PRAKASHKUMAR RAJPUT,FATEPURA, VADODARA V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE INT. TXN., VADODARA

ITA 1520/AHD/2024

AI Insights

The case involves an appeal by Prakashkumar Rajput against the order of the Commissioner of Income Tax (Appeals), which confirmed additions made by the Assessing Officer under Section 68 and Section 69A of the Income Tax Act, 1961. The additions pertained to loans taken from friends and relatives and unexplained cash deposits in the assessee's NRO account. The Tribunal found that the creditworthiness of the loan providers was adequately demonstrated through their income tax returns and confirmations of loans. However, regarding the cash deposits in the NRO account, the Tribunal noted the lack of independent verification of the currency exchange and restoration of the matter to the Assessing Officer for further examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25531 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2021-2022
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KETAKIN DESAI
• Assessee Lawyers: M. J. SHAH; RUSHIN PATEL; A.RS
• Section: 119; 68; 69A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER & SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER I.T.A. No.1520/Ahd/2024 (Assessment Year: 2021-22) Prakashkumar Rajput, Kumbharvada Near Khari Talavadi, Fatepura, Vadodara-390006 Vs. Assistant Commissioner of Income Tax, Circle International Taxation, Vadodara [PAN No.BAZPR0748A] (Appellant) .. (Respondent) Appellant by : Shri M. J. Shah & Shri Rushin Patel, A.Rs. Respondent by: Ms. Ketakin Desai, Sr. DR Date of Hearing 11.03.2025 Date of Pronouncement 20.03.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeal), (in short “Ld. CIT(A)”), Ahmedabad-13 vide order dated 28.06.2024 passed for A.Y. 2021-22. 2. The Assessee has taken the following grounds of appeal:- “1. The C.I.T. (Appeals) erred in law and on facts in confirming the addition of Rs. 9,92,000/- made by Assessing Officer u/s 68 of I.T. Act 1961 being loans taken from friends and relatives without appreciating the facts of the case properly. 2. The C.I.T. (Appeals) erred in law and on facts in confirming the addition of Rs. 14,40,000/- made by Assessing Officer u/s 68 of I.T. Act 1961 for cash deposited in NRO account by selling USD brought by appellate and his wife at the time of returning to India from Angola. 3. The C.I.T. (Appeals) failed to appreciate the material placed on records including bank statements of all friends and relatives along with letter of loan confirmation and certificate of commission received from employer. The appellate reserves its right to add, amend, alter or modify any of the grounds stated hereinabove either before or at the time of hearing.” ITA No. 1520/Ahd/2024 Prakashkumar Rajput vs. ACIT Asst.Year –2021-22 - 2– Ground No.1: Addition of Rs. 9,92,000/- made by Assessing Officer under Section 68 of the Act 3. The brief facts of the case are that during the course of assessment, the Assessing Officer observed that the assessee had taken loans totaling to Rs. 9,92,000/- from five parties, but the assessee was not able to satisfactorily explain the source of deposits of the loans taken by the assessee. For the sake of convenience, the bifurcation of the loan amounts taken by the assessee are reproduced as under: Sr. No. Date Amount (in Rs.) Explanation by assessee 1 15/06/2020 2,00,000 Loan from Mother Smt. Manjulaben B. Rajput 2 15/06/2020 2,00,000 Loan from Mother’s sister Smt. Minaxiben B. Chauhan 3 26/11/2020 2,80,000 Loan from Mother Smt. Manjulaben B. Rajput 4 26/11/2020 2,80,000 Loan from Brother Shri Piyush B. Rajput 5 02/12/2020 32,000 Loan from Mother’s sister Smt. Minaxiben B. Chauhan Total 9,92,000 4. In appeal, Ld. CIT(A) dismissed the appeal of the assessee with the following observations: “5.3.1 With regard to loan amount received from mother of Rs. 2,00,000/-, it is found that the same is received from her mother's bank account and the appellant has not furnished the entire bank statement of her mother. Further, loan of Rs.2,80,000/- was received from her mother's bank account on 26.11.2020 which is preceded by cash deposit of Rs.40,000/- (seven time) from 17.11.2020 to 26.11.2020 amounting to Rs.2,80,000/- therefore the source of loan received from mother of Rs.2,80,000/- is immediately of equal amount in her bank account. Similar pattern of cash deposit in his brother’s (Piyush B Rajput) account was found and loan of Rs. 2,80,000/- was given to the appellant. This clearly shows that the alleged loan amount was managed from her mother’s and brother's bank account. Therefore, the ld. AO rightly stated in the remand report that the source of loan amount received from his mother and brother is not satisfactorily explained. Further, the mother's and brother's copy of ITR shows that they have meager source of income and their creditworthiness is not found based on the documents submitted by the appellant. As regard of loan received from Minaxiben B Chauhan (mother's sister) of Rs.2,32,000/- is concerned, it is seen that the copy ITA No. 1520/Ahd/2024 Prakashkumar Rajput vs. ACIT Asst.Year –2021-22 - 3– of bank statement was only furnished for part period and copy of ITR shows that she did not have creditworthiness to advance loan of Rs. 2,32,000/-. The Ld. AO during the remand proceedings has given detailed finding on the merit of the submission made by the appellant and I have also considered the rejoinder filed by the appellant and I hold that the Ld. AO was justified in making addition of Rs. 9,92,000/- u/s 69A of the IT Act. Accordingly the ground No.2 is dismissed.” 5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A), confirming the addition in the hands of the assessee. 6. Before us, the Counsel for the assessee firstly drew our attention to the source of loan taken by the assessee from his mother, Smt. Manjulaben B. Rajput for a sum of Rs. 2,00,000/-. The Counsel for the assessee drew our attention to the returns of income filed by the mother of the assessee for A.Ys. 2019-20, 2020-21 and 2021-22 and submitted that the mother had filed the return of income declaring adequate income to prove her creditworthiness. Further, the Counsel for the assessee also drew our attention to relevant pages of the Paper Book to demonstrate that all the parties concerned, from whom loan had been taken by the assessee had filed respective returns of income declaring adequate income and therefore, creditworthiness of such parties had been duly proved. Further, the Counsel for the assessee also drew our attention to pages 117 to 119 of the Paper Book and submitted that confirmations from three parties were also produced before the Assessing Officer to the effect that they had given loan to the assessee, during the impugned year under consideration. 7. In response, Ld. D.R. placed reliance on the observations made by the Assessing Officer and Ld. CIT(A) in their respective orders. 8. We have heard the rival contentions and perused the materials on record. ITA No. 1520/Ahd/2024 Prakashkumar Rajput vs. ACIT Asst.Year –2021-22 - 4– 9. We observe that the assessee had obtained the loan from his mother Smt. Manjulaben B. Rajput for a sum of Rs. 2,00,000/- on 15.06.2020 and another loan of Rs. 2,80,000/- on 26.11.2020. The identity of the concerned party is not in doubt, being the mother of the assessee. So far as the creditworthiness is concerned, we observe that Smt. Manjulaben B. Rajput had filed return of income declaring income of Rs. 2.94 lakhs for A.Y. 2019-20, for a sum of Rs. 3.88 lakhs for A.Y. 2020-21 and for a sum of Rs. 4.98 lakhs for A.Y. 2021-22. Accordingly, in our considered view, the creditworthiness of Smt. Manjulaben B. Rajput stands duly established. Further, we also observe that Smt. Manjulaben B. Rajput also furnished confirmation of loan given to the assessee, through banking channels, during the impugned year under consideration. Accordingly, looking into the instant facts, in our considered view, the creditworthiness of Smt. Manjulaben B. Rajput stands duly established. So far as loan from Smt. Minaxiben B. Chauhan is concerned, we observe that she is the sister of the assessee’s mother and she give a loan of Rs. 2,00,000/- on 15.06.2020 and another loan of Rs. 32,000/- on 02.11.2020. On perusal of the records, we observe that Smt. Minaxiben B. Chauhan filed return of income for a sum of Rs. 2.98 lakhs for A.Y. 2019-20 and for a sum of Rs. 3.33 lakhs for A.Y. 2020-21. Further, Smt. Minaxiben B. Chauhan also filed confirmation of loan given to the assessee before the Assessing Officer, alongwith her PAN details. Accordingly, in our considered view both the identity and creditworthiness of Smt. Minaxiben B. Chauhan stands duly established. Further, we observe that the assesse received a loan from his brother Shri Piyush B. Rajput, for a sum of Rs. 2,80,000/- on 26.11.2020. On going through the case records, we observe that Shri Piyush B. Rajput filed return of income for A.Y. 2019-20 declaring total income of Rs. 3.62 lakhs, filed return of income for A.Y. 2020-21 ITA No. 1520/Ahd/2024 Prakashkumar Rajput vs. ACIT Asst.Year –2021-22 - 5– declaring total income of Rs. 3.89 lakhs and filed returns of income for A.Y. 2021-22 declaring total income of Rs. 4.94 lakhs. Accordingly, on perusal of the returns of income filed by the brother of the assessee, in our view, the creditworthiness of Shri Piyush B. Rajput stands duly established. Further, the assessee’s brother, Shri Piyush B. Rajput also filed confirmation before the Assessing Officer, giving details of his business, PAN number and Income Tax Return filing details. Accordingly, looking into the instant facts, in our view in the case of Shri Piyush B. Rajput, the assessee has been able to established the identity and creditworthiness of the said party. 10. In light of our observations above, in our considered view, the assessee has been able to duly establish the source of the loan amount taken from the parties and has also established their creditworthiness. Therefore, in our considered view, this is a fit case where no addition is called for under Section 69A of the Act. Accordingly, addition of Rs. 9,92,000/- is hereby directed to be deleted. 11. In the result, Ground No. 1 of the assessee’s appeal is allowed. Ground No. 2:- Addition of Rs. 14,40,000/- made by the Assessing Officer under Sectio 68 of the Act. 12. During the course of assessment, the Assessing Officer observed that there were cash deposits amounting to Rs. 14,40,000/- in the assessee’s NRO bank account held with Indusind Bank. During the course of assessment, the assessee submitted that in addition to fixed salary of Rs. 65,000/- he was also paid commission of 2% on sales done by him, subject to minimum of UDS 500 per month. During the assessee’s tenure from 13.11.2018 to 14.11.2020, he was paid USD 20,190 as incentives in ITA No. 1520/Ahd/2024 Prakashkumar Rajput vs. ACIT Asst.Year –2021-22 - 6– commission. In support of his claim, the assessee furnished letter given by his employer M/s. Balaxi Healthcare (SU) LDA as proof of receipt of commission in Angola. The assessee further submitted that all the living and food expenses were also borne by his employer. Thus, the assessee had save about 19,750 USD, which he brought bnack to India in two tranches on 27.01.2020 (USD 9,000) and on 14.01.2020 (USD 10,700). After returning to India, the assessee exchanged USD to INR and deposited the money in his aforesaid bank account. The assessee submitted that he exchanged USD into INR from Mr. Priyansh Shah, but the said person has not issued receipt of exchange from USD to INR. However, the Assessing Officer was not convinced with the assessee’s explanation for the reason that if the assessee’s employer had deposited his salary amounting to Rs. 5.77 lakhs in his NRE bank account, then it is not understandable as to why the commission on sale was paid to the assessee in cash. Secondly, the assessee has not furnished any documentary evidence to support that he had exchanged USD to INR and deposited the same in his NRO account. The assessee has merely given name and address of a money changer, however, the assessee was not able to produce receipt from the said person at the time of exchange. 13. In appeal, Ld. CIT(A) confirmed the additions in the hands of the assessee with the following observations: “5.4 The Ground No.3 is against the addition of cash deposit of Rs.14,40,000/- in the NRO account of the u/s 69A of the IT Act. The Ld. AO made the addition after considering the submission of the appellant and the same is discussed in para 3.8 and 3.9 of the assessment order. The cash was deposited on 18.11.2020 and 24.11.2020 in the appellant's bank account which coincides the dates on which cash amount of Rs.40,000/- (7 times) were deposited in his mother's and brother's bank account and ultimately brought in the form of loan in the appellant bank account. This clearly shows that the appellant’s own unexplained money was deposited in his mother's and brother's bank account. Regarding the source of cash deposit in the appellant's bank account of Rs.14,40,000/- is concerned, the appellant explained that he and his wife brought 19,700 USD in cash from Angola. ITA No. 1520/Ahd/2024 Prakashkumar Rajput vs. ACIT Asst.Year –2021-22 - 7– The amount of 19,700 USD was his saving in Angola from the commission income received from Balaxi Healthcare (Su) LDA. The appellant could not furnish any proof that the USD 19,700 was brought in India and the same were exchanged in Rupees which were deposited in the appellant bank account. It is also pertinent to mention that when such a huge foreign exchange of USD 19,700/- is brought to India the appellant is legally required to declared the same before custom authorities. The appellant has not furnished any evidence either during the assessment proceedings or during the appellate proceedings that the foreign exchange of USD 19,700 was declared to the custom authorities. The appellant also could not furnish any evidence of conversion of USD to Rupees. In view of above discussion, I do not find any evidence of conversion of USD to Rupees. In view of above discussion, I do not find any reason to differ with the finding of the Ld. AO and confirm the addition of Rs. 14,40,000/- as unexplained money u/s 69A of the IT Act, 1961. Therefore, the ground no.3 is dismissed. 5.5 The Ground no.4 is general in nature and does not require adjudication. 6. In the result, the appeal is dismissed.” 14. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A). 15. On going through the case records, we observe that assessee has given proof of earning income in Angola and has also furnished letter of incentive paid by is employer dated 25.11.2022 stating that the commission and incentive of USD 20,190 had been paid to the assessee. Further, the Counsel for the assessee also furnished before us the letter of appointment issued by M/s. Balaxi Healthcare (SU) LDA to the assessee dated 15.08.2018, which clearly mentions that the employer shall provide incentives based on the overall performance to the assessee. However, we also observe that the assessee has not filed certain details like return of income filed by the assessee before the relevant Tax Authorities in Angola declaring income from such incentives. The assessee did not file details of passport before the Assessing Officer / CIT(A) for the impugned year under consideration and the assessee has also not furnished copy of bank statement before the Tax Authorities, for their perusal. However, we also note that the assessee had furnished name and address of the concerned ITA No. 1520/Ahd/2024 Prakashkumar Rajput vs. ACIT Asst.Year –2021-22 - 8– person who had exchanged the USD received by the assessee into INR, however, despite this is no independent enquiry was made by the Assessing Officer to verify the genuineness of such party. 16. Accordingly, looking into the totality of facts, wherein the assessee had furnished employment letter from his employer based out of Angola, letter of confirmation that the asessee had received a sum of Rs. USD 20,190 from his employer and also the details of the person who had exchanged the USD into INR, we are of the considered view that in the interest of justice, the matter may be restored to the file of Assessing Officer for fresh appreciation of evidence placed on record by the assessee and thereafter, pass appropriate orders in accordance with law, after giving due opportunity of hearing to the assessee. 17. In the result, Ground No. 2 of the assessee’s appeal is allowed for statistical purposes. 18. In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 20/03/2025 Sd/- Sd/- (MAKARAND V. MAHADEOKAR) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 20/03/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad "