Smt. Geeta Devi Bhutada and Sri Nathmal Bhutra and Sangeeta Devi Bhutra V.

ITTA/110/2003

AI Insights

The case involves an appeal by the assessee, the wife of the Managing Director of M/s Tina Electronics Ltd., against the decision of the Income Tax Appellate Tribunal, Hyderabad. The Tribunal had partially accepted the assessee's claim regarding loans used for purchasing shares in M/s. Tina Electronics Ltd., accepting only a portion as genuine. The appeal raised questions about the Tribunal's rejection of the creditworthiness of certain creditors. The court examined the Tribunal's findings and the evidence on record, ultimately agreeing with the Tribunal's decision and dismissing the appeal.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 796042 (HC-HYDERABAD)
• Appeal Type: Others
• Pronouncement Date: 09-09-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Respondent
• Court: HIGH COURT
• Keywords: Appeal; Assessment; Creditworthiness; Genuine loans; Loan Transactions; Undisclosed income
• Section: 132; 158BD

Judgement Text

"HON’BLE SRI JUSTICE L. NARASIMHA REDDY AND HON’BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A. No.110 OF 2003 JUDGMENT:- (per Hon’ble Sri Justice Challa Kodanda Ram) This appeal is filed raising the following question of law said to be arising from the orders of the Income Tax Appellate Tribunal, Hyderabad Bench “B” (for short “the Tribunal”) in I.T. (S.S.) A.No.54/Hyd/2002, dated 16.09.2002, for the Block Period 1987-88 to 1997-98 at the instance of the assessee. 1) Whether on the facts and circumstances of the case, the Hon’ble Income Tax Appellate Tribunal is justified in holding that the loans advanced by Smt. Geeta Devi Bhutada, Sri Nathmal Bhutra and Sangeeta Devi Bhutra only should be accepted as genuine and the creditworthiness of the other five creditors was not established?” 2) The brief facts as found by the Tribunal are as under: A search under Section 132 of the Income Tax Act (in short “the Act”) was conducted on 18.03.1997 in the case of M/s Tina Electronics Ltd. The assessee is the wife of the Managing Director and in response to notice issued under Section 158BD of the Act, the assessee filed return of income on 22.12.1997 declaring a total undisclosed income of Rs.25,68,500/- for purchase of shares in M/s. Tina Electronics Ltd. The sources of investment was explained by the assessee were NRI gifts to a tune of Rs.25,68,000/-, loans of Rs.8,20,000/- from various persons and Rs,2,60,000/- from her husband. So far as NRI gifts are concerned the same came to be admitted as undisclosed income in the return. So far as Rs.8,20,000/- is concerned the assessee’s claim as loans from various persons consists of family members of one Sri Damodarlal Bhutra was disbelieved by the Assessing Officer and the said amount was added in the process of assessment. In the further appeal questioning the above addition, the assessee filed appeal before the appellate Tribunal and the appellate Tribunal vide its orders dated 16.09.2002 had accepted the claim of the appellants with regard to the loan transactions to an extent of Rs.2,95,000/- from Geeta Devi Bhutada, Mathmal Bhutra and Smt.Sangeeta Devi Bhutra. With respect to the other loanees, the Tribunal did not find any material to support the claim of the assessee. Aggrieved by the same, the assessee filed the present appeal. 3) In the above set of facts, the question of law said to be arising from the orders of the Tribunal at the instance of the assessee is required to be considered. 4) Sri A.V.Krishna Kaundinya, learned senior counsel appearing on behalf of the appellant submits that the Tribunal has erred in appreciating the facts on record and contends that except Damodarlal Bhutra none of the other loanees were examined and in the circumstances the confirmation letters of creditors, the Assessing Officer ought not to have disbelieved the same, particularly considering the fact the loan amounts were received through bank cheques. 5) On the other hand learned standing counsel for the department supported the order of the Tribunal with a submission that the finding recorded by the Tribunal is after scrutinizing the material on record and this order of the Tribunal does not warrant any interference. 6) We have considered the rival submissions. A close scrutiny of the facts on record reveal that when a notice was issued to Sri Damodarlal Bhutra, he could not explain how a sum of Rs.8,20,000/- could be lent to the assessee with his meager income. Sri Damodarlal Bhutra found to have meager sources of income earned from writing of accounting books of various parties. His sons also deriving income from writing of books of accounts. His family consists of 13 members comprising of two sons and their wives and seven children. He had admitted that no returns were being filed on behalf of other members of the family showing any interest income. The verification of bank passbooks revealed that they all having minimum balance in their accounts and the transactions were also very few. Further, the Assessing Officer found that the amounts were deposited by way of cash one or two days prior to clearing of cheques issued towards loan to the assessee-appellant. Based on appreciation of these facts Assessing Officer made addition. However, after a deep scrutiny of the material before the Tribunal, the Tribunal found, as a matter of fact, Geeta Devi Bhutada, Nathmal Bhutra and Sangeeta Devi Bhutra had in fact capacity to advance the loans to a tune of Rs.2,95,000/- and directed to modify the order to allow Rs.2,95,000/- as loans with a direction to delete the addition to that extent. 7) A careful analysis of the order of the Tribunal as set out above goes to show that the Tribunal had carefully analyzed the facts and came to a categorical conclusion that only to an extent of Rs.2,95,000/- were genuine loan transactions and accordingly modified the order of the Assessing Officer. In the above circumstances, we do not find any reason to interfere with the order of the Tribunal as the order of the Tribunal is based on analysis of the facts on record and the question of law raised in the present appeal is a pure question of fact and required to be answered in the affirmative i.e., against assessee and in favour of revenue. 8) In these circumstances, the appeal is dismissed. There shall be no order as to costs. ___________________________ L. NARASIMHA REDDY, J ____________________________ CHALLA KODANDA RAM, J Date:09.09.2014. Ssv "