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Income Tax Appellate Tribunal, CUTTACK
Before: SHRI N.S SAINI
This is an appeal filed by the assessee against the order of CIT(A)-1,
Bhubaneswar, dated 18.8.2015, for the assessment year 2005-06.
The sole issue involved in this appeal is that the ld CIT(A) erred in
confirming the addition of Rs.2,02,397/- as unexplained credit u/s.68 of
the Act made by the Assessing Officer.
I have heard the rival submissions and perused the orders of lower
authorities and materials available on record. The Assessing Officer
observed that the assesse has claimed to have received unsecured loan
2 ITA No. 450/CT K/ 2015 Asse ssment Year :20 05- 06 from friends and relatives of Rs.8,00,000/- during the year under
consideration. The Assessing Officer required the assessee to prove the
genuineness of loans by filing details alongwith confirmation letters. The
Assessing Officer found that all the loans had been obtained in cash except
that from Dr. Vijaya Laxmi Visoi amounting to Rs.32,103/-, which was
received in cheque. He also observed that all the loans except a small
amount of Rs.7,397/- which was received from one Mahmud Khan, were of
Rs.19,500/- from each creditor uniformly. Considering these facts, he
concluded that the loans to the extent of Rs.7,67,897/- are not genuine
and added the same to the income of the assessee.
On appeal, the CIT(A) called for a remand report, wherein, the
Assessing Officer stated that apart from the loan obtained from Dr. Visoi,
there were three more loan creditors as mentioned below, could be
accepted as genuine:
1) Sri Sarat Ch Bishoyi Rs.19,500/- 2) Smt Rekha Agrawal Rs.19,500/- 3) Sri Sanjay Kumar Agarwal Rs.19,500/-
Ld CIT(A) after considering the submission of the assessee and
remand report concluded that the loans from the creditors who have PANs
and who have confirmed the transactions subsequently could be accepted
as genuine apart from the loans which have been treated as genuine by the
Assessing officer in the remand report. Accordingly, he held that the
following creditors had no PAN and in whose cases the three ingredients of
3 ITA No. 450/CT K/ 2015 Asse ssment Year :20 05- 06 proving a loan transaction have not been established are considered as not
genuine:
1) Sarat Chandra Vishoyi : Rs.19,500/- 2) Shasikanta Verma : Rs.19,500/- 3) Jaimati Devi Verma : Rs.19,500/- 4) Surya Prakash Gupta : Rs.19,500/- 5) Safika Khatun : Rs.19,500/- 6) Rashid NZIR : Rs.19,500/- 7) Ahmed Sayed : Rs.19,500/- 8) Usha Agarwala : Rs.19,500/- 9) S.K.Muna : Rs.19,500/- 10) Santosh Kumar Gupta : Rs.19,500/- 11) Mahamud Khan : Rs. 7,397/- Total : Rs.2,02,397/-
Hence, he deleted the addition of Rs.5,65,500/- and confirmed the
addition of Rs.2,02,397/-.
Being aggrieved, the assessee is in appeal before me.
Ld Authorised Representative of the assessee argued and submitted
that the CIT(A) was not justified in confirming the addition of Rs.2,02,397/-
u/s.68 of the Act being unsecured loan received from 11 persons on the
ground that they did not have PAN. He argued that as the income of the
loan creditors is below taxable limit, they were not required to obtain PAN
and hence, PAN was not available. He submitted that the loan received
from those persons are of small amount of Rs.19,500/- each. He submitted
that no material has been brought on record by the revenue after making
enquiry from the loan creditors that they did not have the capacity to
advance Rs.19,500/- as loan to the assessee. In absence of the same,
considering the unsecured loan as not genuine because they did not have
PAN is not justified.
4 ITA No. 450/CT K/ 2015 Asse ssment Year :20 05- 06 9. Ld Departmental Representative supported the order of the CIT(A).
I find that the addition of Rs.2,02,397/- on account of unsecured loan
was confirmed by the CIT(A) on the ground that the loan creditors did not
have PAN. I find force in the arguments of ld Authorised Representative of
the assessee that the income of the loan creditors was below the taxable
limit, therefore, they were not required to obtain PAN. I also find force in
the submissions of Authorised Representative of the assessee that small
amount of Rs.19,500/- was received from 11 persons as unsecured loan
and no material has been brought on record by the revenue after making
enquiry that the loan creditors did not have the capacity to advance
Rs.19,500/- as loan to the assessee. In the above facts and circumstances
of the case, I am of the considered opinion that the addition of
Rs.2,02,397/- u/s.68 cannot be sustained in law. I, therefore, set aside
the order of the CIT(A) and delete the addition of Rs.2,20,397/- and allow
the ground of appeal of the assessee.
In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 22/03/2017 in the presence of parties.
Sd/- (N.S Saini) ACCOUNTANT MEMBER
Cuttack; Dated 22/03/2017 B.K.Parida, SPS
5 ITA No. 450/CT K/ 2015 Asse ssment Year :20 05- 06 Copy of the Order forwarded to : 1. The Appellant : Hare Krishna Varma, A-39, Neelkantha Nagar, Nayapalli, Bhubaneswar 2. The Respondent. ITO, Ward 2(2), Bhubaneswar. 3. The CIT(A)-1 Bhubaneswar 4. Pr.CIT1, Bhubaneswar. 5. DR, ITAT, Cuttack 6. Guard file. BY ORDER, //True Copy//
SR.PRIVATE SECRETARY ITAT, Cuttack