.w. Section 144 and Section 144B of the Income Tax Act, 1961 ('Act' for short) by making an addition of Rs. 36,05,530/- on account of suppression of sale receipts u/s 28 of the Act and also made addition of Rs. 13,74,000/- u/s 68 of the Act on account of unsecured loan. Aggrieved by the assessment order dated 05/03/2024, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 18/03/2025, deleted the disallowance of Rs. 36,05,530/- with a rider of presumptive rate of 8% of gross receipts of Rs.
Rs. 3,77,721/- by sustaining the addition of Rs. 37,678/-. As against the sustaining the said addition, the Assessee has not filed any Appeal.
However, the Ld. CIT(A) sustained the addition of Rs. 13,74,000/- made u/s 68 of the Act. Aggrieved by the sustaining of addition of Rs.
13,74,000/- made u/s 68 of the Act, the Assessee preferred the present Appeal on the grounds mentioned above.
The Assessee has not pressed Ground No. 1 to 3, accordingly Ground No. 1 to 3 are dismissed as not pressed.
The Ld. Assessee's Representative addressing on Ground No. 4 submitted that the Assessee has taken loan from her son Sh. Mandeep Singh who has been separately assessed to tax and the total loan amount of Rs. 13,74,000/- has been given to the Assessee on different dates through banking channel and the Assessee has also returned part of loan amount of Rs. 2,81,145/- and the balance amount of Rs.
10,92,855/- was also not considered by the authorities even after providing all the requisite documents such as PAN, Adhar, ITR, Bank details and confirmation etc. The Ld. Assessee's Representative further submitted that the Assessee has also proved source, however, the Ld.
CIT(A) erroneously confirmed the addition,thus sought for deletion of the addition. the Assessee’s son made cash deposits or managed to take money from others through banking channels just before transferring the money to his mother. Since the sources of the money received by the Assessee were not explained either before A.O. or before the Ld. CIT(A), the Ld.
CIT(A) rightly confirmed the addition, thus, sought for dismissal of the Appeal.
We have heard both the parties and perused the material available on record. In order to prove the genuineness and the creditworthiness of the transaction of loan received from assessee’s son, Sh. Mandeep Singh, the Assessee produced Adhar and PAN Card, copy of the Income Tax Acknowledgment. It is not in dispute that the entire sum of Rs.
13,74,000/- has been paid to the Assessee on different dates through banking channels and during the assessment proceedings, the Assessee returned a sum of Rs. 2,81,145/- through banking channel. The Assessee has also produced confirmation certificate. The Ld. CIT(A) ought to have considered those documents and should have deleted the addition. In view of the above discussion, we find no reason to sustain the addition of Rs. 13,74,000/- made u/s 68 of the Act which has been confirmed by Ld. CIT(A). Accordingly, the addition of Rs. 13,74,000/- hereby deleted.
In the result the Appeal of the Assessee is allowed.
Order pronounced in the open court on 08th August, 2025 Sd/- Sd/-