Late Govindram Mathuradas Agarwal Vs ITO (ITAT Mumbai)
Summary: The Mumbai ITAT allowed the assessee’s appeal for A.Y. 2012-13 and deleted the addition of Rs.87,00,000/- made under Section 68 of the Income Tax Act, 1961 in respect of an unsecured loan received from M/s Banas Finance Ltd. The reassessment had been initiated on the basis of information from DDIT (Inv.), Unit-8(2), Mumbai, alleging that Banas Finance Ltd., a penny-stock scrip listed on BSE, had been used for introducing unaccounted income and providing accommodation entries. During reassessment proceedings, the legal heirs of the deceased assessee furnished the computation of income, Form 26AS, bank statements, loan confirmation from Banas Finance Ltd. and bank evidence of advancement of the loan, which were verified and placed on record by the AO. The Tribunal observed that there was no allegation or substantive material establishing the assessee’s nexus with manipulation or rigging of Banas Finance Ltd.’s shares or with the alleged accommodation-entry activity, and held that the assessee had prima facie discharged the onus under Section 68. The Tribunal also noted that the loan was subsequently repaid through banking channels, with the bank statement evidencing a payment of Rs.89,00,056/- on 10.09.2012, which constituted an important corroborative circumstance supporting the genuineness of the transaction. Referring to Pr. CIT Vs. Skylark Build, Pr. CIT Vs. Veedhata Tower Pvt. Ltd. and CIT Vs. Ayachi Chandrashekhar Narsangji, the Tribunal held that the addition could not be sustained in the absence of substantive material establishing that the amount represented the assessee’s own unaccounted money routed through the lender. The addition was accordingly deleted. The assessee’s other grounds, including the challenge to the reassessment proceedings on account of non-issuance of notice under Section 143(2), were left open as academic. The assessee’s appeal was allowed.
