Shri Ashok Kumar, Kurukshetra V. ITO, W-1, Kurukshetra

ITA 1614/CHANDI/2019

AI Insights

This case involves an appeal by Shri Ashok Kumar against the order of the CIT(A), Karnal, which sustained the addition of Rs. 8,00,000/- under Section 68 of the Income Tax Act. The additions were made by the Assessing Officer (AO) during the assessment proceedings under section 143(3) r.w.s 153A, due to unexplained credits in the assessee's bank account. The Tribunal examined the evidences and arguments presented by both parties, including affidavits and bank statements, to determine the legitimacy of the unsecured loans received by the assessee.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127582 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 08-08-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 29-12-2019
• Other Referred Cases: Sitaram Ramchanddas Patel vs. ITO [2018] 95 taxxman.com 290
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 68; 143(3); 153A

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “ए” , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH ी आकाश द प जैन, उपा य एवं ी #व$म &संह यादव, लेखा सद+य BEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. VIKRAM SINGH YADAV, AM ITA NO. 1614/Chd/ 2019 Assessment Year : 2016-17 Shri Ashok Kumar House No. 1061/5A, Bhagwan Nagar Colony Kurukshetra, Haryana The ITO, Ward No-1 Kurukshetra, Haryana PAN NO: AKDPK0102C Appellant Respondent ! " Assessee by : None # ! " Revenue by : Smt. Amanpreet Kaur, Sr. DR $ % ! & Date of Hearing : 09/08/2023 '()* ! & Date of Pronouncement : 14/08/2023 आदेश/Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee against the order of the Ld. CIT(A), Karnal dt. 29/08/2019 wherein the assessee has challenged the sustenance of addition of Rs. 8,00,000/- under Section 68 of the Act. 2. At the outset, it is noted that the appeal was filed way back in the year 2019 and thereafter, the matter has been adjourned from time to time and even today, when the matter was fixed for hearing and called, none appeared on behalf of the assessee nor any adjournment application was filed. It is therefore decided to hear the matter basis the material available on the record and hearing the Ld. DR. 3. There is a delay of 52 days in filing the appeal as pointed out by the Registry and after considering the condonation application filed by the assessee and hearing the Ld. DR, the delay is hereby condoned and the appeal of the assessee is admitted for adjudication. 2 4. Briefly the facts of the case are that the assessment in this case was completed under section 143(3) r.w.s 153A dt. 31/12/2018. During the course of assessment proceedings, the AO observed that there are credit entries in the bank account maintained by the assessee wherein a sum of Rs. 5,00,000/- has been shown as received from Shri Sanjay Kumar and Rs. 3,00,000/- from Shri Vishwamitra Gaba. The assessee was asked to explain these transactions and in in response, the assessee submitted that he has taken unsecured loan from these two persons. As regard the credit worthiness of these persons, the assessee submitted an affidavit and bank statement in support of Rs. 3,00,000/- taken from Shri Vishwamitra Gaba and in response to Rs. 5,00,000/- received from Shri Sanjay Kumar, the assessee couldnt produce any evidence in terms of ITR or any documents explaining the credit worthiness of Shri Sanjay Kumar. Therefore the AO, not satisfied with the explanation and documentation so submitted, brought the both of these transactions to tax as unexplained credit under section 68 and addition of Rs. 8,00,000/- was made in the hands of the assessee. 5. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) who has sustained the said disallowance. 6. During the course of hearing, non appeared on behalf of the assessee, however, as per the grounds of appeal and the statement of facts submitted by the assessee, he has submitted that he has received a sum of Rs. 5,00,000/- from Shri Sanjay Kumar on 28/10/2015 and which was repaid within a month on 30/11/2015. It was submitted that the Ld. CIT(A) did not accept the bank statement and affidavit of the lender wherein there is no cash deposit entry near the date of transfer. The last entry of deposit was made on 19/05/2015 which is five months before the date of transfer. It was submitted that where the lender has given the amount out of his bank account and from his own funds and the assessee has also repaid the amount within a period of one month, the assessee has discharged the necessary onus cast on him and therefore no addition should be made in his hands. 6.1 Regarding Rs. 3,00,000/- received from Shri Vishwamitra Gaba, it was submitted that Shri Gaba was an agriculturist and paid such amount from his bank account on 3 29/03/2016 and there are no cash deposit near the date of transfer and lender has given loan from his own funds. 6.2 It was accordingly submitted that both the lender are financially sound and have given loan from their bank account and it can be seen from the bank statements that they have enough resources and credit worthiness to advance the said amount to the assessee. It was accordingly submitted that no addition should be made in the hands of the assessee and the addition so made by the Ld. CIT(A) be deleted. 7. The Ld. DR is heard who has relied on the orders of the lower authorities and our reference was drawn to the findings of the Ld. CIT(A) which read as under: “As far as the addition of Rs. 8,00,000/- u/s 68 of the IT Act is concerned, the A.O. made an addition as the creditworthiness of Sh. Vishwamitra Gaba (Rs. 3 lakhs) was not proved. In addition, for the Rs. 5 lakhs received from Sh. Sanjay, no explanation was offered regarding the said source. Merely filing an affidavit or a bank statement in such cases is not sufficient. The A.O. is perfectly justified in seeking proof of creditworthiness. The appellant has merely made a blanket statement that the said persons have confirmed that they have advanced the loan out of own funds. The Hon'ble Gujarat High Court in Sitaram Ramchanddas Patel vs. ITO [2018] 95 taxxman.com 290 had confirmed the addition when the assessee had failed to prove the capacity of the concerned persons to have advanced the said amount. Therefore, in view of this finding and following the judgment cited above, I confirm the addition of Rs. 8 lakhs.” 8. We have heard the rival contentions and purused the material available on record. In respect of unsecured loan transaction with Shri Sanjay Kumar, the assessee has submitted the affidavit of Shri Sanjay Kumar as well as copy of his bank statement. The affidavit so submitted affirms the genuineness of the unsecured loan transaction and has not been rebutted by the Revenue. Further, regarding the bank statement, it has been claimed that there was sufficient own funds of Shri Sanjay Kumar and out of which the money has been advanced to the assessee. We find that there is no adverse finding recorded by the lower authorities disputing the availability of sufficient own funds of Shri Sanjay kumar out of which the money has been advanced to the assessee. Therefore, we find that in the peculiar facts and circumstances of the case, the assessee has discharged the initial onus cast on him in terms of identity, creditworthiness and genenuiness of the unsecured loan transaction. Unless and until the Revenue disproves the documentation so submitted by the assessee, the credit by way of loan transaction cannot be termed as unexplained and the same cannot be 4 brought to tax u/s 68 of the Act. In the result, the addition of Rs 5 lacs is directed to be deleted. 9. Regarding Rs. 3,00,000/- received from Shri Vishwamitra Gaba, we find that there are merely assertions on part of the assessee and which are not supported by any documentation which has been brought on record. The fact that the money has been lend through the banking channels is not sufficient to discharge the onus. The sufficiency and availability of own funds as in case of Shri Sanjay has not been demonstrated in the instant case as there are no bank statements on record. Therefore, the initial onus cast on the assessee cannot be held to be discharged and we affirm the addition of Rs 3 lacs so made by the AO and confirmed by the ld CIT(A). 10. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open Court on 14/08/2023 Sd/- Sd/- आकाश द प जैन #व$म &संह यादव (AAKASH DEEP JAIN) ( VIKRAM SINGH YADAV) उपा य / VICE PRESIDENT लेखा सद+य/ ACCOUNTANT MEMBER AG Date: 14/08/2023 ( + ! , - . - Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. $ / CIT 4. $ / 0 1 The CIT(A) 5. - 2 ग 4 5 & 4 5 678 ग9 DR, ITAT, CHANDIGARH 6. ग 8 : % Guard File ( + $ By order, ; # Assistant Registrar