DCIT vs. CHETHAN P. THAYAL,

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ITA 928/BANG/2013Status: DisposedITAT Bangalore19 February 2016AY 2004-055 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the assessee was not given an opportunity to cross-examine Mr. Khudus, whose statement indicated he was an intermediary. Therefore, the issue of the loan's genuineness requires further verification.

What were the facts?

During a search, the assessee claimed loans from several individuals. The AO made additions as the assessee failed to prove the genuineness and creditworthiness of the creditors. The CIT(A) deleted most additions but confirmed the addition of Rs. 7.00 Lakhs from Mr. Khudus.

What were the issues?

Whether the loan from Mr. Khudus was genuine, and if the assessee was denied a proper opportunity to prove its genuineness.

Which sections of the Income-tax Act were involved?

Section 132,Section 153A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE ‘B’ BENCH, BANGALORE

Before: SHRI ABRAHAM P GEORGE & SHRI VIJAYPAL RAO

For Appellant: Shri Sundar Hegde, K. CA
For Respondent: Smt Neera Malhotra, CIT

order dated 05-02-2013 of CIT(A), Mysore.

2.

The appeal of the assessee is taken up first for disposal.

2.1 Grievance raised by the assessee through its ground nos. 1 to 4 are that the addition of Rs.7.00 Lakhs made by the AO, disbelieving advances received from one Mr. Kundras, was confirmed by the CIT(A).

3.

Facts apropos are that the assessee having income from salary and house property was subject to a search u/s 132 of the IT Act, 1961 on 31-01- 2008. Pursuant to a notice u/s 153A of the IT Act, 1961 assessee filed return declaring an income of Rs.1,55,680/-. Assessee had claimed loans from one Shri Kuddus Rs.7.00 Lakhs, one Shri Agarwal Rs.5.00 lakhs, one Shri Gupta Rs.10.60 lakhs and one Shri Nagendra Rs.5.00 lakhs. Since these were new loans the AO required the assessee to prove the genuineness and credit worthiness of the creditors. Except for a confirmation letter from one Shri Harish, nothing was filed by the assessee. The assessment was completed thereafter, by making an addition of Rs.27,60,000/- being aggregate of the above amounts.

4.

Aggrieved, the assessee moved in appeal before the learned CIT(A).

The argument of the assessee was that he was the Managing Director of M/s Bharat Hi-Tech Builders (P)Ltd. and had filed confirmation letters from each of the four parties. The learned CIT(A) called for a remand report from the AO. In the remand report, the AO re-affirmed his earlier view except for the money borrowed from Shri Nagendran. Learned CIT(A) after considering the remand report and submissions of the assessee was of the opinion, that the assessee could not prove the genuineness of the loan of Rs.7.00 lakhs claimed to have received from Mr. Khudus. As per the learned CIT(A) assessee could prove the genuineness of the balance loans. He deleted the addition to the extent of Rs.20,60,000/-.

5.

Now before us the learned AR submitted that Shri Khudus had appeared before the AO during the course of remand proceedings and confirmed the factum of advance of Rs.7.00 lakhs given to the assessee. According to him, just because Shri Khudus mentioned that he was only an intermediary, the genuineness of the loan could not be disbelieved. Thus, according to him, the loan from Shri Khudus was substantiated by the assessee and the addition required to be deleted.

6.

Per contra, learned DR supported the order of the learned CIT(A).

7.

We have heard the rival submissions and perused the records.

8.

In the statement recorded from Shri Khudus, on 16-11-2011 he had mentioned that he was only acting as intermediary and never advanced any sums to the assessee. He had also stated that the signatures on certain papers were taken by the assessee. However, it seems an opportunity to cross examine Shri Khudus, was not given to the assessee. There were no enquiries conducted by the AO on the statement of Shri Khudus that he was acting as intermediary. We are of the opinion, that the question whether the loan of Rs.7.00 lakhs claimed to have been received from Shri Khudus is genuine or not requires further verification by the lower authorities. We therefore, set aside the orders of the lower authorities on this issue and remit back to the AO for consideration afresh in accordance with law.

9. Now we take up the appeal of the revenue. The Bench pointed out to the learned DR that the tax effect in the revenue’s appeal was less than Rs.10.00 lakhs, since the additions which were deleted by the CIT(A) and which have been assailed by the revenue was Rs.15,60,000/- only. In view of Circular No.21/2015 dated 10th December, 2015 this appeal has to be dismissed for low tax effect.

9.

In the result, the appeal of the assessee is allowed for statistical purposes, whereas that of the revenue is dismissed.

Order pronounced in the open Court on the 10th February, 2016.

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