Lopa Chirag Shah, Ahmedabad V. ITO, Ward-5(2)(3), Ahmedabad

ITA 1800/AHD/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5597 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-04-2020
• Assessment Year: 2015-2016
• Appeal Filed On: 14-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 68; 143(3)

Judgement Text

, SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD ( CONVENED THROUGH VIRTUAL COURT ) BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 1800/AHD/2018 ( ASSESSMENT YEAR : 2015-16) SMT. LOPA CHIRAG SHAH 197, MANEKBAUG SOCIETY, AMBAWADI, AHMEDABAD - 380015 / VS. INCOME TAX OFFICER WARD 5(2)(3), NARAYAN CHAMBERS, NEAR NEHRU BRIDGE, ASHRAM ROAD, AHMEDABAD - 380009 ./ ./ PAN/GIR NO. : ALXPS5771Q ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI HIMANSHU GANDHI, A.R. / RESPONDENT BY : SHRI VIDHYUT TRIVEDI, SR. D.R. DATE OF HEARING 02/09/2020 !'# / DATE OF PRONOUNCEMENT 05/10/2020 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS)-5, AHMEDABAD (CIT(A) IN SHORT), DATED 0 5.06.2018 ARISING IN THE ASSESSMENT ORDER DATED 05.12.2017 PA SSED BY THE ASSESSING OFFICER (AO) UNDER S. 143(3) OF THE INCOM E TAX ACT, 1961 (THE ACT) CONCERNING AY 2015-16. ITA NO. 1800/AHD/18 [SMT. LOPA CHIRAG SHAH VS. ITO] A.Y. 2015-16 - 2 - 2. THE SUBSTANTIVE GROUND OF APPEAL RAISED BY ASSES SEE READS AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, THE LD. CIT(A) ERRED IN CONFIRMING ADDITION U/S 68 AMOUNT RS.24,50,000/- ON ACCOUNT OF UNSECURED LOAN. 3. BRIEFLY STATED, THE ASSESSEE ALONGWITH HER HUSB AND MADE INVESTMENT IN IMMOVABLE PROPERTY VALUED AT RS.2,42, 05,708/- AS FOLLOWS: (I) LOPA C SHAH RS.40,87,880/- (II) CHIRAG P SHAH RS.2,01,17,828/- IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, INQUIR Y ABOUT THE SOURCE OF INVESTMENT IN IMMOVABLE PROPERTY WAS MADE BY THE AO. IT WAS SUBMITTED BY THE ASSESSEE THAT ASSESSEE HAS TAKEN UNSECURED LOANS FROM VARIOUS PARTIES TO FINANCE THE INVESTMEN T MADE IN THE IMMOVABLE PROPERTY. THE AO HOWEVER FOUND THE CREDI TWORTHINESS OF FOUR PARTIES DETAILED HEREUNDER TO BE DOUBTFUL: SR. NO. NAME OF LENDER AMOUNT OF LOAN (IN RS.) TOTAL INCOME DISCLOSED IN A.Y. 2015-16 (IN RS.) CAPITAL BALANCE AS PER CAPITAL ACCOUNT (RS.) 1. SHILPI SHAH 3,50,000/- 2,19,120/- 54,33,376/- 2. SADHANA P SHAH 5,00,000/- 62,580/- 80,39,275/- 3. REENA P SHAH 5,00,000/- NIL 41,40,217/- 4. CHIRAG P SHAH HUF 11,00,000/- 34,930/- 28,73,831/- TOTAL 24,50,000/- THE AO DID NOT FIND THE EXPLANATION TOWARDS NATURE AND SOURCE OF CREDITS RECEIVED FROM ABOVE NAMED PARTIES TO BE SAT ISFACTORY AND CONSEQUENTLY, ADDED THE AGGREGATE SUM OF RS.24,50,0 00/- AS UNEXPLAINED CREDIT TO THE TOTAL INCOME DECLARED BY THE ASSESSEE WITH THE AID OF SECTION 68 OF THE ACT. ITA NO. 1800/AHD/18 [SMT. LOPA CHIRAG SHAH VS. ITO] A.Y. 2015-16 - 3 - 4. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE CIT(A) ALSO DID NOT FIND ANY MERIT IN THE EXPLA NATION OFFERED BY THE ASSESSEE. THE RELEVANT OPERATIVE PARA OF THE O RDER OF THE CIT(A) IS REPRODUCED HEREUNDER FOR READY REFERENCE: 3.3. DURING THE COURSE OF ASSESSMENT PROCEED INGS THE AO OBSERVED THAT THE ASSESSEE ALONGWITH HER HUSBAND SHRI CHIRAG SHAH MADE INVESTMENT IN IMMOVABLE PROPERTY VALUED AT RS.2,42, 05,708/-. AS REGARDS SOURCE OF INVESTMENT IN IMMOVABLE PROPERTY, THE ASSESSEE FURNISHED COPY OF ACCOUNTS OF UNSECURED LOANS WHICH SHE HAD TAKEN FOR PURCHASE OF PROPERTY ALONGWITH COPY OF BANK STATEME NTS AND COPY OF INCOME TAX RETURNS OF THE LENDERS. THE ASSESSEE IN HER BALANCE SHEET HAS SHOWN UNSECURED LOANS OF RS.32,58,00,000/-. ON FURTHER PERUSAL OF THE LOAN ACCOUNTS IN RESPECT OF THE ABOVE PARTIES F URNISHED BY THE ASSESSEE, IT IS SEEN THAT THE LOANS SHOWN TO HAVE B EEN TAKEN FROM THE FOUR PERSONS WERE FOUND DOUBTFUL AS THEY DID NOT HA VE THE MEANS TO PAY SUCH SUBSTANTIAL AMOUNT TO THE ASSESSEE. IN ALL CAS ES, THEIR CAPITAL ACCOUNTS FURNISHED BY THE ASSESSEE ARE NOT FOUND RE LIABLE AND ACCEPTABLE ESPECIALLY BECAUSE THEIR CAPITAL ACCOUNT DO NOT SHOW ANY WITHDRAWALS DURING THE YEAR FOR ADVANCING LOANS TO THE ASSESSEE. FURTHER THEY HAVE. NO PLAUSIBLE AND REASONABLE MEAN S TO ADVANCE SUCH AMOUNTS TO THE ASSESSEE AS COULD BE SEEN FROM THEIR RETURN OF INCOME WHICH SHOW VERY MEAGER INCOME DURING THE YEAR. THE AO ALSO OBSERVED THAT THE ASSESSEE HAS ALSO NOT PAID ANY INTEREST ON LOANS TO THESE PARTIES. THERE IS A COMMON PATTERN OF CREDITS IN TH EIR BANK ACCOUNTS. ALL THE AMOUNTS FOR THE LOANS TO THE ASSESSEE APPEA RED TO HAVE BEEN OBTAINED FROM THE SAME PARTY. THE AO ALSO OBSERVED THAT THE CREDITWORTHINESS OF THESE LOANS TO THE ASSESSEE IS FOUND DOUBTFUL. THE AO WAS ALSO REQUESTED TO PRODUCE THE PERSONS FOR VE RIFICATION OF GENUINENESS OF THEIR CREDITWORTHINESS FOR GIVING TH ESE SUBSTANTIAL LOANS TO THE ASSESSEE. HOWEVER, THE ASSESSEE FAILED TO PR ODUCE THESE PERSONS BEFORE THE AO. CONSIDERING ALL THESE FACTS, THE AO MADE THE ADDITION AMOUNTING TO RS.24,50,000/- U/S.68 OF THE I.T. ACT. DURING THE COURSE OF APPELLATE PROCEEDINGS ALSO THE APPELLANT HAS NOT SUBSTANTIATE HIS CLAIM WITH EVIDENCES. CONSIDERING THE ABOVE FACTS, THE AO IS JUSTIFIED IN MAKING THE ADDITION. ACCORDINGLY, THE ADDITION MADE BY THE AO IS CONFIRMED AND GROUND OF APPEAL IS DISMISSED. 5. FURTHER AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. 6. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEAR NED AR FOR THE ASSESSEE VEHEMENTLY CONTESTED THE ADDITIONS MAD E BY THE REVENUE AUTHORITIES AND CONTENDED THAT THERE IS NO JUSTIFICATION WHATSOEVER IN THE ACTION OF THE AO TO MAKE ADDITION S WITHIN THE ITA NO. 1800/AHD/18 [SMT. LOPA CHIRAG SHAH VS. ITO] A.Y. 2015-16 - 4 - SPHERE OF SECTION 68 OF THE ACT. TO SUPPORT ITS CA SE, THE LEARNED AR CONTENDED THAT ALL THE FOUR PARTIES FROM WHOM THE L OANS HAVE BEEN OBTAINED NAMELY SHILPI SHAH, SADHANA P. SHAH, REENA SHAH & CHIRAG SHAH HUF ARE FAMILY MEMBERS OF THE ASSESSEE AND NATURALLY THESE FAMILY MEMBERS HAVE EXTENDED HELP TO THE ASSE SSEE. THE LEARNED AR SUBMITTED THAT THE AO HAS WRONGLY DOUBTE D THE SOURCE AND CAPACITY OF THE LENDERS TO LEND MONEY TO THE AS SESSEE. THE LEARNED AR REFERRED TO THE BALANCE SHEET OF ONE S PEED CARRIER S BOMBAY PVT. LTD. WHICH IS STATED TO BE A FAMILY OW NED COMPANY. ADVERTING TO THE NOTES OF THE ACCOUNTS APPEARING AT PAGE NO.96 OF THE PAPER BOOK, IT WAS POINTED OUT THAT THESE LENDE RS HAD LENT MONEY TO THE FAMILY COMPANY IN THE EARLIER YEARS AND OWED MONEY FROM THE COMPANY AS ON 31.03.2014. THE MONEY/LOAN SO KEPT W ITH THE COMPANY WAS RECALLED WHICH FLOWED INTO THE HANDS OF THE ASSESSEE BY WAY OF LOAN. THE LEARNED AR ACCORDINGLY SUBMITT ED THAT IN THESE CIRCUMSTANCES WHERE THE SOURCE OF SOURCE OF LOAN ADVANCED TO THE ASSESSEE STANDS PROVED WITH DOCUMENTARY EVIDENCES, THE ANNUAL EARNING CAPACITY OF THE LENDERS IS NOT A JUSTIFIABL E CONSIDERATION FOR CHALLENGING THE PROPRIETY OF THE LOAN ADVANCES. TH E LEARNED AR ACCORDINGLY URGED FOR REVERSAL OF THE ADDITIONS MAD E UNDER S.68 OF THE ACT. 7. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE O BSERVATIONS MADE BY THE AO & CIT(A). 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE BONAFIDES OF LOANS ADVANCES BY FAMILY MEMBERS/HUF O F THE FAMILY AGGREGATING TO RS.24,50,000/- IS IN CONTROVERSY. W E STRAIGHTWAY NOTICE FROM THE ANNEXURES/NOTICE ANNEXED TO THE BAL ANCE SHEET OF SPEED CARRIER S BOMBAY PVT. LTD. THAT ALL THE FOU R PARTIES HAD OUTSTANDING DUES FROM THE COMPANY AS ON 31.03.2014. FOR INSTANCE, ITA NO. 1800/AHD/18 [SMT. LOPA CHIRAG SHAH VS. ITO] A.Y. 2015-16 - 5 - SHILPI SHAH HAD AN OUTSTANDING RECEIVABLE OF RS.10, 96,717/- AS ON 31.03.2014 WHEREAS NIL OUTSTANDING HAS BEEN SHOWN B Y THE COMPANY AS ON 31.03.2015. THUS, THE AFORESAID AMOUNT OF RS .10,96,717/- HAS BEEN RELEASED BY THE COMPANY TO THE LENDER HEREIN. SIMILAR IS THE POSITION FOR SADHANA SHAH WHERE OUTSTANDING OF RS.9 ,92,963/- HAS BEEN REDUCED TO NIL AND REENA SHAH WHERE OUTSTANDIN G AMOUNT OF RS.5,62,900/- WAS RELEASED IN FAVOUR OF THE LENDER. THE LOAN OF RS.20,47,691/- OF CHIRAG P. SHAH HUF WAS SIMILARLY REPAID BY THE COMPANY DURING THE YEAR. IN THE WAKE OF AVAILABILI TY OF FUNDS FROM A DEFINITE SOURCE, THE CAPACITY OF THE LENDERS TO L END MONEY TO THE ASSESSEE WHO HAPPENS TO BE A FAMILY MEMBER CANNOT B E DOUBTED. IN OUR VIEW, THE EXPLANATION OFFERED BY THE ASSESSEE T OWARDS THE BONAFIDES OF THE LOAN AND THE CAPACITY OF THE LENDE RS IS TO BE RECKONED AS SATISFACTORY WHEN SEEN ON THE TOUCHSTON E OF SECTION 68 OF THE ACT. HAVING REGARD TO THE FACTS OF THE CASE , WE ARE OF THE OPINION THAT THE AO HAS MIS-DIRECTED HIMSELF IN LAW AND ON FACTS IN INVOKING SECTION 68 OF THE ACT IN RESPECT OF THE LO ANS IN QUESTION. WE ACCORDINGLY REVERSE AND CANCEL THE ACTIONS OF TH E AO AND CIT(A) ON THE SCORE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMAR K EDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 05/10/2020 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT THIS ORDER PRONOUNCED ON 05/10/2020 ITA NO. 1800/AHD/18 [SMT. LOPA CHIRAG SHAH VS. ITO] A.Y. 2015-16 - 6 - 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56)