SMT BHAGIRATHI DEVI SARAF L/H OF LATE SHRI M.P. SARAF,NEW DELHI vs. DEPUTY COMMISSIONER OF INCOME-TAX, NEW DELHI

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ITA 3156/DEL/2015Status: DisposedITAT Delhi16 December 2015AY 2007-084 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the amounts were received as loans from identified and creditworthy lenders, and were subsequently repaid. The contradictory stand was attributed to a misinterpretation of the assessee's reply.

What were the facts?

During a search operation, unexplained credit entries totaling Rs. 1,47,500 were found in the assessee's bank account. The assessee initially claimed these were loans given out, but later stated they were loans received from family members.

What were the issues?

Whether unexplained credit entries in a bank account can be added as income from undisclosed sources when the identity and creditworthiness of the lenders are established and the loans are repaid.

Which sections of the Income-tax Act were involved?

Section 132

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “SMC” NEW DELHI

Before: SHRI S.V. MEHROTRA :

For Appellant: Shri V.K. Jain CA &, Shri Nem Singh Jain CA
For Respondent: Shri Ved Prakash Mishra Sr. DR
Hearing: 22/09/2015

PER S.V. MEHROTRA, A.M..: This appeal has been preferred by the assessees against the orders dated 30.01.2015, passed by the CIT(A)-2, New Delhi, relating to A.Y. 2005-06. 2. Brief facts of the case are that search & seizure operation u/s 132 of the Act was conducted at the residence of Shri M.P. Saraf at C-89, Lajpat Nagar-II, New Delhi-110024, as well as at locker no. 61 with Union Bank of India, Lajpatnagar-II Branch, New Delhi in connection with search & seizure operation u/s 132 of the I.T. Act conducted on Monnet Group of cases on 19-11-2010. In course of assessment proceedings the assessee was asked to furnish copy of bank statement

1.

2 ITA 3156/Del/2015 maintained during the year along with explanation of credit/ debit entries. The assessee filed bank statement in respect of saving bank account with UCO Bank, from which it transpired that there were following credit entries, the source of which had not been explained:

Date Amount 05.03.2006 Rs. 10000/- 10.10.2006 Rs. 37500/- 10.11.2005 Rs. 25,000/- 10.11.2005 Rs. 75000/- Rs. 1,47,500/-

3.

Since the assessee failed to furnish any satisfactory explanation in respect of the aforesaid credit entries in his bank statement, the AO made addition of Rs. 1,47,500/- as income from undisclosed sources.

4.

Ld. CIT(A) partly confirmed the addition of Rs. 1,37,500/-, inter alia, observing that at the appellate stage assessee explained that the loans received by him from family members, namely, Shri Sanjay Saraf and Shri Vijay Saraf, which had been returned back before the end of the assessment year itself to the concerned persons. The assessee filed confirmations from Shri Sanjay Saraf and Shri Vijay Saraf. Ld. CIT(A) referred to the letter dated 15-2-2013 filed before the AO, wherein the assessee had stated as under: “During the year assessee has given loans to the following persons as per details given below and the said loans received back in same financial year. a) Sanjay Saraf Rs. 35,000/- b) Rashmi Electronics Rs. 37,500/- c) Vijay Saraf Rs. 75,000/-“

3 ITA 3156/Del/2015 5. Ld. CIT(A) concluded that assessee had taken contradictory stand observing that before the AO it had been stated that the assessee gave loans to the above mentioned parties, while before her the reverse had been stated.

She, accordingly, confirmed the addition in respect of three deposits.

6.

Ld. counsel referred to pages 6 & 7 of the PB, wherein the letter dated 15-2-2013 is contained in which in para 15 the assessee had pointed out that during the year assessee had given loans to the various persons as per details given, the contents of which have been reproduced above.

7.

Ld. counsel further referred to page 8, the copy of bank a/c, wherein the amounts received from the three persons i.e. Rashmi Electronics Rs. 37,500/-; Sanjay Saraf Rs. 25,000/-; and Vijay Saraf Rs. 75,000/- on 10-10- 2006 have been credited. Amounts have been refunded on 13-1-2007 to Sanjay Saraf and Rashmi Electronics. The sum of Rs. 75,000/- has been refunded to Shri Vijay Saraf - Rs. 50,000/- on 2-3-2007 and Rs. 25,000/- on 5-3-2007.

8.

Thus, the submission is that amounts were received in October 2006 and refunded in January-March 2007. The confirmations of these persons are on record in which they have clearly given their PAN number and have confirmed the loans. All are tax payers and considering the amount involved the creditworthiness of lenders cannot be doubted. The addition cannot be 4 ITA 3156/Del/2015 confirmed, merely on the basis of contents of reply, which have been interpreted by ld. CIT(A) strictly without considering the time import of the reply, but when the bank accounts clearly recorded these transactions, and the identity and creditworthiness of lenders is not in doubt no addition can be made. Accordingly, I set aside the order of ld. CIT(A) and allow the claim of the assessee by deleting the additions in question.

9.

In the result, assessee’s appeal is allowed.

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