Shri Jignesh Hasmukhbhai Viradia, Vadodara V. The ITO, Ward-3(1)(2), Vadodara

ITA 545/AHD/2020

AI Insights

This case involves an appeal by Shri Jignesh Hasmukhbhai Viradia against the order of the Commissioner of Income Tax (Appeals-3), Vadodara, which confirmed additions made by the Income Tax Officer under Section 68 of the Income Tax Act, 1961, for unexplained cash credits amounting to Rs. 71,94,139 for the assessment year 2012-13. The primary contention was regarding two unsecured loans received from Shri Gaurav Viradia and Shri Alpesh Patel. The Tribunal examined the evidence presented, including bank statements, loan confirmations, and income tax returns of the lenders, to determine the genuineness and creditworthiness of the transactions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131411 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 12-06-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 10-11-2020
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 68; 250

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH Before: Ms. Annapurna Gupta, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member Shri Jignesh Hasmu khbh ai Viradia, 5, Ashish Park Society , Part-I, VIP Road, Karelibaug, Vadodara-3 90018 PAN: ABFP V1967K (Appellant) Vs Inco me Tax Officer, Wd-3(1)(2 ), Vadodara (Resp ondent) Asses see b y : Shri J igar Adhiy aru, A. R. , Revenue by : Shri Bhola ram Dev ashi, Sr. D. R. Date of hearing : 13-06 -2 023 Date of pronouncement : 05-07 -2 023 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeal-3), Vadodara, in proceeding u/s. 250 vide order dated 10/09/2020 passed for the assessment year 2012-13. 2. The assessee has raised the following grounds of appeal:- ITA No. 545/Ahd/2020 Assessment Year 2012-13 I.T.A No. 545/Ahd/2020 A.Y. 2012-13 Page No. Shri Jignesh Hasmukhbhai Viradia vs. ITO 2 “1. On the facts and circumstances of the case as well as law on the subject, the learned CIT (Appeals) has erred in sustaining an addition of Rs.71,94,139/-, in view of Section 68 of the Act, on account of unexplained cash credits. 2. It is therefore prayed that the above additions made by assessing Officer and confirmed by learned CIT (Appeals) may please be deleted. 3. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 3. Before us, the counsel for the assessee submitted that Ld. CIT(Appeals) has confirmed the additions under section 68 of the Act amounting to 71.94 lakhs, on account of unexplained cash credits. However, out of the above amounts confirmed by Ld. CIT(Appeals), the assessee would be only pressing/making arguments with respect to only two parties (Shri Gaurav Viradia and Shri Alpesh Patel) amounting to 37 lakhs approximately. 4. The brief facts of the case are that the assessee is the business of diamond trading and during the course of assessment proceedings, the AO observed that during the year under consideration, the assessee received unsecured loans from various parties, more particularly two parties i.e. Gaurav Viradia ( 29 lakhs) and Alpesh Patel ( 8 lakhs) and assessee has not been able to prove the identity, creditworthiness and genuineness of the parties. Accordingly, after taking the assessee’s submission on record, the AO confirmed the above two amounts received by the assessee, as unexplained income under section 68 of the Act. In appeal, Ld. CIT(Appeals) confirmed the addition made by the assessing officer with respect to the above 2 parties, with the following observations: I.T.A No. 545/Ahd/2020 A.Y. 2012-13 Page No. Shri Jignesh Hasmukhbhai Viradia vs. ITO 3 “5.3.1 In the case of loan of Rs.29,00,000/- received from Shri Guarav Viradia, confirmation, bank account and copy of return of income was filed. AO in his report has stated that hi this case, on verification of bank statement, it was noticed that deposits were made by way of transfer/cheques just before the alleged claim of loan transaction. It was further reported that an amount of Rs. 10,00,000/- was received by the appellant on 26.12.2011 and on the same day there was deposit of Rs.10,00,000/-. However, this amount was not reflected in the unsecured loan account. Apart from the immediate deposits and transfer no substantial balance was noted in fee account of Shri Gaurav Viradia. During the remand proceedings appellant was requested to produce Shri Gaurav Viradia for examination and verification and also notice was issued u/s 133(6). But Gaurav Viradia has neither attended before the AO nor produced any details or explanation with regard to immediate deposit of amounts in his accounts. Therefore, the genuineness and creditworthiness of this transaction is not proved. The onus is cast upon the appellant to prove the genuineness and creditworthiness of transaction reflected in his books, which he failed to discharge. The appellant's rejoinder to remand report on this issue has also been considered and found that nothing new is furnished to counter the report of AO. In view of this addition to the extent of Rs.29,00,000/-is upheld. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 5.3.3 In the case of loan of Rs.8,00,000/- from Shri Alpesh(Kavabhai Patel) the appellant has filed confirmation and bank statement. In the remand report, AO has drawn adverse inference with regard to this transaction. AO has stated that Shri Alpesh deposited cash prior to extending loan to appellant. On verification of the bank statement, AO in his report has contradicted the claim of appellant with regard to the date of receipt. Appellant had shown date of receipt of loan on 21.11.11 whereas in the bank account there is debit of 4,00,000/- on 12.11.11 without mentioning assessee's name against the entry. Thus, the identity, credit worthiness and genuineness of the transaction is not proved. In view of the foregoing discussion, addition of Rs.8,00,000/- is confirmed.” 5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals), confirming the additions with respect to the aforesaid two parties. With respect to the loan taken from Shri Gaurav Viradia ( 29 lakhs), the counsel for the assessee submitted that all relevant documents to establish the genuineness, identity and creditworthiness of the lender, Shri Gaurav Viradia were furnished before Ld. CIT(Appeals) and also before the AO in the remand proceedings. The counsel for the assessee submitted that I.T.A No. 545/Ahd/2020 A.Y. 2012-13 Page No. Shri Jignesh Hasmukhbhai Viradia vs. ITO 4 all transactions took place though the banking channels and further the return of income of Shri Gaurav Viradia were also placed on record. Besides the above, the confirmation of Shri Gaurav Viradia and the bank account of Shri Gaurav Viradia were also placed on record, which established the identity and creditworthiness of the lender. The counsel for the assessee drew our attention to pages 42-43 of paper book dated 05-01-2023 and submitted that the assessee had received a total amount of 33 lakhs from Shri Gaurav Viradia and had returned an amount of 4 lakhs to the above party. The counsel for the assessee submitted that in the instant facts, there is no allegation on part of the Department with respect to any cash deposits being made in the account of the lender before the amount was given to the assessee. Further, from the return of income of Shri Gaurav Viradia, it is evident that for all the year under consideration, he has filed return of income declaring income upwards of 6 lakhs. Further, it has not disputed by the Department that the assessee has also placed confirmation of Shri Gaurav Viradia on record. In view of the above, the addition is not liable to be sustained. In response, the Ld. DR submitted that in the remand proceedings, the AO issued notices to Shri Gaurav Viradia, however, despite the same he did not cause appearance before the assessing officer. 6. We have heard the rival contentions and perused the material on record. With respect to the aforesaid addition in the case of Shri Gaurav Viradia, we observe that the assessee has placed substantial material on record to prove the identity, creditworthiness and genuineness of the transaction. Admittedly, in the instant facts all transactions took place through banking channels, the confirmation of the lender Shri Gaurav I.T.A No. 545/Ahd/2020 A.Y. 2012-13 Page No. Shri Jignesh Hasmukhbhai Viradia vs. ITO 5 Viradia is on record, the returns of income filed by Shri Gaurav Viradia were also placed before the assessing officer for his records and the bank account of Shri Gaurav Viradia was also placed before the Department. The fact that in remand proceedings Shri Gaurav Viradia did not cause appearance in person, does not lead to the inference that the identity of lender or his creditworthiness has not been established by the assessee. In view of the above facts, we are of the considered view, that no addition under section 68 of the Act is called for in the case of Shri Gaurav Viradia. 6.1 So far as the other lender, Shri Alpesh Patel ( 8 lakhs) is concerned, Ld. CIT(Appeals) made a specific observation that cash was deposited in the bank account of the lender, immediately before extending the loan to the assessee. Further, even perusal of the bank statement of the lender shows certain apparent discrepancies, for which no plausible explanation has been given by the assessee. Therefore, in the instant facts, we are of the considered view that Ld. CIT(Appeals) has not erred in facts and in law in confirming the addition with respect to the aforesaid lender. The assessee has been unable to give any plausible explanation as to why cash was deposited in the bank account of the lender immediately prior to extending loan to the assessee. Also, there is an apparent contradiction in the stand taken by the assessee with respect to the date on which loan was extended to the assessee. Accordingly, looking into the facts of the instant case, in our considered view, the assessee has not been able to establish the creditworthiness or genuineness of the aforesaid transaction with Shri Alpesh Patel, and therefore the addition made by the Ld. CIT(Appeals) with respect to the aforesaid party is liable to be sustained. I.T.A No. 545/Ahd/2020 A.Y. 2012-13 Page No. Shri Jignesh Hasmukhbhai Viradia vs. ITO 6 7. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 05-07-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 05/07/2023 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/ आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद