SHRI JAYANTILAL PATEL,RAIPUR vs. INCOME TAX OFFICER, WARD-2(2), RAIPUR

At the very outset of the hearing of the appeal, it transpires that the present appeal is time barred by 87 days. The reasons enshrined in the application reveals that the delay was caused because of circumstances which could neither be attributed to any deliberate conduct of the assessee-appellant, nor smacks of a lackadaisical approach on his part. The Ld. Departmental Representative (for short ‘DR’) did not raise any objection to the seeking of condonation of delay. After going through the application,

Succinctly stated, the assessee who was engaged in the business of sawing of timber etc. had filed his return of income for the A.Y.2017-18 on 10.01.2018, declaring an income of Rs.2,90,840/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act.

Assessment was, thereafter, framed by the A.O vide his order passed u/s.143(3) dated 05.12.2019 after, inter alia, re- characterizing the loan of Rs.2.20 lacs that was claimed by the assessee to have been received from his son, viz. Shri Ritesh Jayantilal Patel, as his unexplained cash credit u/s.68 of the Act.

Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without any success.

The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal.

I have heard the ld. authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions.

Controversy involved in the present appeal lies in a narrow compass, i.e., sustainability of the view taken by the lower authorities who had recharacterized the loan of Rs.2.20 lacs that was claimed by the assessee to have been received from his son, viz. Shri Ritesh Jayantilal Patel, as an unexplained cash credit u/s.68 of the Act. As is discernible from the records, the A.O in the course of the assessment proceedings observed that the assessee had claimed to have raised a loan of Rs.2.20 lacs from Shri Ritesh Jayantilal Patel. As the assessee on being called upon to substantiate the authenticity of the aforesaid loan transaction could place on record only a confirmation of the said lender, therefore, the A.O called upon him to explain as to why the amount in question may not be held as unexplained cash credit u/s.68 of the Act. On being called upon to place on record a copy of the return of income a/w. other supporting documents to substantiate the creditworthiness of the aforesaid lender, it was the claim of the assessee that as the income of Shri Ritesh Jayantilal Patel (supra) during the year under consideration

After having given a thoughtful consideration to the issue in hand, I find substance in the claim of the assessee of having raised a genuine loan from the aforesaid lender, viz. Shri Ritesh Jayantilal Patel (supra). Before proceeding any further, it would be relevant to point out that the lender is the son of the assessee and is a qualified MBA. Controversy involved in the present appeal hinges around the creditworthiness of the aforesaid lender, which, as per the A.O the assessee had failed to substantiate by placing on record cogent material in support thereof. Admittedly, confirmation of the aforesaid lender, viz. Shri Ritesh Jayantilal Patel (supra) was placed on record

Last but not the least, the fact that the assessee’s claim of having paid interest of Rs.55,844/- on the outstanding loan to the aforementioned lender, which had not been disallowed by the lower authorities clearly militates against the view taken by the lower authorities which had dubbed the loan transaction in question as bogus. Also, I am unable to comprehend that in case the A.O had certain reservation as regards the authenticity of the loan transaction under consideration, which had been confirmed by the lender, then, what stopped him from carrying out further verifications and arriving at a logical conclusion, instead of summarily and whimsically dubbing the transaction as bogus. Be that as it may, I am of the considered view that in the totality of the facts involved in the present case there is no justification on the part of the A.O to have held the amount of Rs.2.20 lacs as an unexplained cash credit u/s.68 of the Act. Accordingly, the order passed by the CIT(Appeals) is set-aside in terms of my aforesaid observation, with a direction to the A.O to vacate the addition of Rs. 2.20 lacs made u/s.68 of the Act. Thus, the Ground of appeal No.1 raised by the assessee is allowed in terms of the aforesaid observations.

In the result, appeal of the assessee is allowed in terms of aforesaid observations.