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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 28.02.2023 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”], which in turn arises out of assessment-order dated 09.12.2019 passed by learned ITO, Neemuch [“AO”] u/s 147/143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2012-13, the assessee has filed this appeal on the grounds mentioned in Appeal Memo (Form No. 36).
Heard the learned Representatives of both sides at length and case- records perused. Page 1 of 6
Smt. Neeta Devi Goyal, Neemuch vs. ITO, Neemuch AY 2012-13 3. Brief facts leading to present appeal are such that the assessee- individual filed her original return on 31.08.2012 declaring a total income of Rs. 5,54,010/-. Subsequently, based on an information received from ADIT(Inv)-1, Udaipur that the assessee had given a loan of Rs. 6,75,000/- to one M/s U.B. Investment which was a part of bogus loan/accomodation- giving mechanism adopted by certain group of persons, the AO re-opened assessment through notice dated 27.03.2019 u/s 148. In response, the assessee re-filed return on 19.04.2019 repeating the original income of Rs. 5,54,010/-. Ultimately, the AO completed re-opened assessment after making an addition of Rs. 6,75,000/- and thereby assessing total income at Rs. 12,29,010/-. Aggrieved by action of AO, the assessee carried matter in first-appeal. During first-appeal, the CIT(A) observed non-compliances of the notices of hearing fixed by him and therefore dismissed assessee’s appeal confirming the addition made by AO. Still aggrieved, the assessee has come in next appeal before us.
Ld. AR for assessee submitted that in the first-appeal before CIT(A), the assessee could not be make representation because it was conducted through faceless regime and the assessee was not aware of the notices of hearing issued by CIT(A). Normally in such cases, our practice is to remand case back to the file of CIT(A) for adjudication afresh after giving opportunity of hearing to assessee. But the Ld. AR made a humble prayer that the issue involved in present appeal is very small and it would be better to decide at this stage itself instead of remanding it back to CIT(A). This would avoid
Smt. Neeta Devi Goyal, Neemuch vs. ITO, Neemuch AY 2012-13 multiplicity of proceeding and end the litigation. After participative discussions of both sides, Ld. AR’s prayer is accepted.
To explain the factual matrix of case, Ld. AR carried us to Para No. 5 of assessment-order and submitted that the AO has made addition of Rs. 6,75,000/- in respect of loan given by assessee to M/s U.B. Investment (Prop. Shri Vikram Anjana) on 29.03.2012. Ld. AR submitted that during assessment-proceeding, when the AO asked the assessee to explain source of the loan given, the assessee submitted that she made a cash-deposit of Rs. 2,25,000/- in her Bank A/c 27.03.2012 & 29.03.2012 and thereafter out of the balance held in Bank A/c, the said loan of Rs. 6,75,000/- was given. Regarding source of cash-deposit of Rs. 2,25,000/- in Bank A/c, the assessee submitted that she made a cash-withdrawal of Rs. 6,00,000/- from same Bank A/c on 10.03.2012 and the unutilized balance available out of such withdrawal was re-deposited. But the AO did not accept claim of re- deposit out of previous withdrawal with the reasoning that the assessee had already re-deposited in bank a/c on 16.03.2012 & 19.03.2012. Then, the AO also noted, in Para No. 6 of assessment-order, the modus operandi applied by Shri Vikram Anjana, prop. of M/s U.B. Investment, for chanelizing money and providing bogus entries/accommodation to other parties. Ultimately, vide Para No. 7 of assessment-order, the AO made addition of Rs. 6,75,000/-, being the loan given by assessee, in assessee’s hands.
Smt. Neeta Devi Goyal, Neemuch vs. ITO, Neemuch AY 2012-13 6. Having explained this, Ld. AR firstly raised an important question. He submitted that in the present case the AO has made addition qua the loan given by assessee and not loan taken by assessee. Ld. AR submitted that the loan given by assessee is very genuine, but for the sake of academic discussion even if it is said to be bogus/accommodation then also it does not warrant any addition in assessee’s hands. Ld. AR submitted that had this been a case of ‘loan taken’ by assessee, the AO would have been very much justified in treating as undisclosed income of assessee but the present case has a reverse transaction. Ld. AR strongly submitted that he fails to understand how the ‘loan given’ by anyone, even if bogus, can be treated as ‘income’ in the hands of giver. Without prejudice, Ld. AR also explained that (i) the assessee has given loan from her bank a/c on 29.03.2012 through banking channel; (ii) recovered it back on 21.04.2012 through banking channel with interest of Rs. 10,868/-; (iii) the borrower M/s U.B. Investment has deducted TDS of Rs. 1,087/- out of interest; (iv) the TDS is duly reflected in Form No. 26AS of AY 2013-14; (v) the assessee has shown interest income and claimed TDS credit in AY 2013-14 which the department has assessed. Ld. AR pointed out that the assessee did not charge any interest for AY 2012-13 under consideration for the reason that loan itself was given on 29.03.2012 which remained outstanding just for 2/3 days in that year. Ld. AR carried us to the documents filed at Page No. 7-14 of Paper-Book-II to show all these facts. Thus, the loan given by assessee is very much genuine.
Smt. Neeta Devi Goyal, Neemuch vs. ITO, Neemuch AY 2012-13 7. With regard to the source of cash deposit of Rs. 2,25,000/- in bank a/c before giving impugned loan, Ld. AR carried us to Paper-Book-I Page No. 10-19 where a copy of assessee’s bank a/c is filed. Referring to same, Ld. AR demonstrated that the assessee made a cash-withdrawal of Rs. 6,00,000/- on 10.03.2012 and made cash-deposits of just Rs. 1,00,000/- on 16.03.2012 & Rs. 25,000/- on 19.03.2012; therefore the assessee was left with more than enough cash for re-deposit of Rs. 2,25,000/- on 27.03.2012 & 29.03.2012. Hence, the assessee’s claim that she was having unutilized cash-balance out of previous withdrawal is fully substantiated and verifiable from entries in Bank A/c itself. Ld. AR submitted that the AO has grossly erred in making an adverse observation in this regard.
With aforesaid submissions, Ld. AR prayed to delete the addition fully.
Per contra, Ld. DR dutifully supported the order of AO. However, Ld. DR also submitted that the entire facts are before the Bench and the Bench may take a judicious call in the matter.
We have considered rival submissions of both sides and perused the order of AO. There is no dispute on the fact that the AO has made addition qua the ‘loan given’ by assessee and not ‘loan taken’ by assessee. We agree that under the scheme of Income-tax act and it is logical also, there can be an addition for bogus ‘loan/accommodation taken’ by a person but certainly there cannot be any addition for bogus ‘loan/accommodation given’. If the loan given by “X” to “Y” is found bogus/accomodation, the department can make addition in the hands of “Y” but certainly not in the hands of “X”. In fact, Ld. DR also understood this basic point and that is why he simply supported the AO’s order and left it for the Bench to take a call. As far as the source of cash-deposit of Rs. 2,25,000/- in bank a/c, prior to giving loan, is concerned, Ld. AR has successfully demonstrated that the assessee made a withdrawal of enough amount from same bank a/c which was available for re-deposit. Thus, looking into these very aspects, we need not go further to examine the genuineness or otherwise of the loan given by Smt. Neeta Devi Goyal, Neemuch vs. ITO, Neemuch AY 2012-13 assessee, suffice it to say that the AO has wrongly made addition of Rs. 6,75,000/- given by assessee in assessee’s hands. We, therefore, direct the AO to delete the addition.
During hearing before us, Ld. AR also objected to the legality of the re- opening of proceeding done by AO and Ld. DR for revenue strongly opposed Ld. AR’s pleading. However, since we have already deleted the addition made by AO in foregoing para, there is no necessity to go into the legality of proceeding. Hence, the same is kept open without any adjudication.
Resultantly, this appeal of assessee is allowed.
Order pronounced in the open court on 31.10.2023.