M/S NATIONAL DIARY CORPORATION THROUGH ITS PARTNER SH. BHUPINDER SINGH,LUDHIANA vs. DCIT, CIRCLE, KHANNA

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ITA 1503/CHANDI/2017Status: DisposedITAT Chandigarh09 May 2018AY 2013-143 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the Assessing Officer should have conducted further inquiries, including summoning the lender, before making the addition. The assessee had discharged the primary onus by providing evidence of the loan transaction.

What were the facts?

The assessee received an unsecured loan of Rs. 10,00,000/-. The Assessing Officer made an addition under Section 68 for non-proof of creditworthiness of the lender. The CIT(A) confirmed the addition, stating the lender was not produced for examination.

What were the issues?

Whether the addition under Section 68 for an unsecured loan is justified when the assessee has provided evidence of the loan but the lender was not produced for examination by the Assessing Officer.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DIVISION BENCH’B’, CHANDIGARH

Before: SHRI SANJAY GARG & DR. B.R.R. KUMARShri. Bhupinder Singh

For Appellant: Shri. Aditya Grover, Ms. Meenakshi Gupta
For Respondent: Shri. Manjit Singh
Hearing: 03/05/2018Pronounced: 09/05/2018

PER DR.B.R.R.KUMAR, A.M. :

The present appeal has been filed by the Assessee against the order of the Ld. CIT(A)-2, Ludhiana dt. 31/07/2017.

2.

In the present appeal Assessee has raised the following grounds of appeal:

1.

That the order passed by Ld. CIT(A) and the assessment proceedings carried out by the A.O are bad both in term of de-jure and de-facto and hence deserves to be set-aside at the very out set. 2. That the Ld. CIT(A) has erred while confirming the addition of Rs. 10,00,000/- under section 68 of the Act, as made by the Assessing Officer in an arbitrary manner. 3. That the Ld. CIT(A) without considering the facts and circumstances of the matter has summarily and mechanically upheld the assessment order wrongly passed by the A.O. 4. That the Ld. CIT(A) has erred while confirming the addition despite of the fact that the Appellant has placed on record sufficient / cogent evidence with respect to proving the source of the unsecured loan of Rs. 10,00,000/- and has duly discharged the onus upon the Appellant.

5.

That both the Ld. CIT(A) and A.O had failed to discharge their duty as to disprove the version of the Appellant with respect to unsecured loan in question.

3.

The moot issue involved in this case is addition of Rs. 10 Lacs on account of unexplained unsecured loan from one M/s Onkar Rai & Co. Proprietor Mr. Vikas Mehta. During the assessment proceedings the Assessing Officer has asked to provide identity, genuineness of the transaction and credit worthiness of the lender of the loan. Before the Assessing Officer the assessee submitted that the loan has been taken through cheque and has confirmed the advancement of the loan and hence no addition is called for as the primary onus has been discharged.

Since the credit worthiness of the lender has not been proved, the Assessing Officer has made the addition of this loan amount under section 68 of Income Tax Act,1961.

4.

Before the Ld. CIT(A) the assessee submitted that the interests are also being paid regularly to the lender which gives credence to the loan and hence the addition needs to be deleted. However, the Ld. CIT(A) has confirmed the addition on the grounds that the assessee has not produced the lender for examination before the Assessing Officer.

5.

We have heard the arguments of both the parties, the Ld.AR contention that the lender is very influential person being a politician and it is beyond the control of the assessee to produce him before the Assessing Officer. It was also argued that having discharge the primary onus, it was incumbent on the Assessing Officer to make investigation as necessary from his side.

6.

Ld.AR has further contended that it was imperative for the Assessing Officer to summon the loanee and to record the statements under section 131 of Income Tax Act,1961. It is only thereafter that the totality of the material placed by the assessee before the Assessing Officer could be taken into consideration to determine the veracity thereof under section 68 of the Income Tax Act,1961 . Reliance is placed on the judgment of the jurisdictional High Court in the case of CIT Vs. N.P. Garodia 310 ITR 62 (P&H). He therefore requested that the issue be restored to the fie of the Assessing Officer to make necessary enquiries on this issue and decide the issue in accordance with the law.

7.

In these circumstances, we remand the matter back to the file of the Assessing Officer to conduct proper inquiries before bringing the amounts for taxation under section 68. The veracity of the genuineness and credit worthiness would depend on the outcome of the issue determined hereinabove.

8.

As a result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open Court.

Sd/- Sd/- (SANJAY GARG) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 09/05/2018 AG Copy to: 1.The Appellant, 2. The Respondent, 3. The CIT(A), 4. The CIT, 5. The DR

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