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Income Tax Appellate Tribunal, ‘’B’’ BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED
आयकरअपीलीयअधिकरण, अहमदाबादनयायपीी IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’B’’ BENCH, AHMEDABAD
BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND Ms. MADHUMITA ROY, JUDICIAL MEMBER आयकरअपीलसं./ITA Nos. 606-607/AHD/2023 धििाधरणवरध/Asstt. Year: (2013-2014 & 2014-2015) Namrata Alpit Patel, Income Tax Officer, 110-, Yoginagar Township, Opp. Vs. Ward-1(3)(2), Prabhuta Marriage Hall, Chhani Vadodara. Baroda-391740
PAN : ARJPP8791R
(Applicant) (Respondent)
Assessee by : Shri Jigar Adhiyaru, A.R. Revenue by : Shri Alpesh Parmar, Sr. D.R. सुिवाईकीतारीख/Date of Hearing : 12/02/2024 घोरणाकीतारीख/Date of Pronouncement: 10/04/2024 आदेश/O R D E R PER WASEEM AHMED ACCOUNTANT MEMBER:
Both the appeals have been filed by the same Assessee against the orders of the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre, (in short “NFAC”), Delhi arising in the matter of the Assessment Order passed u/s 143(3) of the Income Tax Act 1961 (here-in-after referred to as "the Act") relevant to the Assessment Years 2013-2014 & 2014-15.
IT(SS)A Nos.606 & 607/Ahd/2023 A.Ys. 2013-14 & 2014-15 2 First, we take up ITA No. 606/AHD/2023, an appeal by the assessee for AY 2013-14 2. The assessee has raised the following grounds of appeal:
“1. The CIT(A) on the facts and in the circumstances of the case and in law has grossly erred in confirming the addition of Rs. 17,92,172/- as made by the AO as unexplained cash credit u/s 68 of the Act. The Ld. CIT(A) while confirming the addition has totally ignored the documentary evidences filed by the appellant to prove the identity of the lenders, sources of loan amounts of Rs.17,92,17s/- and genuineness of transactions. No evidences either by the AO or by the CIT(A) have been brought on record which are contrary to these documentary evidences and hence addition of Rs.17,92,178/- as confirmed by the CIT(A) is without considering the merits of the case and merely by relying the findings of the AO. 2. The CIT(A) on the facts and in the circumstances of the case and in law has grossly erred in confirming the addition of Rs.17,92,178/- without bringing any evidences on records as result of examination of the lenders independently. The addition of Rs.17,92,178/- has been confirmed by the CIT(A) without examining independently the lenders either at the stage of assessment proceedings or at the stage of appellate proceedings. 3. The appellant craves leave to add/alter any of the grounds of appeal before or at the time of hearing.” 3. The only issue raised by the assessee is that the learned CIT(A) erred in confirming the addition of Rs. 17,92,172/- made under section 68 of the Act. 4. The facts in brief are that the assessee is an individual and engaged in the business of trading of iron and steel in the name and style of M/s Alliance Infrastructure & Logistics. The assessee during the year has taken the unsecured loans as detailed below: 1. Emirates Trading Company (Prop- Jitendra Amin) Rs. 12,58,672/- 2. Harshil Amin Rs. 3,33,500/- 3. Om Sai Travel (Prop- Kuntal Brahmbhatt) Rs. 2,00,000/- Total Rs. 17,92,172/-
The assessee during the assessment proceeding to explained the nature and source of credit as required under the provisions of section 68 of the Act by
IT(SS)A Nos.606 & 607/Ahd/2023 A.Ys. 2013-14 & 2014-15 3 furnishing the copy of ITR acknowledgment, computation of income, confirmation letter, Bank Statement etc. of the loan parties.
However, the AO found that equivalent cash deposited in the bank of loan parties immediately before the amount was transferred to the assessee through banking channel but sources of cash deposit in their respective bank was not explained. The AO also found that the loan party were earning very small income and after incurring day to day family expenses they could not have any amount left to advance unsecured loan. The AO referred various case laws and accordingly held that merely furnishing the copy of ITR’s, and bank statements and confirmation will not absolve the assessee from the onus to establish the creditworthiness of the creditor and genuineness of loan. The AO also noted that there was a very little balance in the bank of the loan parties before and after transferring amount in guise of unsecured loan to assessee out of cash deposit. Similarly, in their bank statement, there was not much cash deposit or withdrawal in their bank account except the cash equal to loan amount deposited before transfer. Accordingly, the AO referred to the principles of surrounding circumstantial evidence and human probability held that the assessee routed own unaccounted cash through the bank of respective parties. Hence the AO treated the above stated unsecured loan as unexplained credit under the provision of section 68 of the Act and added the same to the total income of the assessee.
The aggrieved assessee preferred an appeal before the learned CIT(A) who concurred with the view taken by the AO and confirmed the addition made under section 68 of the Act.
Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us.
The learned AR before us filed a paper book running from pages 1 to 27 along with the written submission having 9 pages. The sum and substance of the
IT(SS)A Nos.606 & 607/Ahd/2023 A.Ys. 2013-14 & 2014-15 4 learned counsel of the assessee was that the assessee furnished the necessary details justifying the identity, creditworthiness of the parties and the genuineness of the transactions. Therefore, the provisions of section 68 cannot be invoked.
On the contrary, the learned DR before us vehemently supported the order of the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly the assessee in the year under dispute has taken unsecured loan from 3 parties aggregating to Rs. 17,92,172/-. The assessee, in order to establish the source of loan credit as required under the provision of section 68 of the Act, provided the primary documents such as Name, address, confirmation letter, ITR-V & computation and bank statement of those 3 parties. The AO doubted the genuineness of loan and creditworthiness of the parties for reason that there was immediate cash deposit in the bank of the creditor parties equal to the amount of loan extended to the assessee and loan party have declared very meager income which is not sufficient to extend unsecured loan to the assessee. In this regard, we perused the documentary evidence furnished by the assessee in respect of each loan parties. The assessee has taken a loan of Rs. 3,33,500/- from the party namely Shri Harshil Amin. On perusal of his return of income, we note that the impugned party has disclosed gross total income of Rs. 2,78,031/- and earning income from business, house property and other sources. Thus, considering the amount of loan and income declared in return, it cannot be said that the impugned party lacks creditworthiness. Similarly in the case of other parties namely Emirate Trading Company and Om Sai Travel, the assessee has shown loan of Rs. 12,58,672/- and Rs. 2 Lakh respectively whereas the impugned parties have declared gross total income of Rs. 14,72,817/- and Rs. 4,82,944/- in their respective returns. Thus, all the creditor parties have shown sufficient income, considering the loan amounts. All the parties are engaged in business activities. Their bank account contains large volumes of transactions. Certainly, the cash deposits just before transferring
IT(SS)A Nos.606 & 607/Ahd/2023 A.Ys. 2013-14 & 2014-15 5 the loan amount raise doubt, but mere doubt cannot be a basis for making the addition. The AO was required to conduct inquiries before rejecting the primary documentary evidence provided by the assessee. The AO in the present case without making inquiry or bringing any contrary material held that the assessee owns cash deposited in the bank of the parties which was transferred in bank of the assessee in guise of unsecured loan. The action of the AO is mere presumption and surmises. As such, no material brought on record which may remotely suggest that cash deposited in the bank of the loan parties belongs to the assessee. 11.2 The Hon’ble Supreme Court in case of CIT vs. P. Mohanakala reported in 291 ITR 278 while dealing with scope of provision of the section 68 of the Act held that “the opinion of the AO that the explanation furnished by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material available on record. Application of mind is the sine qua non for forming the opinion.” In other words, once the assessee submits primary evidence with regard to identity and credit worthiness of creditor and the genuineness of the transaction, the onus shifts on the AO to consider the material provided and make independent inquiry in order to find out genuineness of the evidence or bring material contrary to the fact explained by the assessee. The AO cannot reject the primary evidence furnished by the assessee without appreciating the facts available on record or without bringing contrary material to form the belief that primary document or explanation furnished by the assessee is not satisfactory.
11.3 In the present case, the assessee has provided all the necessary documentary evidence to prove identity, creditworthiness, and genuineness of transaction. However, the AO merely on basis of surmises and conjecture held that the assessee has routed own unaccounted cash in the guise of unsecured which is not justified. Therefore, we hereby set aside the finding of the learned
IT(SS)A Nos.606 & 607/Ahd/2023 A.Ys. 2013-14 & 2014-15 6 CIT(A) and direct the AO to delete the addition made. Hence the ground of appeal filed by the assessee is hereby allowed.
11.4 In the result appeal filed by the assessee is hereby allowed. Coming to ITA No. 607/Ahd/2023 an appeal by the assessee for A.Y. 2014-15
The assessee has raised the following grounds of appeal:- “1. The CIT(A) on the facts and in the circumstances of the case and in law has grossly erred in confirming the addition of Rs. 13,00,OOO/- as made by the AO as unexplained cash credit u/s 68 of the Act. The Ld. CIT(A) while confirming the addition has totally ignored the documentary evidences filed by the appellant to prove the identity of the lenders, sources of loan amounts of Rs.13,00,000/- and genuineness of transactions. No evidences either by the AO or by the CIT(A) have been brought on record which are contrary to these documentary evidences and hence addition of Rs.13,00,000/- as confirmed by the CIT(A) is without considering the merits of the case and merely by relying the findings of the AO. 2. The CIT(A) on the facts and in the circumstances of the case and in law has grossly erred in confirming the addition of Rs.13,00,000/- without bringing any evidences on records as result of examination of the lenders independently. The addition of Rs.13,00,000/- has been confirmed by the CIT(A) without examining independently the lenders either at the stage of assessment proceedings or at the stage of appellate proceedings. 3. The CIT(A) on the facts and in the circumstances of the case and in law has grossly erred in confirming the addition of Rs.60,588/- by disallowing the freight and loading and unloading expense mere taking base of expenses of previous year. 4. The appellant craves leave to add/alter any of the grounds of appeal before or at the time of hearing.” 13. At the outset, we note that that the issue raised by the assessee in the caption appeal is identical to the issue raised by the assessee for the assessment year 2013-14 in ITA No. 606/AHD/2023. Therefore, the findings given in ITA No. 606/AHD/2023 shall also be applicable for the issue raised in the year under consideration i.e. A.Y. 2014-15. The appeal of assessee for the A.Y. 2013-14 has been decided by us vide paragraph No. 11 of this order in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the issue raised for the
IT(SS)A Nos.606 & 607/Ahd/2023 A.Ys. 2013-14 & 2014-15 7 assessment year 2014-15. Hence, the ground of appeal filed by the assessee is hereby allowed.
13.1 In the result, the appeal of the assessee is hereby allowed.
In the combined result, both the appeals of the assessee are hereby allowed. Order pronounced in the Court on 10/04/2024 at Ahmedabad.
Sd/- Sd/- (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (T (True Copy) Ahmedabad; Dated 10/04/2024 Manish