CHARANJEET LAL ARORA,HARIDWAR vs. ACIT CIRCLE 1(3) 1 HARIDWAR, HARIDWAR

The present appeal is filed by the Assessee against the order of Ld. Commissioner of Income Tax (Appeals)-Addl/JCIT (A)-1, Surat (‘Ld.

Brief facts of the case are that, the Assessee being individual, engaged in business of wholesale trading of spices and edible oil, filed his return of Income declaring total income at Rs. 36,87,760/-, Subsequently, the case was selected for scrutiny under CASS. The Assessing Officer completed the scrutiny proceedings on 16/12/2019 under section 143(3) of the Income Tax Act, 1961 ('Act' for short)by making an addition of Rs. 8,00,000/- on account of unexplained credit u/s. 68 of the Act. Aggrieved by the assessment order dated 16/12/2019, the Assessee preferred an Appeal before the Ld. CIT(A).

The Ld. Counsel for the Assessee vehemently submitted that, the Assessee has produced bank statement of the lender from where loan was received by the Assessee. The A.O. has also issued notice u/s 131 of the Act to the lender in question Sh. Om Bahadur, who has produced all requisite documents called by the A.O. Further the loan amount has been received of the Assessee by banking channel.

Per contra, the Department's Representative submitted that an amount of Rs. 8,00,000/- has been given to the Assessee by Sh. Om Bahadur, whereas just before the said transaction, the said Om Bahadur has deposited a cash of Rs. 16,60,000/-. Further submitted that, the sum received by the Assessee in garb of unsecured loan showing lack of creditworthiness, hence the authorities below have rightly considered the same as unexplained credit u/s 68 of the Income Tax Act, 1961, which requires no interference at the hands of the Tribunal.

We have heard both the parties and perused the material available on record. During the assessment proceedings, the A.O. asked to furnish complete details of unsecured loans received from various person in order to verify the genuinenity of the same. In response, the Assessee furnished the documents, however, the A.O. doubted an unsecured loan received from Sh. Om Bahadur to the tune of Rs. 8,00,000/-. The A.O. has also issued notice u/s 131 of the Act to the said Om Bahadur asking him to produce all bank account statements, ITR with computation for Assessment Year 2017-18 and statement of affair for Assessment Year 2017-18 and 2018-19. In response the said Sh. Om Bahadur has produced all the requisite documents called by the A.O. Further, the said Om Bahadur has also given confirmation regarding lending the unsecured loan to the Assessee. However, without appreciating the above documents the A.O. made addition only on the ground that there was cash deposits in the account of Sh. Om Bahadur just prior to transfer of the loan to the Assessee.

As could be seen from the record, there is nothing brought on record by the Revenue to show that the Assessee or Assessee’s cash has been deposited in the bank account of Sh. Om Bahadur and thereafter the said amount has been transferred to the Assessee.

In the result, the appeal of the Assessee is allowed.