Bhaveshbhai Arvindbhai Buha, Surat V. Dy. Commissioner of Income Tax, Central Circle -2, , Surat

ITA 9/SRT/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0580 (ITAT-SURAT)
• Duration Of Justice: 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-10-2022
• Assessment Year: 2014-2015
• Appeal Filed On: 18-01-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; Assessment record; Onus to prove
• Section: 131; 68; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH (SMC), SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No. 09/Srt/2022 (Assessment Year: 2014-15) (Physical hearing) Shri Baveshbhai Arvindbhai Buha, 37, Nirmalnagar Society, Nr. Sarthana Jakatnaka, Varachha Road, Surat. PAN No. AIDPB 1316 R Vs. D.C.I.T. Central Circle-2, Surat. Appellant/ assessee Respondent/ revenue Assessee represented by Shri Ashwin K Parekh, CA Department represented by Shri J.K. Chandani, Sr.DR Date of hearing 17/10/2022 Date of pronouncement 17/10/2022 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal under section 253 of Income-tax Act (Act) by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals)-4, Surat (hereinafter referred as the ld. CIT(A)] dated 09/12/2021 for the Assessment Year (AY) 2014-15. The assessee has raised following grounds of appeal: “1. The learned Commissioner of Income Tax (Appeals) has grievously erred in law and on facts in confirming the addition of Rs. 9,75,000/- u/s 68 of the Act without appreciating the evidences submitted and simply relying on non-producing depositors. The addition of Rs. 9,75,000/- should therefore be deleted. 2. The appellant reserves the right to add, alter, modify, amend or withdraw any of the grounds of appeal before hearing.” ITA No. 09/Srt/2022 Sh. Baveshbhai Arvindbhai Buha Vs DCIT 2 2. Brief facts of the case are that the assessee is in the business of investment in agriculture land, dealing in non-agriculture land and agricultural activities and also partner in a firm which is carrying business of construction and development. The assessee filed his return of income for the A.Y. 2014-15 on 30/11/2014 declaring income of Rs. 17,21,860/-. The case of assessee was selected for scrutiny. During the assessment, the Assessing Officer noted that the assessee has shown unsecured loan from thirty-nine parties. To verify the genuineness of transactions, the Assessing officer issued notice under Section 133(6) of the Act, to all the parties. The Assessing Officer noted that the notice sent under Section 133(6) of the Act were returned back in respect of 16 parties. The assessee was asked to produce all such sixteen (16) parties on or before 26/09/2016. The assessee furnished latest address of all those parties and reply therof. The Assessing officer randomly chose eight parties for producing them before him. Out of eight parties, the assessee could not produce two of them namely Dayalal J. Barot (HUF) and Vaishaliben J. Doshi. The Assessing Officer further noted that Dayalal J. Barot (HUF) paid Rs. 4.75 lacs and Vaishaliben J. Doshi paid Rs. 5.00 lacs as unsecured loan to the assessee. The Assessing Officer issued show cause notice as to why such unsecured loan from these two parties, should not be treated as unexplained cash credit. The Assessing Officer held that the ITA No. 09/Srt/2022 Sh. Baveshbhai Arvindbhai Buha Vs DCIT 3 assessee failed to prove such parties and thus failed to prove the identity of the persons, genuineness of the transactions and creditworthiness of the creditors and added aggregate unsecured loan of Rs. 9.75 lacs to the income of the assessee under Section 68 of the Act. 3. On appeal before the ld. CIT(A), the assessee filed detailed written submission. The submission of assessee are duly recorded in para 5.1.3 of his order. In the submission, the assessee stated that he has availed loan from both the parties. The assessee furnished all the evidences consisting of identity of lenders, genuineness of transactions and creditworthiness of creditors. The Assessing Officer not accepted such evidence and directed to produce the parties. The Assessing Officer made addition on the basis of his conclusion that two lenders were not produced before him. The assessee informed the Assessing Officer that lender has stated to assessee that they will appear only on the summon issued to them under Section 131 of the Act. The Assessing Officer has not given any finding on the identity of lender, genuineness of transaction and their creditworthiness. The assessee also submitted that he has repaid the loan in subsequent year and relied upon the decision of Hon’ble Gujrat High Court in the case of CIT Vs. Ayachi Chandrashekhar Narsangji in Tax Appeal No. 992 of 2013, wherein it was held that if the amount is repaid in the subsequent financial year and the ITA No. 09/Srt/2022 Sh. Baveshbhai Arvindbhai Buha Vs DCIT 4 department has accepted the repayment, no addition under Section 68 can be made. The assessee has repaid the loan amount in the subsequent year and furnished the ledger account showing repayment. 4. The ld. CIT(A) after considering the submission of assessee, treated the submission of assesse as additional evidence under Rule 46A of the Income Tax Rules, 1962 (in short, the Rules). The ld. CIT(A) further took his view that the assessee has not filed any application for admission of additional evidence and in absence of proper application for admission of additional evidence, such evidence cannot be entertained. The assessee has not explained sufficient reason, which prevented the assessee from filing details before the Assessing Officer. The ld. CIT(A) after referring the provisions of Rule 46A of the Rules, held that the assessee is required to satisfy first appellate authority that he has fulfilled the condition laid down in Rule 46A. On such conclusion, the ld. CIT(A) held that the additional evidence produced by assessee are not admitted and accordingly, dismissed the appeal of assessee. Further aggrieved, the assessee has filed the present appeal before the Tribunal. 5. I have heard the submission of learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the revenue and have gone through the orders of the lower ITA No. 09/Srt/2022 Sh. Baveshbhai Arvindbhai Buha Vs DCIT 5 authorities. The ld. AR of the assessee submits that he has furnished all the evidences before assessing officer to discharge his onus to prove the identity of lenders/depositors, genuineness of transactions and creditworthiness of creditors. The Assessing Officer simply made addition by taking a view that two parties were not produced by the assessee. The Assessing Officer has not issued any summon or notice to such parties. Before the ld. CIT(A), the assessee explained that both the parties insisted that they would appear only on the summons of Assessing Officer under Section 131 of the Act. The assessee requested the Assessing Officer to issue summon under Section 131 to enforce their attendance. The assessee again furnished complete details including PAN number, confirmation of bank, copy of bank statement, ITR of both the lenders. No adverse finding on such evidences were given by the ld. CIT(A). The ld. CIT(A) treated the evidence, which were already provided to the Assessing Officer, as an additional evidence under Rule 46A of the Rules. It is not the case of assessee that he filed any application under Rule 46A of the Rules or that any additional evidence was filed by assessee. The ld. AR submits that the Assessing Officer by presuming the fact that the assessee has filed additional evidence, such additional evidence was not admitted and dismissed the appeal of assessee without adjudicating ITA No. 09/Srt/2022 Sh. Baveshbhai Arvindbhai Buha Vs DCIT 6 the issues on merit. The ld. AR of the assessee submits that the matter may be remanded back to the ld. CIT(A) to adjudicate the issue on merit. 6. On alternative and without prejudice submission, the ld. AR of the assessee submits that the loan taken from both the parties were paid in subsequent financial year. The repayment of loan had been accepted in subsequent year without any variance. Once repayment is accepted, the receipt of loan cannot be disputed by the lower authorities. To support his submission, the ld. AR of the assessee relied upon the decision of Hon’ble Jurisdictional High Court in the case of CIT Vs. Ayachi Chandrashekhar Narsangji (supra). The ld. AR submits that the case of assessee has good case on merit. 7. On the other hand, the ld. Sr. DR for the revenue supported the orders of the lower authorities. The ld. Sr. DR submits that the notices sent to both the parties were returned unserved and the precise reason for Assessing Officer to ask for production of parties before him for verification. Had the notices been served on the address given by assessee. The Assessing Officer would not have insisted for their personal presence. The assessee was bound to produce such parties for verification. No evidence about their bank details and of return of unsecured loan was produced before the Assessing Officer. Since such evidence was produced for the first time, the ld. CIT(A) treated such evidence as additional evidence. The ld. CIT(A) after detailed ITA No. 09/Srt/2022 Sh. Baveshbhai Arvindbhai Buha Vs DCIT 7 discussion, dismissed the appeal of assessee. The ld Sr DR for the revenue prayed for dismissal of appeal. 8. I have considered the submissions of both the parties and have gone through the orders of lower authorities carefully. I find that the Assessing officer made addition in respect of loan of two parties only on the ground that these two parties were not produced by the assessee. The Assessing Officer nowhere mentioned that the assessee has not furnished the names, addressed, proof of address or evidence regarding genuineness of transaction or creditworthiness. This sole basis for disallowance was non- production of two creditors. The assessee claimed unsecured loans from 39 parties, out of which loan from 37 parties was accepted by assessing officer. The Assessing officer even has not bothered to mention a total quantum/aggregate of unsecured loan from 39 parties. Before the ld. CIT(A), the assessee besides the other contention, contended that he has furnished the evidence of identity, creditworthiness and genuineness of loan and requested the Assessing Officer to enforce the attendance of parties by issuance of summon. The ld. CIT(A) instead of verifying the fact or seeking any confirmation or remand report from the Assessing Officer or verifying assessment record, took his view that the assessee has furnished additional evidence and the assessee does not fulfil the condition laid down in Rule 46A ITA No. 09/Srt/2022 Sh. Baveshbhai Arvindbhai Buha Vs DCIT 8 of the Rules. On careful perusal order of ld. CIT(A), I find that it was not the case of assessee that he is filing additional evidence or that he failed to produce such evidence before the Assessing Officer. In my view, the ld. CIT(A) proceeded on wrong footing by taking his view that the assessee has filed additional evidence. I further find that the ld. CIT(A) has not examined the issue on merit. The ld. CIT(A) failed to appreciate that when the assessee has substantiated the loan from remaining 37 parties and made a prayer to the Assessing Officer to enforce the attendance of lender, the ld. CIT(A) was not justified in confirming the addition on impression in his mind that the assessee has filed additional evidence. Therefore, I deem it proper to restore the appeal to the file of ld. CIT(A) to examine the issue afresh. Though, in my view, no additional evidence, as claimed by the ld. AR of the assessee is filed before the ld. CIT(A). Yet, the ld. CIT(A) still consider that such evidence was not available before the Assessing Officer, he will admit such evidence as the evidences have relevancy with the fact in issues and goes to the root of the addition and will be at liberty to call the remand report from the Assessing Officer and to decide the issue in accordance with law. 9. I find that the ld. AR of the assessee in alternative submission has raised a plea that the loan was repaid in subsequent financial year and relied upon ITA No. 09/Srt/2022 Sh. Baveshbhai Arvindbhai Buha Vs DCIT 9 the decision of Hon’ble Gujarat High Court in the case of CIT Vs. Ayachi Chandrashekhar Narsangji (supra). The ld. CIT(A) is also directed to consider such fact before deciding the issue. The assessee is also given liberty to file relevant evidence to substantiate such contention, if such evidence was not filed during the original assessment. In the result, the grounds of appeal raised by the assessee is allowed. 10. In the result, this appeal of assessee is allowed for statistical purposes. Order pronounced in the open court on 17th October, 2022 and the result was placed on notice Board. Sd/- (PAWAN SINGH) JUDICIAL MEMBER Surat, Dated: 17/10/2022 *Ranjan Copy to: 1. Assessee – 2. Revenue - 3. CIT(A) 4. CIT 5. DR 6. Guard File By order Sr.Private Secretary, ITAT, Surat