Case Law Details
Nitin Madhukar Rathi Vs DCIT (ITAT Pune)
Introduction: The case of Nitin Madhukar Rathi vs. DCIT, heard at ITAT Pune, revolves around the assessment of unexplained cash deposits arising from unsecured loans. The Assessing Officer (AO) raised concerns about the credibility and regular income source of certain creditors, resulting in an addition of Rs.60,00,000 to the assessee’s total income. The Commissioner of Income Tax (Appeals) [CIT(A)] provided partial relief, but a significant addition of Rs.38,00,000 was confirmed.
Detailed Analysis: The AO scrutinized unsecured loans received by the assessee and issued notices under section 133(6) to the loan creditors. Details, including names, loan amounts, return income, bank statements, and AO remarks, were outlined. The AO contended that creditors listed at Sr. No. 2, 5, and 8 lacked income-generating apparatus and a regular income source. Consequently, an addition of Rs.60,00,000 was made to the assessee’s total income.
The CIT(A) conducted a detailed examination, granting partial relief. Notably, Rs.10,00,000 related to Mr. Manoj Pardeshi’s loan, earmarked for property purchase, was deleted. Additionally, Rs.12,00,000 in the hands of Ms. Kalpana Kataria was deleted, considering her asset and liability statements and acknowledging her source/income capacity.
For the remaining six creditors, the CIT(A) upheld the AO’s stance, asserting their lack of creditworthiness to lend the loan amount. It was claimed that the authorized representative on behalf of the assessee admitted this fact. The appeal before ITAT Pune lacked evidence to support the grounds, leading to the confirmation of the addition of Rs.38,00,000.
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