SHRI JETHABHAI DANABHAI VADHER, SURAT V. ACIT, CIRCLE-3(3), SURAT

CO 17/SRT/2020

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which had deleted several additions made by the Assessing Officer under section 143(3) of the Income Tax Act, 1961, for the assessment year 2014-15. The additions pertained to unexplained investments in LIC policies, unexplained cash deposits in bank accounts, and unsecured loans. The CIT(A) had accepted the assessee's explanations and evidence, which the Revenue challenged in the Tribunal. The Tribunal examined the submissions, evidence, and the reasoning of the CIT(A) and upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301993 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 10 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-05-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 23-08-2020
• Other Referred Cases: ITO vs. Karnavati Petrochem Pvt. Ltd. [ITA No.2228/Ahd/2012]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Capital asset; Business income; Cost of acquisition; Set aside
• Section: 131; 68; 69; 143(3); 44AB; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A.L.SAINI, AM आयकरअपील सं./ITA No.142/SRT/2020 (िनधाŊरणवषŊ / Assessment Year: (2014-2015) & ᮧ᭜याᭃेप/Cross Objection No.17/SRT/2020 (a/o ITA No.142/SRT/2020) (Physical Court Hearing) Assistant Commissioner of Income Tax, Circle-3(3) Surat Room No.414,Aayakar Bhavan, Majura Gate, Surat-395001, Vs. Shri Jethabhai Danabhai Vadher B-29, Mahendra Park Society Opp. Kiran Motors parvat Patia, Surat- 395010 ̾थायीलेखासं./जीआइआरसं./PAN/GIR No.: ACLPV 1969 J (अपीलाथŎ /Assessee) (ŮȑथŎ/Respondent)/co-objector िनधाŊįरती की ओर से /Assessee by : Shri Mehul Shah, C.A राजˢ की ओर से/Respondent by : Shri Vinod Kumar, Sr-DR सुनवाई की तारीख/ Date of Hearing : 25/05/2023 घोषणा की तारीख/Date of Pronouncement : 26/06/2023 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the Revenue and Cross Objection (CO) filed the by the assessee, pertaining to assessment year 2014-15, are directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-3 Surat [‘CIT(A)’ for short], dated 06.02.2020, which in turn arises out of an assessment order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide, order dated 30.12.2016. 2. Grounds of appeal raised by the Revenue are as follows: Page | 2 ITA No.142/SRT/2020 & CO 17/SRT/2020 A.Y. 2014-15 Sh. Jethabhai D Vadher “1. Whether on facts and in law, the Ld. CIT(A) was justified in deleting the addition of Rs.1,26,630/- made by the AO on account of unexplained investment in LIC policies, by accepting the submission of the assessee that the investment of Rs.97,771/- was made by his spouse and investment of Rs.28,859/- was made in the next F.Y i.e. 2014-15 without considering the fact that the investment made by his spouse is not allowable as per law and also Rs.28,859/- was paid by the assessee on 28.03.2014 i.e., during the year under consideration itself? 2.Whether on facts and in law, the Ld. CIT(A) was justified in deleting the addition of Rs.48,94,000/- out of the addition made by the AO of Rs.61,94,000/- on account of cash deposit made by the assessee in Sutex Co-Op. Bank Ltd., by accepting the submission of the assessee that the source of the cash deposit is out of agricultural income, cash sales, etc., without appreciating the facts that the assessee could not explain the relevant entries with supporting documentary documents to prove the source of cash deposits during the assessment proceedings? 3. Whether on the facts and in law the Ld. CIT(A) was justified in deleting the addition of Rs.50,00,000/- made by the AO on account of bogus unsecured loan from Shri Ahmed Bobat, by accepting submission of the assessee that Shri Ahmed Bobat had confirmed that he had given money to the assessee for purchase of plot, without appreciating the fact that the assessee could not establish that the amount of Rs.50,00,000/- claimed to have been received from Shri Ahmed Bobat was for the purpose of sale of the plot with any documentary evidences?. 4. Whether on facts and in law the Ld. CIT(A) was justified in deleting the addition of Rs.25,71,000/- made by the AO on account of unexplained and unrecorded investment in immovable property, by observing that the assessee had purchased the land in F.Y. 2011-12 and the AO cannot make the addition for the year under consideration, without considering the fact the assessee had failed to disclose the said property in the balance sheet as on 31.03.2014? 5. Whether on facts and in law the Ld. CIT(A) was justified in deleting the addition of Rs.7,65,033/- out of the addition made by the AO of Rs.20,40,000/- on account of unexplained business receipts from sales of various plots, by allowing the benefit of cost of acquisition of the property sold at Rs.7,65,033/-, inspite of the facts that during the assessment proceedings, it was established that the assessee was engaged in the business of sale of plots and this receipt was over and above the income & expenses recorded in his regular books of accounts and the assessee is not eligible for the deduction of cost of acquisition? 6. Whether on facts and in law the Ld. CIT(A) was justified in deleting the addition of Rs.8,50,818/- made by the AO on account of unexplained interest expenses in respect of loan taken from HDB Financial Services, by accepting submission of the assessee that the net interest should be considered for the disallowance, without considering the fact that the assessee had shown huge amounts of other loans in his accounts and could not establish that against which loan the interest expenses of Rs.8,50,818/- was incurred with any supporting documentary evidences? Page | 3 ITA No.142/SRT/2020 & CO 17/SRT/2020 A.Y. 2014-15 Sh. Jethabhai D Vadher 7. Whether on facts and in law the Ld. CIT(A) was justified in deleting the addition of Rs.36,00,000/- made by the AO on account of unexplained loans taken from the Central Bank of India, has treated the loan from Bank as bogus u/s 68 which is bad in law, as the identity, genuineness and creditworthiness of the lender gets clearly established when the assessee has taken loan from nationalized bank, without considering the fact that the assessee had suppressed the above loans of Rs.36,00,000/- by not disclosing the same in his regular books of account?” 3. Grounds of appeal raised by the assessee in cross objection No.17/SRT/2020, are as follows: “1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in partly confirming the action of Assessing Officer by sustaining the addition of Rs.13,000,000/- out of total addition of Rs.61,94,000/- on account of alleged unexplained cash deposit in the bank account of the assessee u/s 68 of the Act. 2. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of Assessing Officer in making addition of Rs.7,00,000/- on account of alleged unexplained credits. 3. It is therefore prayed that addition made by the Assessing Officer and confirmed by CIT(A) may please be deleted or the matter may please be set aside to the file of CIT(A). 4. Assessee craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appellate order.” 4. Now, we shall take these grounds one by one. Ground No.1 raised by the Revenue relates to deleting the addition of Rs.1,26,630/- made by the assessing officer (AO) on account of unexplained investment in LIC policies. 5. Succinct facts qua the issue are that during the course of assessment proceedings, on verification of the details submitted by the assessee regarding the investment in LIC policies, it has been observed by the assessing officer that assessee has made total investment of Rs.2,31,465/- in LIC during the year under consideration, the details of the same are as follows: Sr. No. Police No. Premium paid by Premium/;half yearly/yearly Premium amount Total amount of premium paid (Rs) 1 862521201 Assessee YLY 1 x 1 16,651/- 16,651/- Page | 4 ITA No.142/SRT/2020 & CO 17/SRT/2020 A.Y. 2014-15 Sh. Jethabhai D Vadher 2 86501195 Assessee HLY 1 x 2 40,435/- 80,870/- 3 865011954 Assessee HLY 1 x 2 47,749/- 95,498/- 4 863408591 Assessee Yearly 1 x 1 28,859/- 28,859/- 5 862521202 Assessee Yearly 1 x 1 9,587/- 9,587/- Grand Total 2,31,465/- Therefore, Assessing Officer observed that since the assessee has made total investment of Rs.2,31,465/- in LIC during the year under consideration; however, the assessee has recorded only Rs.1,04,835/- in the computation of income forming part of the return of income for the year under consideration. Accordingly, investment in LIC of Rs.1,26,630/- [Rs.2,31,465 -Rs.1,04,835] is remained unexplained and unrecorded for the year under consideration. In view of these facts and circumstances of the case, the assessee, vide show cause notice of the Assessing Officer, dated 09.12.2016 was requested to show cause as to why the said amount of Rs.1,26,630/- [Rs.2,31,465 – Rs.1,04,835] being unexplained investment for the year under consideration, should not be treated as his unexplained investment u/s 69 of the Act and accordingly be added to his total income for the year under consideration, over and above, his income declared in the return of income for the year under consideration. 6. In response to the aforesaid show cause notice, the assessee, vide his letter dated 16.12.2016 has submitted his reply, which is reproduced below: “Regarding your proposed addition of Rs.1,26,630/- on account of unexplained investments u/s 69 of the Act for the investment in LIC policies, it is submitted that out of the total premium of Rs.2,31,465/- the assessee has shown Rs.1,04,835/- as premium paid in the computation of income. The remaining amount of Rs.97,771/ is paid by the spouse of the assessee Smt. Dakshaben Jethabhai Vadher and so the assessee has not claimed any deductions on account of the same. The said receipts of Rs.97,771/- along with the copy of bank passbook in which said payment is highlighted are enclosed herewith for your kind perusal. The balance amount of Rs.28,859/- is paid on 28.03.2014 and the cheque for the same was cleared in FY 2014-15. So the assessee has claimed the deduction for the said payment in the next financial year.” Page | 5 ITA No.142/SRT/2020 & CO 17/SRT/2020 A.Y. 2014-15 Sh. Jethabhai D Vadher 7. However, the Assessing Officer rejected the contention of the assessee and held that spouse of the assessee is a separate tax entity and is not supposed or required to pay any premium on behalf of the assessee as the assessee himself is also a separate tax entity for taxation purpose as per the prevailing provisions of the Act, therefore, Assessing Officer made an addition u/s 69 of the Act amounting to Rs.1,26,630/-. 8. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the Ld. CIT(A) who has deleted the addition made by the Assessing Officer. Aggrieved by the order of Ld. CIT(A), the Revenue is in appeal before us. Learned Sr-DR for the Revenue argued that LIC payment was made by the spouse of the assessee and not by the assessee himself. The spouse is a separate tax entity therefore LIC payment may be disallowed. On the other hand, Learned Counsel for the assessee, argued that LIC premium was paid by cheque by himself and partly by his wife, hence it is not an unaccounted investment therefore ld CIT(A) has rightly deleted the addition. 9. We have heard the rival parties and have gone through the material placed on record. We note that Ground No.1 raised by the Revenue pertains to addition of Rs.1,26,630/- u/s 69 of the Act. The ld CIT(A) observed that Assessing Officer has not disputed the premium of Rs.1,04,835/- claimed by the assessee in the computation. Out of the policies tabulated in assessment order totalling Rs.2,31,465/-, the payment on two occasions are made by spouse of the assessee being Rs.92,293/- dated 17.02.2014 and Rs.9,587/- dated 31.12.2013, which is also reflected in the bank statement of Daxaben Vadher (spouse of assessee) filed in the paper book at page No.52. The ld CIT(A) noted that if charges are removed from 92,293/-, it comes to Rs.88,184/- and hence the total premium paid by wife comes to Rs.97,771/- (88,184 + 9,587/-). The copy of LIC receipt also proves that the payment is Page | 6 ITA No.142/SRT/2020 & CO 17/SRT/2020 A.Y. 2014-15 Sh. Jethabhai D Vadher made by the spouse of assessee. The balance amount of Rs.28,859/- is paid on 28.03.2014 and ld CIT(A) noted that the cheque for the same was cleared in financial year (FY) 2014-15 i.e. on 02.04.2014, as evident from the bank account of assessee and so the assessee has claimed the deduction for the said payment in the next financial year. Therefore, ld CIT(A) noted that the payment made towards insurance policies was not unaccounted/unexplained investment, and hence ld CIT(A) deleted the addition. We have gone through above findings of ld CIT(A) and noted that the conclusions arrived at by the CIT(A) are correct and admit no interference by us. We, approve and confirm the order of the CIT(A) and dismiss ground No.1 raised by the Revenue. 10. Ground No.2 raised by the Revenue relates to deleting the addition of Rs.48,94,000/- out of the addition made by the Assessing Officer of Rs.61,94,000/- . 11. Succinct facts qua the issue are that during the course of assessment proceedings, on verification of the copies of bank statements of Savings Account No.248011-2003448, with the Sutex Co-Op. Bank Ltd., Parvat Patia Branch and Account No.2236893183 with the Central Bank of India, it was noticed by Assessing Officer that during the year under consideration there are huge amounts of cash deposits to the tune of Rs.48,94,000/- and Rs.13,00,000/- respectively were made by the assessee on various dates in the said bank accounts. It has further been noticed by Assessing Officer from the copy of Form No.3CD, forming part of Audit Report furnished by the assessee, during the course of assessment proceedings that the assessee was following "Mercantile" system of accounting and was having business of sale of finished fabrics during the year under consideration. During the course of assessment proceedings, the assessee has grossly failed to produce the cash book, bank, book and purchase and sales register for verification of Page | 7 ITA No.142/SRT/2020 & CO 17/SRT/2020 A.Y. 2014-15 Sh. Jethabhai D Vadher the nexus, if any, with the said amounts of huge impugned cash deposits under reference. The assessee was asked by the Assessing Officer to explain the issue of cash deposits along with documentary evidences. 12. In response to the aforesaid show-cause notice, the assesses, vide his letter dated 16.12.2016 and 15.12.2016 has submitted written submission before the AO, which are reproduced below: "As per reply dated 16.12.2016:- Regarding cash deposits of Rs.48,94,000/- in the account held with Sutex Co-op. Bank Ltd., we are giving explanation of the same vide our separate letter dated 15.12.2016. As per reply dated 15.12.2016:- “Regarding your proposal to make addition of Rs.48,94,000/- on account of unexplained cash deposits, it is submitted that the bank account under consideration held with Sutex Co-op. Bank Ltd. is reflected in the audited balance sheet. We have already submitted Audit report before your honour. For the purpose of source of cash deposits, we are enclosing cash book." As per reply dated 16.12.2016:- Regarding cash deposits of Rs.13,00,000/- in the account No.2236893183 with Central Bank of India, it is submitted that the assessee has made the deposits against the advance received from sale of plot at Bagumara, Dist Palsana although the assessee disclosed profit in the A. Y. 20016-17, but advance received earlier." 13. However, Assessing Officer rejected the plea of the assessee and held that explanation given by the assessee was not satisfactory therefore made an addition u/s 68 of the Act amounting to Rs.61,94,000/- [Rs.48,94,000 + Rs.13,00,000]. 14. On appeal, ld CIT(A) deleted the addition of Rs.48,94,000/- and confirmed the addition of Rs.13,00,000/-. Aggrieved by the order of ld CIT(A), the Revenue is in appeal before us and assessee is in cross objection before us. Page | 8 ITA No.142/SRT/2020 & CO 17/SRT/2020 A.Y. 2014-15 Sh. Jethabhai D Vadher 15. Learned DR for the Revenue argued that during the course of assessment proceedings, it was noticed by AO that assessee had deposited Cash of Rs.48,94,000/- in saving bank account with Sutex Co-Op. Bank Ltd, (A/c No. 248011-2003448) and Rs. 13,00,000/- with Central Bank of India ( A/c No. 2236893183). As the assessee failed to furnish the source of the said cash deposits, therefore, Assessing Officer added Rs. 61,94,000/- to the total income of the assessee. Therefore, addition made by the assessing officer may be sustained. 16. On the other hand, Ld Counsel for the assessee, pleaded that in respect of cash deposit of Rs.13,00,000/- made by the assessee, with Central Bank of India, is out of agricultural income, cash sales, etc., and the relevant entries were reflected in the cash book. The assessee had produced cash book for verification before the Assessing Officer and the Assessing Officer did not find any mistake or irregularity. Had the assessee`s cash book was wrong, the Assessing Officer would have rejected books of accounts of the assessee. Therefore, ld Counsel contended that since assessee`s books of accounts were not rejected therefore addition sustained by ld CIT(A) at Rs.13,00,000/- may be deleted. 17. We have heard both the parties. We note that ground No.2 raised by the Revenue pertains to addition of Rs.61,94,000/- on account of unexplained cash credits u/s 68 of the Act. The Assessing Officer observed that assessee has made cash deposits amounting to Rs.48,94,000/- in bank account held with Sutex Co-Op Bank Ltd and Rs.13,00,000/- in bank account held with Central Bank of India. The assessee is into the business of sale of finished fabrics. The ld Counsel for the assessee, contented that books of account of assessee are audited u/s 44AB of the Act and assessee has shown Sutex Co-Op Bank in audited balance sheet and hence the said Page | 9 ITA No.142/SRT/2020 & CO 17/SRT/2020 A.Y. 2014-15 Sh. Jethabhai D Vadher bank account is disclosed by the assessee. The Ld Counsel of the assessee has tabulated the cash deposits made on different dates in the submission and matched the dates and amount in cashbook and bank statement to prove that each cash deposits were disclosed. 18. We note that the ld CIT(A) after going through the Income Tax Return of earlier years observed that the cash book shows the opening balance of Rs.14,14,421/- which is tallied with “Schedule-Part A-BS” of ITR filed for preceding year i.e., AY 2013-14. Therefore, ld CIT(A) observed that the cash deposits in banks were from the cash book disclosed in the books of accounts. The ld CIT(A) noted that assessee has also provided the source of cash in cash book being agriculture income, cash sales, sale of car etc. During the year, the assessee has shown receipts in cash on account of agricultural activity of Rs.28,12,688/- and sale of car of Rs.6,00,000/- in cash and cash sales of Rs.10,25,250/- which was accepted by Assessing Officer inasmuch as Assessing Officer has not pointed out any defect in the cash book and has not rejected the books of account. Therefore, after considering the arguments and the submission of the assessee that the cash deposits of Rs.48,94,000/- in Sutex Co-operative are made from cash in hand from cash book and hence the addition made of Rs.48,94,000/- was deleted by ld CIT(A). We note that there is no infirmity in the conclusion reached by ld CIT(A), hence we approve and confirm the findings of ld CIT(A) and dismiss the ground No.2 raised by the Revenue. 19. In regard to addition of Rs.13,00,000/-, we note that during the appellate proceedings, the assessee has contended to give telescoping against the income declared in IDS. We also note that Assessing Officer has not pointed out any defect in the cash book and has not rejected the books of accounts, of the assessee, therefore, we delete the addition of Rs.13,00,000/-. Page | 10 ITA No.142/SRT/2020 & CO 17/SRT/2020 A.Y. 2014-15 Sh. Jethabhai D Vadher Therefore, ground No.1 raised by the assessee in cross objection No.17/SRT/2020 is allowed. 20. Ground No.3 raised by the Revenue relates to deleting the addition of Rs.50,00,000/- made by the Assessing Officer on account of unsecured loan. 21. Succinct facts qua the issue are that during the course of assessment proceedings, on verification of the copy of balance sheet as on dated 31.03.2014, it was noticed by the Assessing Officer that assessee had shown unsecured loan of Rs.78,25,918/-. For verification of the genuineness of the transactions, creditworthiness of the so-called lenders and for verification of identity of the lenders, a show-cause notice dated 10.08.2016 was issued by the Assessing Officer which was duly served upon the assessee. In response to the show-cause notice, the assessee has submitted its reply, which is reproduced below: “Assessee received Rs.50,00,000/- from Ahmed Bopat. The said person has confirmed the fact of tendering amount of Rs.50,00,000/- to the assessee before your honour. Assessee sold 4602.78 sq. mtrs land to the said person for Rs.20,40,000/-. The assessee didn't offer the short term capital gain on sale of land which works out to Rs.12,74,967/-. We have enclosed herewith working of short term capital gain for your kind perusal. This amount may please be added to the total income of the assessee. The remaining amount of Rs.29,60,000/- was received as advance. A copy of purchase deed and sale deeds of the land under consideration are also enclosed.” 22. However, the assessing officer has rejected the contention of the assessee and held that so-called unsecured loan to the extent of Rs.50,00,000/- from Shri Ahemad Bobat is bogus and therefore Assessing Officer made addition to the tune of Rs.50,00,000/-. 23. On appeal, ld CIT(A) deleted the addition therefore revenue is in appeal before us. Learned DR for the Revenue has argued a lot, however finally he has primarily reiterated the stand taken by the Assessing Officer, Page | 11 ITA No.142/SRT/2020 & CO 17/SRT/2020 A.Y. 2014-15 Sh. Jethabhai D Vadher which we have already noted in our earlier para and is not being repeated for the sake of brevity. On the other hand, ld Counsel for the assessee defended the order passed by the ld CIT(A). 24. We have heard both the parties.We note that ground No.3 raised by the revenue pertains to addition of Rs.50,00,000/- on account of unexplained credits. The undisputed facts are that the assessee has received Rs.50,00,000/- from Shri Ahmed Bobat during the year under consideration which has been shown by the assessee as unsecured loans in the balance sheet. The only basis of addition of the Assessing Officer is that the nature of payment of Rs.50,00,000/- received from Ahmed Bobat is “advance against purchase of plot from the assessee and not unsecured loan. The Assessing Officer has issued summons u/s 131 to Shri Ahmed Bobat and in response to the same, Ahmed Bobat has filed a letter dated 02.09.2016 in which he has confirmed that the has given money to the assessee for the purchase of plot. Based on these facts, the ld CIT(A) held that the Assessing Officer has made inquiry with the party u/s 131 of the Act and during the inquiry, the party has confirmed the fact of advance of money to the assessee and thus the impugned amount of Rs.50,00,000/- cannot partake the character of undisclosed income of the assessee. Even if the version of Assessing Officer is accepted, the change in nomenclature of unsecured loan to advance for purchase of plot would not invoke the provisions of Section 68 because it does not prove that the amount represents any unaccounted income of the assessee. The assessee also relied on various judicial precedents during the appellate proceedings. Based on this factual position, the ld CIT(A) deleted the addition. We do not find any infirmity in the conclusion reached by ld CIT(A), hence we dismiss ground No.3 raised by the Revenue. Page | 12 ITA No.142/SRT/2020 & CO 17/SRT/2020 A.Y. 2014-15 Sh. Jethabhai D Vadher 25. Now we shall take Ground No.2 raised by the assessee in his C.O, wherein the grievance of the assessee is that ld CIT(A) has erred in confirming the action of the Assessing Officer in making addition of Rs.7,00,000/- on account of alleged unexplained credits. 26. Succinct facts qua the issue are that during the assessment proceedings, the Assessing Officer observed that unsecured loans to the tune of Rs.7,00,000/- [out of the total of Rs.28,25,918/-] claimed to have been taken from Archana Maske, Daxaben Vadher and Harish Maske. The Assessing Officer issued the notice to the assessee to explain the transaction. In response to the notice of the Assessing Officer, the assessee has furnished the details before the Assessing Officer. However, the Assessing Officer has rejected the contention of the assessee and held that lenders have very meager income; hence creditworthiness cannot be established, therefore Assessing Officer made addition of Rs.7,00,000/-. 27. On appeal, ld CIT(A) confirmed the action of the Assessing Officer, therefore assessee is in cross objection before us. The ld Counsel for the assessee submitted that transaction was through cheque by way of banking channel hence genuineness cannot be doubted. On the other hand, ld DR relied on the findings of the Assessing Officer. 28. We have heard both the parties. We note that Ground No.2 raised by the assessee in his C.O, pertains to addition of Rs.7,00,000/-. We observe that assessee had received loan from Archana Harish Makse, Dakshaben Jettabhai Vadher and Harish G Maske of Rs.2,00,000/-, 3,00,000/- and 2,00,000/- respectively. As far as the assessee is concerned, he has submitted the following documents and evidences: (i) confirmation of accounts of transaction (ii) the copy of the bank account of the creditor shown the Page | 13 ITA No.142/SRT/2020 & CO 17/SRT/2020 A.Y. 2014-15 Sh. Jethabhai D Vadher transaction to the assessee. (iii) copy of income tax return filed (iv) copy of balance sheet in the case of the impugned unsecured loan parties. We note that by submitting these details and documents the assessee has discharged his onus to explain the credits. We note that Assessing Officer has not made any adverse finding in any of these documents and details submitted by the assessee, even though all these details were furnished by the assessee before him. The Assessing Officer ought to have examined all these details and refuted / rejected them, with a cogent adverse findings and discernable line of reasoning, in order to arrive at a conclusion and to make such addition, however, the Assessing Officer has failed to do so. Hence, we are not inclined to accept the contention of the Assessing Officer in any manner and hence the addition so made is deleted. Hence this ground No.2 of the assessee`s CO is allowed. 29. Ground No. 4 raised by the revenue relates to deleting the addition of Rs.25,71,000/- made by the Assessing Officer on account of unexplained investment in immovable property. 30. Brief facts qua the issue are that during the course of assessment proceedings, on verification of the copy of balance sheet for the year under consideration, it has been noticed by the Assessing Officer that the assessee has not disclosed the property located at Block No.459A, Revenue S.No.376, village Haldharu, Tal. Kamrej, Dist. Surat, admeasuring 15285 sq. Mtrs. in the balance sheet as on 31.03.2014 i.e. his regular books of accounts for the year under consideration. Therefore, Assessing Officer was of the view that assessee has suppressed the investments in the said land therefore made addition to the tune of Rs.25,71,000/-. 31. On appeal, ld CIT(A) deleted the addition, therefore Revenue is in appeal before us. The ld Counsel for the assessee submitted that land was Page | 14 ITA No.142/SRT/2020 & CO 17/SRT/2020 A.Y. 2014-15 Sh. Jethabhai D Vadher purchased in FY 2011-12, therefore, this transaction is not taxable in the assessment year 2014-15, hence ld Counsel relied on the findings of ld CIT(A). On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 32. We have heard both the parties. We note that Ground No. 4 raised by the Revenue pertains to addition of Rs.25,71,000/- on account of unexplained unaccounted and unrecorded investment. During the appellate proceedings, the ld CIT(A) observed that assessee had purchased 15617 sq. meter land by executing registered sale deed on 16.05.2011 for Rs.25,71,000/-. The copy of purchase deed is field in the paper book by the assessee and the same is verified by us. Based on these facts, ld CIT(A) held that the land was purchased in FY 2011-12, and hence the addition made by Assessing Officer in the year under consideration is totally uncalled for. We agree with the findings of ld CIT(A) and dismiss the ground no.4 raised by the Revenue. 33. Ground No. 5 raised by the Revenue relates to deleting the addition of Rs.7,65,033/- out of the addition made by the Assessing Officer of Rs.20,40,000/- on account of unexplained business receipts. 34. The ld DR for the Revenue submitted that this receipt is from sales of various plots, by allowing the benefit of cost of acquisition of the property sold at Rs.7,65,033/-, inspite of the facts that during the assessment proceedings, it was established that the assessee was engaged in the business of sale of plots and this receipt was over and above the income and expenses recorded in assessee`s regular books of accounts and therefore the assessee is not eligible for the deduction of cost of acquisition. On the other hand, ld Counsel defended the order passed by ld CIT(A). Page | 15 ITA No.142/SRT/2020 & CO 17/SRT/2020 A.Y. 2014-15 Sh. Jethabhai D Vadher 35. We have heard both the parties. We note that Ground No.4 pertains to the addition of Rs.20,40,000/- on account of unaccounted and unrecorded net business receipts. The assessee has argued during the appellate proceedings that he had total plot area of 15,617 sq.mtrs. at R No.376, Block No.459/A, Haldharu Kamrej, Surat and after sub plotting the assessee had sold an area of 4602.78 sq, mtrs to Ahmed Bobat for Rs. 20,40,000/- in 21 different sale deeds and the details of sale deeds are tabulated by the Assessing Officer at para 5.1.5 of the assessment order which mentions the Sale Deed No. Date of sale deed, amount and mode of payment as cash. The assessee has argued before ld CIT(A) that he has received Rs.50,00,000/- from Ahmed Bobat against the purchase of the said plots for area of 4602.78 sq mtr. The assessee in the Paper Book has filed the working of short term capital gain along with purchase deed of plot and sale deed after sub-plotting being executed and according to the said working, the short term capital gain comes to Rs.12,74,967/- after reducing the cost of acquisition on pro-rata basis. 36. Having considered the above facts, the ld CIT(A) observed that the Assessing Officer has made the addition on account of capital gain of Rs.20,40,000/- which is the sales consideration as per sale deeds without allowing the cost of acquisition which is naturally to be given as per the provision of Section 48. Further, on perusal of sample sale deeds of these plots, the ld CIT(A) noticed that the sale deed does not state the mode of payment being cash and hence the Assessing Officer has wrongly assumed the mode of payment as cash. However, it is also true that the assessee has failed to offer the resulting capital gains arising on sale of capital asset amounting to Rs.12,74,967/-. Therefore, ld CIT(A) confirmed the addition to the tune of Rs.12,74,967/- and the assessee got the relief of Rs.7,65,033/- (Rs.20,40,000 – Rs.12,74,967/-). This way, the ground of appeal raised by Page | 16 ITA No.142/SRT/2020 & CO 17/SRT/2020 A.Y. 2014-15 Sh. Jethabhai D Vadher the assessee was partly allowed by ld CIT(A). We have gone through the above conclusion reached by ld CIT(A) and observed that there is no infirmity in the order passed by ld CIT(A), therefore we confirm and approve the findings of ld CIT(A) and dismiss the ground No.5 raised by the Revenue. 37. Ground No.6 raised by the Revenue relates to deleting the addition of Rs.8,50,818/- made by the Assessing Officer. 38. The ld DR for the Revenue argued that this addition was made by Assessing Officer on account of unexplained interest expenses in respect of loan taken from HDB Financial Services. The ld CIT(A) deleted the addition by accepting submission of the assessee that the net interest should be considered for the disallowance, without considering the fact that the assessee had shown huge amounts of other loans in his accounts and could not establish that against which loan the interest expenses of Rs.8,50,818/- was incurred, with any supporting documentary evidences, therefore, ld DR contended that addition made by Assessing Officer may be confirmed. On the other hand, ld Counsel defended the order passed by ld CIT(A). 39. We have heard both the parties. We note that Ground No.6 raised by the Revenue relates addition of Rs.8,50,818/- on account of interest expenses. The assessee has incurred interest expense of Rs.8,50,818/- on loan taken from HDB Financial Services and the said loan was advanced to Himmatbhai Nathabhai Rakholitya, which was evidenced from copy of bank statement of Sutex Co-op Bank. On perusal of bank statement and loan ledger, it was observed by ld CIT(A) that the total amount of loan is Rs.97,58,647/- credited in the bank account on 04.07.2013 and immediately an amount of Rs.82,00,000/- is advanced to Himmatbhai Rakholiyaon, Page | 17 ITA No.142/SRT/2020 & CO 17/SRT/2020 A.Y. 2014-15 Sh. Jethabhai D Vadher which the assessee has received interest of Rs.8,81,203/- which is credited in the profit and loss account. The assessee relied on the judgment of ITO vs. Karnavati Petrochem Pvt. Ltd.[ITA No.2228/Ahd/2012] and contended before ld CIT(A) that if any disallowance is made, it should be net of interest and here the net interest is Nil as the interest income is more than the interest expenses. Based on this factual position, ld CIT(A) noted that only the net interest should be considered for the purpose of any disallowance. Further, the facts of the case are better as the assessee has also proved the nexus of loan taken and advance given to Himatbhai Rakholiya. Thus, considering the argument and submission of assessee, the ld CIT(A) deleted the addition of Rs.8,50,818/-. After going through the above findings of ld CIT(A), we note that there is no infirmity in the conclusion so reached by ld CIT(A), hence we confirm the findings of ld CIT(A) and dismiss ground No.6 raised by the Revenue. 40. Ground no.7 raised by the Revenue pertains to deleting the addition of Rs.36,00,000/- made by the AO on account of loans taken from the Central Bank of India. 41. Learned DR for the Revenue argued that loan from Bank has not been disclosed in the books of accounts therefore addition made by the Assessing Officer may be sustained. On the other hand, ld Counsel for the assessee defended the order passed by ld CIT(A). 42. We have heard both the parties. We note that ground No.7 pertains to addition of Rs.36,00,000/- on account of unexplained and unrecorded loans. The brief facts are that assessee had received agricultural income during the year under consideration. It was observed by the Assessing Officer that assessee had received loan of Rs.6,00,000/- from Central Bank of India, Page | 18 ITA No.142/SRT/2020 & CO 17/SRT/2020 A.Y. 2014-15 Sh. Jethabhai D Vadher Dindoli branch and Rs.30,00,000/- from Canara Bank, Bardoli Branch as the same was mentioned in the 7/12 agreement dated 16.04.2010 and 20.05.2015 respectively. The assessee strongly contended before ld CIT(A) that the factum of proposed addition was never brought to the notice of the assessee. No show cause notice was issued in regard to the proposed addition. The ld CIT(A) noted that the addition was based solely on the 7/12 agreement dated 16.04.2010 and 20.05.2015 in which details of mortgage was mentioned. The assessee argued that the loan was actually credited in subsequent AY and filed the documents to support the same. The ld CIT(A) observed that the Assessing Officer has treated the loan from bank as bogus u/s 68 which is bad-in-law possible as the identity, genuineness and creditworthiness of the lender gets clearly established when the assessee has taken loan from nationalized bank. The Assessing Officer has not given any finding that the loan amount represents any unaccounted income of the assessee. Thus, we note that loan taken from nationalized bank should not be treated bogus. Therefore, we are of the view that ld CIT(A) has rightly deleted the addition, hence we confirm the findings of ld CIT(A) and dismiss ground No.7 raised by the Revenue. 43. In the result, appeal of the Revenue is dismissed whereas assessee’s Cross Objection is allowed. Order pronounced in the open court on 26/06/2023 by placing the result on the notice board. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat/िदनांक/ Date: 26/06/2023 Dkp Outsourcing Sr.P.S. Page | 19 ITA No.142/SRT/2020 & CO 17/SRT/2020 A.Y. 2014-15 Sh. Jethabhai D Vadher Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat ue copy/