ASSISTANT COMMISSIONER OF INCOME TAX , CIR -1(3), , SURAT V. MR. IRSHAD YUNUS DHORAJIWALA, SURAT

ITA 127/SRT/2023

AI Insights

The case involves an appeal by the revenue against the decision of the CIT(A) which had deleted various additions made by the AO under the Income-tax Act, 1961 for the assessment year 2017-18. The AO had made additions on account of unexplained cash deposits, bogus purchases, and unexplained unsecured loans. The CIT(A) found that the assessee had provided sufficient evidence to substantiate the transactions and that the books of account were maintained properly. The Tribunal, after considering the arguments and evidence presented, upheld the CIT(A)'s decision and dismissed the appeal by the revenue.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 473300 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Next Hearing Date: 13-09-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 20-02-2023
• Other Referred Cases: Sumati Dayal vs. CIT, CIT vs. Durga Prasad More, CIT vs. Manoj Indravadan Chokshi, CIT vs. Kulwant Rai, S. R. Venkata Ratnam vs. CIT, Vinatha Madhusudan Reddy vs. ACIT, Rajchandra & Ors. vs. ACIT, CIT vs. Jai Kumar Bakliwal, CIT vs. Deen Dayal Choudhary, ITO vs. Smt. Pratima Ashar, CIT vs. Namastey Chemicals (P.) Ltd., DCIT vs. Gandhi Capital (P.) Ltd., CIT vs. Victory Spinning Mills Ltd., CIT vs. Ayachi Chandrashekhar Narsangji, PCIT vs. Ambe Tradecorp (P.) Ltd., Blessing Construction vs Income tax officer, CIT vs. Rohini Builders, CIT vs. Ranchod Jivabhai Nakhava, PCIT vs. D&H Enterprises, CIT vs. Apex Therm Packaging (P.) Ltd., ITO vs. Shanti Enterprise
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: RASESH SHAH
• Keywords: Set aside; Unexplained cash credit; Income from undisclosed sources; Bogus purchase; Source of fund; Bogus
• Section: 143(3); 142(1); 250; 251; 48; 68; 69A; 145; 72; 145(3)

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.127/SRT/2023 (Assessment Year: 2017-18) (Physical Hearing) The ACIT, Circle – 1(3), Surat Vs. Irshad Yunus Dhorajiwala, Plot No.19, Gulzar Row House, Sultaniya Zim Khana, Rander Road, Surat – 395009. èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AHTPD1075C (Appellant) (Respondent) Appellant by Shri Mukesh Jain, Sr. DR Respondent by Shri Rasesh Shah, CA Date of Hearing 13/09/2024 Date of Pronouncement 07/11/2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the revenue emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’], dated 23.12.2022 for assessment year (AY) 2017-18. 2. Grounds of appeal raised by the revenue are as under: “1. On the facts and in circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the gross profit addition of Rs.32,02,951/- and accepting the regular books of account without appreciating the fact that various discrepancies in the book results were pointed out by the AO. 2. On the facts and in circumstances of the case and in law, the ld.CIT(A) has erred in deleting the addition of Rs.77,65,917/- on account of unexplained money u/s 69A of the Income-tax Act, 1961made by the AO despite the fact that there was no details and documentary proof on record. 2 ITA No. 127/SRT/2023/A.2017-18 Irshad Yunus Dhorajiwala 3. On the facts and in circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs.60,00,000/- on account of unexplained cash credits made by the AO when the assessee failed to establish the creditworthiness of the depositors as well as genuineness of the credit during the course of assessment proceedings. 4. On the basis of the facts and circumstances of the case and in law, the ld. CIT(A) ought to have upheld the order of the Assessing Officer. 5. It is therefore prayed that the order of ld. CIT(A) may kindly be set aside that of the Assessing Office be restored. 6. The appellant craves leave to add, alter, amend and/or withdraw any round of appeal either before or during the course of hearing of the appeal.” 3. Ground No.1 raised by the assessee which relates to deletion of gross profit addition of Rs.32,02,951/-. 4. Facts of the case in brief are that assessee had filed his return of income for the year under consideration on 16.10.2017, declaring income of Rs.15,12,670/-. The case was selected for complete scrutiny. Various notices u/s.143(2) and 142(1) of the Act and show cause notice were issued and duly served on the assessee. Subsequently, after considering the reply of the assessee, assessment u/s 143(3) was completed on 13.12.2019 by determining total income at Rs.3,85,83,200/- by making the following additions: (i) addition on account of unexplained cash deposit of Rs.77,65,917/-, (ii) bogus purchases on account of bogus creditors Rs.96,95,613/- and (iii) unexplained unsecured loans of Rs.60,00,000/-. The Assessing Officer (in shot, ‘AO’) has also rejected the books of account u/s 145(3) of the Act and estimated the gross profit but he has not made separate addition on account of fall in gross profit because disallowance from purchases of Rs.96,95,613/- was made which compensated the fall in gross profit of Rs.32,02,951/-. Aggrieved by above additions, 3 ITA No. 127/SRT/2023/A.2017-18 Irshad Yunus Dhorajiwala assessee filed appeal before Ld. CIT(A) who, after considering the assessment order, reply of the assessee and various decisions on the issues of addition, has deleted all additions and allowed the appeal of the assessee. We shall discuss the ground-wise additions made by AO and the decisions of the Ld. CIT(A) in the following paragraphs: 4.1 Ground No.1 pertains to deletion of gross profit addition of Rs.32,02,951/- and accepting regular books of account maintained by assessee. This issue has been decided by the Ld. CIT(A) in ground nos.1 and 5 of the grounds raised before him. Since the gross profit addition was subsumed in disallowance of bogus purchases of Rs.96,95,613/-, no separate addition was made by AO. However, the Ld. CIT(A) has deleted addition of the bogus purchases which has not been contested by the revenue. Therefore, gross profit addition on standalone basis has been agitated before us. 4.2 During the course of assessment proceedings, the AO has found that the purchases prices of coal shown by the assessee was not uniform, even for the same party on the same day. He prepared comparative chart and noted that purchase rate on the same date varied between Rs.2,350/- to Rs.4,300/-, which is an abnormal variation of 83%. It was also observed that the entire purchase register is filled with such instances of varied purchase prices due to some unexplained factors. Further, the same applied to the sales made by the assessee, whereby coal has been sold at varied rates without any proper explanation. The AO asked assessee to furnish reasons for the wide variation in 4 ITA No. 127/SRT/2023/A.2017-18 Irshad Yunus Dhorajiwala rates of sale and purchase but the assessee failed to comply with the requirement and failed to upload any grade/quality wise details of coal. The assessee also failed to produce proper account books. The AO observed that in absence of quality and grade details, proper verification could not be undertaken regarding the sales and purchases. Hence, there is serious defect in the books of account which requires invocation of the provisions of section 145 of the Act. Section 145 of the Act puts the onus on the assesse to maintain the correctness and completeness of accounts regular method of accounting to the satisfaction of the AO. Since there were many defects as stated above, the AO has rejected the books of account u/s 145(3) of the Act. The AO found that the assesse has shown GP @ 2.18% for AY. 2017-18 and GP was shown @2.24% previous year i.e., 2016-17. Thus, there is fall in the GP of 0.06%. He rejected the books of account for the reasons stated above and determined the GP of the year at 2.60%, being average of GP shown for AY.2015-16 and AY.2016-17. The fall in GP was 0.42% (2.60% - 2.18%) which was applied on the turnover of Rs.76,26,07,411/- and Rs.32,02,951/- was added to the total income due to fall in rate of GP. However, no separate addition on account of fall in G.P was made due to telescoping of the above amount against addition on account of bogus purchase of Rs.96,95,613/-. 4.3 Aggrieved by the order of AO, the assessee filed appeal before Ld. CIT(A). The Ld. CIT(A) observed that there is very negligible fall of only 0.06% in the GP rate and only 0.01% in the NP rate which cannot be treated as an 5 ITA No. 127/SRT/2023/A.2017-18 Irshad Yunus Dhorajiwala abnormal variation, especially considering the fact that the amount of turnover, gross profit and net profit have increased substantially in the current year as compared to the preceding year. The Ld. CIT(A) has further observed that during the course of assessment proceedings, the appellant has furnished complete details of sales, purchases and stock, and the AO has not brought any material or evidence on record to show either unaccounted sales or bogus purchases or bogus expenses or suppression in closing stock. Hence, there is no justification for the AO rejecting the book result. The Ld. CIT(A) further observed that the purchases are fully supported by proper bills. Most of the purchases are imported purchases and the entire payments have been made through banking channel. The AO has failed to bring any material or evidence on record to prove that any of purchases is bogus. As regards the contention of AO that appellant has not maintained quality and quantity-wise records, the Ld. CIT(A) observed that the appellant has traded in only one item i.e., coal for which the complete quantitative details have been maintained by assessee and these details have been verified by the auditors who has furnished the details in Clause No. 35(a) of Form No. 3CD of the tax audit report. Thus, the Ld. CIT(A) held that AO was not justified in rejecting the book result of the appellant and hence, the addition of Rs.32,02,951/- made by the AO by rejecting the books of account of the appellant was deleted. 4.5 Aggrieved by the order of Ld. CIT(A), the Revenue filed appeal before the Tribunal. The Learned Senior Departmental Representative (Ld. Sr. DR) for 6 ITA No. 127/SRT/2023/A.2017-18 Irshad Yunus Dhorajiwala the Revenue strongly supported the order of AO. He submitted that the Ld. CIT(A) had not appreciated the fact observed by the AO that the entire purchase register/sales register were filled with variation of purchase/sales prices due to unexplained factors. The observation of the AO that quality and quantity-wise registers were not maintained by the assessee, has not been properly rebutted by the Ld. CIT(A). The AO has discussed the applicability of section 145 of the Act which was ignored by the Ld. CIT(A). 4.6 On the other hand, Learned Authorized Representative (Ld. AR) of the assessee strongly supported the order of CIT(A). He submitted that the reasons given by the AO for rejecting the book result and addition on account of fall in GP rate has been properly discussed by the CIT(A) before deleting the addition. He submitted that variation of price cannot be ground of rejection of the books of account. He also submitted that the fall in GP rate is only 0.06% and the fall in net profit is only 0.01%. On the other hand, turnover has increased significantly during the year under consideration. The assessee is following FIFO (first in, first out) method and the closing stock shown by the assessee has not been disputed. In view of the above, he requested that the order of CIT(A) may be upheld. 4.7 We have heard both the parties and perused the materials available on record. We find that the turnover of the assessee has increased substantially from Rs.32.61 Crore to Rs.76.26 Crore. We also find that the GP rate of the current year was 2.18% as against 2.24% of the preceding year. Thus, there is 7 ITA No. 127/SRT/2023/A.2017-18 Irshad Yunus Dhorajiwala negligible fall of 0.06%. Similarly, the fall in GP rate is only 0.01% (2.01% - 2.00%). We find that the gross profit has increased to Rs.1.66 Crores in the current year from Rs.0.73 Crores in the preceding year. Similarly, the net profit has increased to Rs.1.53 Crore from Rs.0.66 Crores in the preceding year. Thus, we agreed that the book results of the appellant have improved substantially in the current year. We also find that purchases claimed by the appellant are fully supported by proper bills and the payments thereon have been made through proper banking channel. Such finding of CIT(A) has not been disproved by the Revenue by bringing any material or evidence. The Ld. CIT(A) has also given a categorical finding that proper quantitative records and quality details are furnished in the tax audit report. On the other hand, the Revenue has failed to bring any material or evidence on record to show bogus purchase or bogus expenses or unaccounted sales or suppression in closing stock or defect in quantity of sales, purchases and stocks. In fact the CIT(A) has deleted addition of bogus purchases of Rs.96,95,613/- which has not been contested by revenue. Therefore, the finding of the CIT(A) that AO was not justified in rejecting the books of account of the appellant cannot be faulted with. Hence, rejection of books of account and addition of Rs.32,02,951/-, as made by the AO, is quashed and the deletion of above addition by the CIT(A) is upheld. 4.8 In the result, Ground No.1 raised by the Revenue is dismissed. 5. Ground No.2 pertains to addition of Rs.77,65,917/- on account of unexplained money u/s 69A of the Act. During assessment proceedings, the AO 8 ITA No. 127/SRT/2023/A.2017-18 Irshad Yunus Dhorajiwala observed that during the year under consideration, the assessee had deposited cash of Rs.1,39,00,000/- including cash amounting to Rs.12,50,000/- during demonetization period. On being asked, the assessee had submitted that withdrawals are to the tune of Rs.96,00,000/-, part of which have been re- deposited into the bank account. Further, cash of Rs.61,34,083/- was received from various parties. The AO observed that the cash withdrawn from bank in May, Sept and Oct. 2016 is an eye wash as the withdrawn cash would have been used for business purpose. The AO observed that no businessman would withdraw cash just to keep it with him. Also, it is not the case of assesse that he has given the cash as loans/deposits and has got it back. Hence, it was concluded that the withdrawn cash has been used for accounted /unaccounted purposes. To substantiate her view, the AO had called for the cash book; however, the assessee had not submitted any cash book. Hence, mere withdrawal of cash cannot establish that the same amount has been re- deposited into the bank. Further, the reason for doing so were also not satisfactorily furnished by the assessee, hence, the AO made addition of Rs.77,65,917/- [Rs.1,39,00,000 (-) Rs.61,34,083]. The AO also placed reliance upon the judgement of Hon'ble Apex Court in the case of Sumati Dayal vs. CIT (1995) 80 Taxman 89/214 ITR 801 (SC) and CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC). 5.1 In the appellate proceeding, the Ld. CIT(A) observed that AO has not been able to bring on record any instance or evidence or material, to show 9 ITA No. 127/SRT/2023/A.2017-18 Irshad Yunus Dhorajiwala incorrect cash receipts or incorrect cash payments by the appellant is fictitious. It has also been observed that it is a regular practice of the appellant to first withdraw cash from his bank accounts and subsequently, deposit the same in the bank accounts on later dates. Thus, the bank statements clearly support the appellant's explanation that he is required to maintain sufficient cash on hand to meet with contingencies which may arise due to outstation transportation of coal. The Ld. CIT(A) held that appellant has satisfactorily proved the source of cash deposited in his regular bank account. 5.2 The Ld. Sr. DR submitted that the assessee has failed to furnish the cash book during the course of assessment proceedings which may actually establish the cash position as on date. Further, in the assessment order the then AO has rightly placed the reliance upon the judgement of Hon'ble Apex Court in the case of Sumati Dayal vs. CIT (1995) 80 Taxman 89/214 ITR 801 and CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC); however, the Ld. CIT(A) has not commented upon the same. The reason of cash withdrawal and the re- deposition is still unanswered due to lack of cash book. Hence, the addition may be confirmed. 5.3 The Ld. AR, on the other hand, supported the order of CIT(A). He submitted that the assessee maintains regular cash book and bank book where the amounts withdrawn are duly reflected. The CIT(A) has discussed about the nature of assessee’s business and observed that he is required to maintain sufficient cash in hand to meet contingencies which may arise during 10 ITA No. 127/SRT/2023/A.2017-18 Irshad Yunus Dhorajiwala outstation transportation of coal. He further submitted that there is no finding of AO that cash available with the appellant was invested or utilized for any other purpose. Such contention was rightly accepted by CIT(A). The Ld. AR argued that the decisions in cases of Sumati Dayal (supra) and Durga Prasad More (supra) are not applicable to the case of assessee. On the other hand, he has relied on following decisions, viz: (i) CIT vs. Manoj Indravadan Chokshi, 50 taxman.com 419 (Guj.), (ii) CIT vs. Kulwant Rai, 291 ITR 36 (Del.), (iii) S. R. Venkata Ratnam vs. CIT, (1980) 48 CCH 619 (Kar.), (iv) Vinatha Madhusudan Reddy vs. ACIT, (2018) 54 CCH 151 (Mum – Trib.) and (v) Rajchandra & Ors., 121 TTJ 366 (Del – Trib.). 5.4 We have heard both the parties and perused the materials available on record. We have also deliberated the case laws relied upon by both sides. There is no dispute regarding the fact that the assessee is a trader of coal and to meet the transportation expenses, he is required to maintain certain level of cash on hand. It is also an undisputed fact that assessee has withdrawn cash of Rs.96,00,000/- from bank during the year under consideration. He has also received Rs.61,34,083/- from customers on account of sale proceeds. Thus, the cash available with the assessee was Rs.1,57,34,083/-. Out of the above cash balance, he has deposited Rs.12,50,000/- during demonetization period and Rs.1,26,50,000/- during non-demonetization period. Thus, total cash available with assessee was Rs.1,50,34,083/- against which he has deposited Rs.1,39,00,000/-. The assessee still had cash balance of Rs.11,34,083/- with 11 ITA No. 127/SRT/2023/A.2017-18 Irshad Yunus Dhorajiwala him after depositing of Rs.1,39,00,000/-. The AO has allowed the sale proceeds of Rs.61,34,083/- but added the balance of Rs.77,65,917/- [Rs.1,39,00,000 (-) Rs.61,34,083]. Thus, he has not considered plea of assessee that withdrawal of cash was used for redeposit. Neither AO nor Sr. DR have given any evidence or conclusive finding that the cash available by assessee was utilized or invested for any purpose. The addition made by AO is based only on presumption and not backed by any material or corroborative evidence. Hence, we do not find any infirmity in finding of CIT(A) that assessee has satisfactorily proved the source of cash deposited in his regular bank accounts. The decisions relied upon by Ld. AR in cases of Vinatha Madhusudan Reddy (supra) and Baldev Raj Charla (supra) are directly on the issue. In case of Vinatha Madhusudan Reddy (supra), it was held that if deposit in bank account was preceded by withdrawal of money from same bank, then source of funds was prima facie demonstrated or explained by assessee. If revenue wants to disbelieve plea of assessee, it must show that previous withdrawal of cash was not available with assessee on the date of deposit. As stated earlier, the revenue has not disproved the plea of assessee. In case of Baldev Raj Charla (supra), it was held that where there were sufficient cash withdrawal to cover the cash deposit in question, merely because there was time gap between withdrawal of cash and cash deposits, explanation of assessee could not be rejected and addition on account of cash deposit cannot be made. There is no reason why the ratio of 12 ITA No. 127/SRT/2023/A.2017-18 Irshad Yunus Dhorajiwala the above decisions would not apply to the present case. In view of the facts discussed above and decisions cited supra, the ground of revenue is dismissed. 5.5 In the result, Ground No.2 is raised by the Revenue is dismissed. 6. Ground No.3 pertains to deletion of addition of Rs.60,00,000/- on account of unexplained cash credit made by the AO when the assessee failed to establish creditworthiness of the depositor as well as genuineness of the transactions. During the assessment proceedings, the AO found that the assessee has claimed to have accepted huge unsecured loan of Rs 60,00,000/- from Shri Jayantilal J. Sarsavadiya. In this connection, the AO found that the lender was engaged in the business of motorcycle repairing. The lender does not have any capacity to lend such huge amount of money. The lender has failed to explain the source of the sums and has claimed that he has taken hand loans from other persons. Source of fund explained by the lender was vague and not supported with any evidence. The lender has not charged any interest on the loan. Thus, the AO came to the conclusion that the loans are nothing but assessee's own unaccounted income. Hence, he added Rs.60,00,000/- u/s 68 of the Act. 6.1 The Ld. CIT(A) has observed that the appellant has satisfied all the three ingredients of section 68 of the Act, i.e., (i) identity of the depositor, which gets proved from the name, address and PAN of the depositor and depositor personal appearance before the AO, (ii) genuineness of the transactions gets proved from the confirmation of account furnished by the depositor as also 13 ITA No. 127/SRT/2023/A.2017-18 Irshad Yunus Dhorajiwala the statement under oath of the depositor before the AO wherein he has confirmed to have given the loan to the appellant from his bank account, (iii) creditworthiness of the depositor gets proved from his ITR return and from the source of funds as explained by him to the AO. The Ld. CIT(A) further observed that the aforesaid loan of Rs. 60,00,000/- as received during the year has been fully repaid and squared off during the year. And therefore AO is not justified in adding the said loan. The CIT(A) relied on the decisions in the following cases, viz: (i) CIT vs. Jai Kumar Bakliwal, (2014) 45 taxmann.com 203 (Raj.), (ii) CIT vs. Deen Dayal Choudhary, (2017) 88 taxmann.com 475 (Raj.), (iii) ITO vs. Smt. Pratima Ashar, (2019) 107 taxmann.com 135 (Mumbai – Trib.), (iv) CIT vs. Namastey Chemicals (P.) Ltd., (2013) 33 taxmann.com 271 (Guj.), (v) DCIT vs. Gandhi Capital (P.) Ltd., (2022) 137 taxmann.com 75 (Surat – Trib.), (vi) CIT vs. Victory Spinning Mills Ltd., (2014) 50 taxmann.com 416 (Madras), (vii) CIT vs. Ayachi Chandrashekhar Narsangji, (2014) 42 taxmann.com 251 (Guj.), (viii) PCIT vs. Ambe Tradecorp (P.) Ltd., (2022) 145 taxmann.com 27 (Guj.) and (ix) Rajhans Construction (P.) Ltd. vs. ACIT, (2022) 140 taxmann.com 370 (Surat – Trib.). 6.2 Before us, the Ld. Sr. DR submitted that the lender does not have any capacity to lend such huge amount of money, as observed by the then AO. The lender has failed to explain the source of the sums and has claimed that he had taken hand loans from other persons. Source of fund submitted by the lender was vague and unsupported with evidence. Merely submitting the ITR, Bank 14 ITA No. 127/SRT/2023/A.2017-18 Irshad Yunus Dhorajiwala statement and PAN does not establish the creditworthiness of the lender. In the instant case the decision of Hon'ble Gujarat High Court in the case of Blessing Construction vs Income tax officer (tax appeal no. 16 of 2013) is squarely applicable. 6.3 On the other hand, the Ld. AR of the assessee supported the order of the CIT(A). He has reiterated the submission made before the CIT(A) and has also relied upon the decisions before the CIT(A). He submitted that the assessee has been able to explain the nature and source of the cash credit being loan of Rs.60,00,000/- received from Shri Navnit Jayantilal Sarsavadiya. He submitted that confirmation of the lender, his ITR, bank statement etc. have been given to the AO and CIT(A). The lender also attended before the AO and confirmed the loan given to the assessee. The Ld. AR submitted copy of the confirmation of accounts by the creditor showing that the amount has been repaid during the year. He therefore submitted that sicne the loan was repaid during the same year, it cannot be added as held in the cases of (i) Ayachi Chandrashekhar Narsangji (supra), (ii) Ambe Tradecorp (P.) Ltd. (supra), (iii) CIT vs. Rohini Builders [SLP(C) No.515 of 2002] (SC), (iv) DCIT vs. Rohini Builders, 256 ITR 360 (Guj.), (v) CIT vs. Ranchod Jivabhai Nakhava, (2012) 21 taxmann.com 159 (Guj.), (vi) PCIT vs. D&H Enterprises, (2016) 72 taxmann.com 91 (Guj.), (vii) CIT vs. Apex Therm Packaging (P.) Ltd., (2014) 42 taxmann.com 473 (Guj.) and (viii) ITO vs. Shanti Enterprise, (2016) 71 taxmann.com 275 (Guj.). 15 ITA No. 127/SRT/2023/A.2017-18 Irshad Yunus Dhorajiwala 6.4 We have heard both the parties and perused the materials available on record. We have also deliberated the case laws relied upon by both parties. There is no dispute regarding the fact that assessee had received loan of Rs.60,00,000/- during the year which was repaid during the year. The AO made the addition because the lender is not a man of means. He has required the assessee to produce the lender before him and upon production of the lender, he has recorded the statement. The appellant had furnished complete details and documentary evidences such as confirmation, PAN, bank statement of the depositors to prove the genuineness of the loan. After considering facts of the case as above and submission of the assessee, the CIT(A) has observed that appellant has furnished all the required details; thereby, the appellant has fully discharged the onus cast upon him u/s 68 of the Act. The lender had also personally appeared and confirmed about the impugned loan. Thus, assessee has satisfied all three ingredients of section 68 i.e., (i) identity of the depositors, (ii) genuineness of the transaction and (iii) creditworthiness of the lender. Therefore, relying on the decisions cited above, he held that the loan received by the appellant cannot be treated as unexplained cash credit u/s 68 of the Act. We do not find any infirmity in the order of CIT(A) because the assessee has satisfactorily explained the nature and source of the credits in his books of account maintained for the previous year. We further find that the assessee had fully repaid the loan of Rs.60,00,000/- during the year under consideration. It is seen from the confirmation letter that assessee had 16 ITA No. 127/SRT/2023/A.2017-18 Irshad Yunus Dhorajiwala received loan of Rs.40,00,000/-, Rs.10,00,000/- and Rs.10,00,000/- on 07.04.2016, 08.04.2016 and 15.03.2017 respectively from Shri Navnit Jayantilal Sarsavadiya. The assessee has repaid the amount through banking channel on 15.06.2016 (Rs.25,00,000/-), 25.07.2016 (Rs.25,00,000/-) and 17.03.2017 (Rs.10,00,000/-). Thus, the amount of Rs.50,00,000/- received in April, 2015 was repaid in June & July, 2016. Thereafter, he received Rs.10,00,000/- on 15.03.2017 which was repaid on 17.03.2017. Therefore, the assessee has fully repaid the loan taken by him in the current year itself. Therefore, following the decisions in the case of Ayachi Chandrashekar Narsangji (supra), Ambe Tradecopr (P.) Ltd. (supra) and the other decisions relied upon by the Ld. AR, such addition u/s 68 cannot be made. In case of Ayachi Chandrashekhar Narsangji (supra), the Hon’ble Gujarat High Court held that where Department had accepted repayment of loan in subsequent year, no addition was to be made in the current year on account of cash credit. The present case of the assessee is stronger because the loan has been repaid in the same year. The Hon’ble Gujarat High Court in case of Ambe Tradecorp (P.) Ltd. (supra) held that where assessee took loan from two parties and he has furnished requisite materials showing identity of the loan giver and that assessee was not beneficiary as loan was repaid in subsequent year, no addition u/s 68 could be made on account of such loan. The case of the assessee is fully covered by the decisions of the Hon’ble jurisdictional High Court of Gujarat. In view of the 17 ITA No. 127/SRT/2023/A.2017-18 Irshad Yunus Dhorajiwala above facts and authorities cited supra, we find that the CIT(A) has rightly deleted the addition made by the AO u/s 68 of the Act. 6.5 In the result, Ground No.3 raised by the Revenue is dismissed. 7. In the combined result, appeal of the Revenue is dismissed. Order is pronounced on 07/11/2024 in the open court. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 07/11/2024 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) / PCIT 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat "