Shri Jayantilal Patel, Raipur V. Income Tax Officer, Ward-2(2), Raipur

ITA 94/RPR/2022

AI Insights

The case involves Shri Jayantilal Patel, who appealed against the order of the CIT(Appeals)/National Faceless Appeal Center, Delhi, which upheld the addition of Rs. 2.20 lacs as unexplained cash credit under Section 68 of the Income-tax Act, 1961. The addition was initially made by the Assessing Officer during the scrutiny assessment for the assessment year 2017-18, recharacterizing a loan received from his son as unexplained. The Tribunal, after considering the evidence and the submissions, concluded that the loan was genuine and the addition was unjustified.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 128081 (ITAT-RAIPUR)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-08-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 18-05-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 143(3); 143(2)

Judgement Text

आयकर अपीलȣय अͬधकरण Ûयायपीठ “एक-सदèय” मामला रायप ु र मɅ IN THE INCOME TAX APPELLATE TRIBUNAL RAIPURBENCH “SMC”, RAIPUR Įी रवीश स ू द, ÛयाǓयक सदèय के सम¢ BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER आयकरअपीलसं./ ITA No. 94/RPR/2022 Ǔनधा[रणवष[ / Assessment Year : 2017-18 Shri Jayantilal Patel, Ring Road No.2, Bhanpuri, Raipur-492 001 PAN : AEQPP9093L .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer-2(2), Raipur (C.G.) ......Ĥ×यथȸ / Respondent Assessee by : Shri Sakshi Gopal Agrawal, CA Revenue by : Shri G.N Singh, Sr. DR स ु नवाई कȧ तारȣख / Date of Hearing : 25.08.2022 घोषणा कȧ तारȣख / Date of Pronouncement : 23.11.2022 2 Shri Jayantilal Patel Vs. ITO-2(2), Raipur ITA No.94/RPR/2022 आदेश / ORDER PER RAVISH SOOD, JM The present appeal filed by the assessee is directed against the order passed by the CIT(Appeals)/National Faceless Appeal Center (NFAC), Delhi, dated 23.12.2021, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 05.12.2019 for the assessment year2017-18. The assessee has assailed the impugned order on the following grounds of appeal before me: “1. The Income Tax Officer, Ward-2(2), Raipur has been erred in making addition of Rs.2,20,000/- by considering unsecure loan as unexplained cash credits in bank u/s.68 of the I.T. Act, 1961. 2. The Income Tax Officer, Ward 2(2), Raipur has been erred for passing an order u/s.143(3) of IT Act that is bad in law as well as fact.” 2. At the very outset of the hearing of the appeal, it transpires that the present appeal is time barred by 87 days. The reasons enshrined in the application reveals that the delay was caused because of circumstances which could neither be attributed to any deliberate conduct of the assessee-appellant, nor smacks of a lackadaisical approach on his part. The Ld. Departmental Representative (for short ‘DR’) did not raise any objection to the seeking of condonation of delay. After going through the application, 3 Shri Jayantilal Patel Vs. ITO-2(2), Raipur ITA No.94/RPR/2022 I am satisfied with the reasons leading to the delay and condone the same after drawing support from the order of the Hon’ble Supreme Court of India in Suo Moto Writ Petition (Civil) No.3 of 2020 dated 23.03.2020, which had thereafter from time to time been modified by the Hon’ble Apex Court vide its order(s) dated 08.03.2021, 27.04.2021, 23.09.2021 and 10.01.2022. 3. Succinctly stated, the assessee who was engaged in the business of sawing of timber etc. had filed his return of income for the A.Y.2017-18 on 10.01.2018, declaring an income of Rs.2,90,840/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act. 4. Assessment was, thereafter, framed by the A.O vide his order passed u/s.143(3) dated 05.12.2019 after, inter alia, re- characterizing the loan of Rs.2.20 lacs that was claimed by the assessee to have been received from his son, viz. Shri Ritesh Jayantilal Patel, as his unexplained cash credit u/s.68 of the Act. 5. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without any success. 6. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal. 4 Shri Jayantilal Patel Vs. ITO-2(2), Raipur ITA No.94/RPR/2022 7. I have heard the ld. authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 8. Controversy involved in the present appeal lies in a narrow compass, i.e., sustainability of the view taken by the lower authorities who had recharacterized the loan of Rs.2.20 lacs that was claimed by the assessee to have been received from his son, viz. Shri Ritesh Jayantilal Patel, as an unexplained cash credit u/s.68 of the Act. As is discernible from the records, the A.O in the course of the assessment proceedings observed that the assessee had claimed to have raised a loan of Rs.2.20 lacs from Shri Ritesh Jayantilal Patel. As the assessee on being called upon to substantiate the authenticity of the aforesaid loan transaction could place on record only a confirmation of the said lender, therefore, the A.O called upon him to explain as to why the amount in question may not be held as unexplained cash credit u/s.68 of the Act. On being called upon to place on record a copy of the return of income a/w. other supporting documents to substantiate the creditworthiness of the aforesaid lender, it was the claim of the assessee that as the income of Shri Ritesh Jayantilal Patel (supra) during the year under consideration 5 Shri Jayantilal Patel Vs. ITO-2(2), Raipur ITA No.94/RPR/2022 did not exceed the prescribed limit, therefore, no return of income was filed by him. On a perusal of the bank account of the lender, it was observed by the A.O that immediately prior to advancing of the aforesaid impugned loan cash of an equal amount was deposited in his said bank account. Also, it was noticed by the A.O that the aforesaid lender over the period, i.e., 24.03.2014 to 05.01.2017 had maintained a miniscule balance in the range of Rs.3000/- to Rs.4000/- in his bank account. Considering the aforesaid facts, the A.O holding a conviction that the assessee had failed to substantiate the authenticity of the loan transaction in question, thus, held the amount in question as an unexplained cash credit u/s.68 of the Act. On appeal, CIT(Appeal) upheld the view taken by the A.O. 9. After having given a thoughtful consideration to the issue in hand, I find substance in the claim of the assessee of having raised a genuine loan from the aforesaid lender, viz. Shri Ritesh Jayantilal Patel (supra). Before proceeding any further, it would be relevant to point out that the lender is the son of the assessee and is a qualified MBA. Controversy involved in the present appeal hinges around the creditworthiness of the aforesaid lender, which, as per the A.O the assessee had failed to substantiate by placing on record cogent material in support thereof. Admittedly, confirmation of the aforesaid lender, viz. Shri Ritesh Jayantilal Patel (supra) was placed on record 6 Shri Jayantilal Patel Vs. ITO-2(2), Raipur ITA No.94/RPR/2022 by the assessee in the course of the assessment proceedings. Ostensibly, the confirmation the lender reveals an opening balance of Rs. 5,51,489/- (Cr.) as on 01.04.2016, and as such it reveals that the aforesaid lender had in the past too advanced an amount to the assessee. Apart from that, it transpires that the assessee during the year under consideration i.e on 30.01.2017 had vide an account payee cheque No.728610.repaid to the lender in question a part of the outstanding loan of Rs.75,000/- Also, the assessee had paid interest @9% on the outstanding loan to the aforesaid lender, which I find had not been disallowed by the A.O while framing the assessment. Considering the aforesaid facts, I am of a strong conviction that now when the lender, viz. Shri Ritesh Jayantilal Patel(supra) had duly confirmed the loan transaction in question by placing on record his confirmation, then the A.O could not have summarily discarded the same without placing on record any such material which would have disproved to the hilt the authenticity of the transaction in question. On the contrary, the fact that a part of the loan had been repaid by the assessee to the aforesaid lender during the year under consideration fortifies the authenticity of the loan transaction in question. Also, the fact that the opening balance of Rs.5,51,489/- (Cr.) on 01.04.2016 reflected in the account of the aforesaid lender clearly reveals beyond doubt the creditworthiness of 7 Shri Jayantilal Patel Vs. ITO-2(2), Raipur ITA No.94/RPR/2022 the aforesaid person, which as observed by me hereinabove had till date had not been doubted or dislodged by the department. 10. Last but not the least, the fact that the assessee’s claim of having paid interest of Rs.55,844/- on the outstanding loan to the aforementioned lender, which had not been disallowed by the lower authorities clearly militates against the view taken by the lower authorities which had dubbed the loan transaction in question as bogus. Also, I am unable to comprehend that in case the A.O had certain reservation as regards the authenticity of the loan transaction under consideration, which had been confirmed by the lender, then, what stopped him from carrying out further verifications and arriving at a logical conclusion, instead of summarily and whimsically dubbing the transaction as bogus. Be that as it may, I am of the considered view that in the totality of the facts involved in the present case there is no justification on the part of the A.O to have held the amount of Rs.2.20 lacs as an unexplained cash credit u/s.68 of the Act. Accordingly, the order passed by the CIT(Appeals) is set-aside in terms of my aforesaid observation, with a direction to the A.O to vacate the addition of Rs. 2.20 lacs made u/s.68 of the Act. Thus, the Ground of appeal No.1 raised by the assessee is allowed in terms of the aforesaid observations. 8 Shri Jayantilal Patel Vs. ITO-2(2), Raipur ITA No.94/RPR/2022 11. Ground of appeal No.2 being general in nature is dismissed as not pressed. 12. In the result, appeal of the assessee is allowed in terms of aforesaid observations. Order pronounced in open court on day of 23 rd November, 2022. Sd/- (रवीश स ू द/RAVISH SOOD) ÛयाǓयक सदèय/JUDICIAL MEMBER रायप ु र / Raipur; Ǒदनांक / Dated : 23 rd November, 2022 ***SB आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals), Raipur. (C.G) 4. The Pr. CIT, Raipur (C.G.) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, “एक-सदèय” बɅच, रायप ु र / DR, ITAT, “SMC” Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशान ु सार / BY ORDER, // True Copy // Ǔनजी सͬचव /Private Secretary आयकर अपीलȣय अͬधकरण, रायप ु र/ ITAT, Raipur