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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM
आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2015-16, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-3, Surat [in short “the ld.CIT(A)”], in Appeal No. CIT(A) Surat-3/10483/2017-18, dated 23.10.2019, which in turn arises out of an order passed by the assessing officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 28.12.2017.
The grounds of appeal raised by the assessee are as follows: “(I) Addition of Rs.45,50,000 as unsecured loan: (1) The learned CIT(A) was not justified in confirming the addition in respect of unsecured loan particularly when the assessee had discharged its burden by filling confirmations, copy of income-tax returns and all the relevant details. (2) On the facts and circumstances of the case, the appeal is required to be allowed. (II) The assessee craves leave to add, alter or vary any of the grounds of appeal.”
ITA 561/SRT/2019/AY.2015-16 Dharmeshkumar M. Thummar 3. Succinct facts are that during the course of assessment proceedings, assessing officer examined the details submitted by the assessee in respect of unsecured loan taken by the assessee. It was noted by the assessing officer that during the year assessee had obtained new unsecured loan of Rs.45,00,000/- from seven parties. The assessee was asked to submit supporting evidence to prove the identity, genuineness and creditworthiness of the Lenders. In response, the assessee submitted details and documents before the assessing officer. On the basis of the documentary evidences submitted, a summary chart has been prepared by AO which is enclosed as Annexure-A (page 1) of assessment order. The assessing officer, taking the basis of summary chart, held that the remarks made in the Annexure-A, clearly prove that the Lenders have no creditworthiness to advance loans to the assessee. Further, in few cases the Lenders could not be traced at the given address and in few cases confirmations were note filed. Thus, assessing officer held that the identity, genuineness, and creditworthiness of the loans shown was doubtful. Therefore, the amount for Rs.45,00,000/- shown in the name of unsecured loans was added as unexplained credit. 4. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A), who has confirmed the action of Assessing Officer. Aggrieved by the order of ld. CIT(A), the assessee is in further appeal before us. 5. Learned Counsel for the assessee submitted additional evidences, before the Bench, under Rule 29 of the ITAT, Rules 1962, in respect of three Loan Creditors. The request of the assessee, to admit additional evidences, is reproduced below: “The Hon'ble Members, Income-tax Appellate Tribunal, Surat. Re:- Application for Additional evidence under Rule 29 of the ITAT Rules, 1962. Respected Sirs, (1) My appeal in ITA No. 561/SRT/2019 is filed with the ITAT, Surat. (2) Solitary issue under the appeal pertains to addition u/s.68 of loans received from 7 persons. Of these persons, I had received a sum of Rs.5 lacs each from Ms. Bhumi Jigneshbhai Parmar, Yatinbhai Prakashbhai Nayee and Hiren Prakashbhai Nayee. Although during the course of assessment proceedings, I could submit
ITA 561/SRT/2019/AY.2015-16 Dharmeshkumar M. Thummar PAN, address, copy of ITR, computation of income and Bank passbook, Balance sheet and ledger for Income-tax purpose, I could not furnish their confirmations as I had dispute with them since I could not repay their loans sooner as also proceedings on these 3 loan accounts started at the fag end of the proceeding. (3) To support my above contention, I have drawn an affidavit, which is enclosed (Annexure A). (4) The additional evidence is given on Page No.61, 67 and 80 being confirmation of the loans. Since one of the grounds for addition has been ask of confirmation and that I was prevented by reasonable cause in furnishing, I urge you to please admit. 6. Therefore, Ld. Counsel submitted that these additional evidences are in respect of three Loan Creditors viz. M/s. Bhumi Jigneshbhai Parmer, Yatinbhai Prakashbhai Nayee and Hiren Prakashbhai Nayee and contended that there was sufficient cause not to submit these additional evidences before the Lower Authorities, therefore these additional evidences may be admitted. The ld Counsel also stated that in respect of Yatinbhai Prakashbhai Nayee, the assessee repaid the loan after two years, that is, in assessment year 2017-18, however, the assessee submitted additional evidences also (in respect of Yatinbhai Prakashbhai Nayee).
About balance Lenders, ld Counsel submits that assessee has submitted for each Lender, following evidences, Viz: (a) Copy of return of income, (b) Copy of computation of income,(c) Copy of Bank passbook and (d) Copy of contra confirmation etc. Therefore, ld Counsel prays the Bench that addition made by assessing officer may be deleted.
On the other hand, Learned Departmental Representative (Ld. DR) for the Revenue opposed the plea taken by the assessee to submit the additional evidences under Rule 29 of the ITAT, Rules 1962. The Ld. DR argued that assessee has not explained the reasons that what prevented him to submit these additional evidences before the lower authorities, therefore these additional evidences should not be admitted. The ld DR further argued that if the Bench has admitted these additional evidences then in that situation these additional evidences may be remitted back to the file of the assessing officer for his examination, as assessing officer never got opportunity to examine these additional evidences.
ITA 561/SRT/2019/AY.2015-16 Dharmeshkumar M. Thummar 9. About balance Lenders, ld DR argued that assessee has failed to prove the identity, creditworthiness and genuineness of the transactions, therefore, addition made by the Assessing Officer may be confirmed. The Ld. DR also took us through paper book page no. 17, wherein the show- cause notice of the Assessing Officer is placed and stated that in the show cause notice, the Assessing Officer has pointed out that on these Lenders notice under section 133(6) of the Act has not been served. The relevant part of the show-cause notice of the assessing officer is reproduced below: “(vi) For the source of investment made in the property for Rs.24,25,308/-. You have stated to obtained unsecured loan from three parties as below: Name of the person Amount who had given you Particulars Remark unsecured loan Sanjay D. Rs.7,85,140/- Before giving loan, he Notice issued u/s Makhana had obtained a credit 133(6) remained amount of Rs.7,50,000/- in unserved. his account. The credit entry was transferred to you on the same day. Pravin H. Braman Rs.7,85,140/- Before giving loan, he Notice issued u/s had obtained a credit 133(6) remained amount of Rs.7,50,000/- in unserved his account. The credit entry was transferred to you on the same day. Mukesh K. jain Rs.7,85,140/- Before giving loan, he No reply till date had obtained a credit amount of Rs.7,50,000/- in his account. The credit entry was transferred to you on the next day. (vii) From the above, it is clear that you had obtained credit entries of Rs.22,50,000/- from three parties for investment in property as appearing in ITS. These credit entries were shown to be obtained in Varachha Cooperative Bank A/c No.100050203842. The fact that the account is disclosed to the department cannot be ascertained due to non-submission of balance sheet/assets & liabilities.” 10. With help of the above table, Ld. DR pointed out in case of Sanjay Devjibhai Makhana, Pravinbhai Hajarikmal Braman, Mukeshbhai Khyalilalji Jain, before giving loan, they had obtained a credit amount of Rs.7,50,000/- in their accounts and these credit entries were transferred next day. Besides, about the
ITA 561/SRT/2019/AY.2015-16 Dharmeshkumar M. Thummar Lender of Dharmeshkumar M.Thummar-HUF, the genuineness and creditworthiness of the transactions have not been proved. Therefore, ld DR stated that genuineness and creditworthiness of the transactions are not established. Hence, regarding remaining four Lenders, the appeal of the assessee may be dismissed.
We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We note that assessing officer observed that assessee had obtained unsecured loans of Rs.45,50,000/- from seven parties. The AO held that the details furnished by the assessee showed that these seven parties did not have sufficient balance in the bank accounts to make the payments and lack creditworthiness. Out of the seven parties two were also not found at the given addresses. The AO also noted that notices u/s 133(6) of the Act in case of two persons namely, Pravinbhai Barman and Sanajybhai Makwana could not be served. The AO after the detailed discussion prepared the chart, which is also the part of the assessment order and held that these transactions are not genuine, and assessee has failed to prove genuineness and creditworthiness of these transaction therefore made addition to the tune of Rs.45,50,000/-. On appeal, ld CIT(A) observed for each Lender, as follows: “6.1.2. On the perusal of the details it is observed that the unsecured loans were taken by the assessee from 7 persons and the inquiries by the AO revealed as following: Name of the. Amounts Remarks lender of Loan
ITA 561/SRT/2019/AY.2015-16 Dharmeshkumar M. Thummar Sanjaybhai 750000/- The person was not found traceable at the given D Makhana address therefore the AO was not in the position to ascertain the existence of the lender. The lender had filed the return of income showing income of Rs.2,34,690/- but had not provided any balance sheet. The bank statement revealed that the lender was not having sufficient balance and the amount was transferred as loan only after obtaining a credit entry in the bank account before the transfer of fund. The average balance before and after the amount was transferred through RTGS to the assessee was meager amount only. In this case the identity and the creditworthiness of the lender is not proved. Pravinbhai 750000/- The person was not found traceable at the given H Brahman address therefore the AO was not in the position to ascertain the existence of the lender. The lender had filed the return of income showing income of Rs.2,68,930/- but had not provided any balance sheet. The bank statement revealed that the lender was not having sufficient balance and the amount was transferred as loan only after obtaining a credit entry in the bank account before the transfer of fund. The average balance before and after the amount was transferred through RTGS was meager amount only. In this case the identity and the creditworthiness of the lender is not proved. Mukeshbhai 750000/- The lender had filed the return of income showing K. Jain income of Rs.2,65,110/- but had not provided any balance sheet. The bank statement revealed that the lender was not having sufficient balance and the amount was transferred as loan only after obtaining a credit entry in the bank account before the transfer of fund. In this case the creditworthiness of the lender is not proved as the lender was not having sufficient balance in the bank statement. The average balance before and after the amount was transferred through RTGS was meager amount only. The creditworthiness of the lender was not proved. Bhumi J 500000/- The lender had filed the return of income showing Parmar income of Rs.2,69,070/-. The bank statement revealed that the lender was not having sufficient balance and the amount was transferred as loan only after obtaining a credit entry in the bank account before the transfer of fund. In this case the creditworthiness of the lender is not proved as the lender was not having sufficient balance in the bank statement. The average balance before and after the amount was transferred through RTGS was meager amount only. The creditworthiness of the lender was not proved. No confirmation was also filed.
ITA 561/SRT/2019/AY.2015-16 Dharmeshkumar M. Thummar Yatin P 500000/- The lender had filed the return of income showing Nayce income of Rs.2,64,650/-. The bank statement revealed that the lender was not having sufficient balance and the amount was transferred as loan only after obtaining a credit entry in the bank account before the transfer of fund. In this case the creditworthiness of the lender is not proved as the lender was not having sufficient balance in the bank statement. The average balance before and after the amount was transferred through RTGS was meager amount only. The creditworthiness of the lender was not proved. No confirmation was also filed. Hiren P 500000/- The lender had filed the return of income showing Nayee income of Rs.2,61,400/-. The bank statement revealed that the lender was not having sufficient balance and the amount was transferred as loan only after obtaining a credit entry in the bank account before the transfer of fund. In this case the creditworthiness of the lender is not proved as the lender was not having sufficient balance in the bank statement. The average balance before and after the amount was transferred through RTGS was meager amount only. The creditworthiness of the lender was not proved. No confirmation was also filed. Dharmeshku 800000/- The lender had filed the return of income showing mar M. income of Rs.2,59,130/-. The bank statement revealed Thummar that the lender was not having sufficient balance and HUF the amount was transferred as loan only after obtaining a credit entry in the bank account before the transfer of fund. In this case the creditworthiness of the- lender is not proved as the lender was not having sufficient balance in the bank statement. The average balance before and after the amount was transferred through RTGS was meager amount only. The creditworthiness of the lender was not proved. 6.1.3. The above facts show that all the lenders did not have the capacity to give unsecured loans to the assessee which is evident from the examination of their bank statements. The lenders have received funds for single transaction just before the loan amount was given in their bank account and were maintaining meager balances in their bank accounts. Mere filing of confirmation and copy; of the return of income does not prove the transactions to be genuine. The primary onus is on the assessee to prove the source of cash credits supported with evidences………” 12. We note that before us assessee has submitted additional evidences, in respect of three Lenders. The Ld. DR submitted that in respect of three Lenders, assessee has submitted especially additional evidences under Rule 29 of the ITAT Rules, 1962, therefore, these additional evidences have to be examined by the
ITA 561/SRT/2019/AY.2015-16 Dharmeshkumar M. Thummar Assessing Officer, hence matter may be remitted back to the file of the Assessing Officer. About remaining four Lenders, we find merit in the submission of ld DR to the effect that assessee has also failed to prove genuineness and creditworthiness of the transactions, therefore we are of the view that one more opportunity should be granted to the assessee to plead his case before assessing officer. Therefore, we deem it fit and proper to set aside the order of the ld. CIT(A) and remit the matter back to the file of the assessing officer to adjudicate the issue afresh on merits. For statistical purposes, the appeal of the assessee is treated as allowed.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order is pronounced on 23/11/2022 by placing the result on the Notice Board.
Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat �दनांक/ Date: 23/11/2022 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat