Only Death Certificate of lender is not sufficient to to prove the identity of the lender, genuineness of the transaction and creditworthiness of the lender

Manishkumar & Co.  Vs. ITO( ITAT Ahmedabad)-  The first ground relates to addition of Rs.13,77,000/- made u/s 68 by the AO. During the assessment proceedings the assessee was asked by the AO to prove the identity of the lender, genuineness of the transaction and creditworthiness of the lender in respect of the loan of Rs.13,77,000/- shown in the name of Shri Madanlal J. Panjabi. The assessee was only able to furnish the death certificate of Madanlal J. Panjabi. No other evidence including that from the legal heir of Mr. Panjabi was submitted The AO therefore, made the addition of Rs.13,77,000/- u/s 68 of the Act. Before ld. CIT(A) also no details could be submitted by the assessee. The ld. CIT(A), therefore, confirmed the action of the AO. Further aggrieved, now the assessee is in appeal before us.

 INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD

ITA No. 58/Ahd/2009 – Asst. Year :2005-06

M/s Manish Kumar & Co.

Vs.

Income-tax Officer

Date of pronouncement : 08/12/11.

O R D E R

Per D. K. Tyagi, Judicial Member.

This is an appeal filed by the Assessee against the order of ld. CIT(A) dated 7.10.2008. Following grounds have been raised in this appeal:-

(1) The ld. CIT(A)-IV, Baroda erred in law and on facts in confirming addition of Rs. 13,77,000/- u/s 68 of the IT Act.

(2) The ld. CIT(A)-IV, Baroda erred in law and on facts in confirming the dis allowance of Rs. 6,893/- being 10% of vehicle expenses repairs and depreciation.

2. The first ground relates to addition of Rs. 13,77,000/- made u/s 68 by the AO. During the assessment proceedings the assessee was asked by the AO to prove the identity of the lender, genuineness of the transaction and creditworthiness of the lender in respect of the loan of Rs. 13,77,000/- shown in the name of Shri Madanlal J. Panjabi. The assessee was only able to furnish the death certificate of Madanlal J. Panjabi. No other evidence including that from the legal heir of Mr. Panjabi was submitted The AO therefore, made the addition of Rs. 13,77,000/- u/s 68 of the Act. Before ld. CIT(A) also no details could be submitted by the assessee. The ld. CIT(A), therefore, confirmed the action of the AO. Further aggrieved, now the assessee is in appeal before us.

3. Heard both the parties and perused the record. We deem it proper to give one more opportunity to the assessee to substantiate his claim of credit of Rs.13,77,000/- from Shri Madanlal J. Panjabi and for this purpose the matter is restored back to the AO for fresh adjudication after providing reasonable opportunity of being heard to the assessee. This ground is allowed for statistical purposes.

4. The second ground relates to addition of Rs. 13,786/- being 20% of vehicle expenses and depreciation of Rs. 68,931/-. This addition was made by the AO by observing that personal use of the vehicles could not be ruled out. The ld. CIT(A) has reduced the dis allowance to 10% of the total expenses. We, however, feel that this addition to be restricted to 5% of the total expenses. This ground is partly allowed.

4. In the result, the appeal filed by the assessee is partly allowed for statistical purposes.

Order was pronounced in open Court on 08/12/11.