Sampat Lal Lodha Vs ITO (ITAT Jodhpur)
ITAT Jodhpur held that addition under section 68 of the Income Tax Act towards unexplained credit unsustainable as genuineness of the depositors provided by filing confirmation, affidavits, bank statement, etc.
Facts- The return of the assessee was e-filed and processed u/s. 143(1). Thereafter, as per information received from the ADIT(Inv.)-II, Udaipur, it was gathered that the assessee has made investment of Rs. 48,80,350/- for construction of residential complex at Nathdwara during the financial year 2009-10. However, as per return of income filed for the year, ld. AO noted that no sources of such investment were disclosed by the assessee in his return of income. As the assessee made investment of Rs. 48,80,350/- out of undisclosed sources therefore, income chargeable to tax amounting to Rs.48,80,350/- escaped assessment in terms of section 147 of the I.T. Act.
On examination of details with regard to sources of investment, it was noticed that during the year the assessee has received Rs. 22,00,000/- on account of unsecured loans. Out of the said credits, post verification, Rs. 13,00,000/- added to the total income of the assessee on account of unexplained credit u/s 68 of the I.T. Act.
Conclusion- Held that the action of the lower authority addition a sum of Rs. 13,00,000 for the four depositors wherein the assessee has filed the confirmation, affidavits, bank statement and personal presence marked is sufficient to considered these depositors as genuine. As in the rest of the four depositors the assessee has given all the evidence which is supposed to be given by the assessee and the capacity of the lender to advance money to the assessee, was not a matter which could be required of the assessee to be established, as that would amount to calling upon him to establish source of the source. Based on this observation we vacate the addition of Rs. 13,00,000/- made by the lower authorities.
FULL TEXT OF THE ORDER OF ITAT JODHPUR
These are two appeals filed by the assessee and is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as (NFAC)] dated 03.11.2021 & 27.12.2021 for the Assessment Years 2010-11 & 2011-12, which in turn arise out of an order passed by ITO, Ward-02, Rajsamand passed u/s. 147/143(3) of the Income Tax Act, 1961 [ here in after referred to act “Act”] on 29.03.2016 & 30.12.2016.
2. We have heard these cases together and passing the order together with the consent of both the parties.
3. First we are taking the case of the assessee Shri Sampat Lal Lodha in ITA No. 01/Jodh/2022 for A. Y. 2010-11 and in this case the assessee has raised following grounds:-
“1. That on the facts and in the circumstances of the case, the ld. CIT(A), NFAC, Delhi without going into the entirety of the facts, has erred in confirming the action of the Assessing Officer in initiation of the proceedings u/s 147/148 of the Act.
2. That on the facts and in the circumstances of the case, the ld. CIT(A) has also erred in sustaining the addition of Rs. 13,00,000/- u/s 68 of the Act without going into factual matrix of the case.
3. That on the facts and in the circumstances of the case, the ld. CIT(A) has also erred in confirming the disallowance of Rs. 3,16,663/- out of interest expenses claimed from the rental income.
4. That the petitioner may kindly be permitted to raise any additional or alternative grounds at or before the time of hearing.”
4. The fact as culled out from the records is that return declaring total income of Rs. 3,06,637/- was e-filed by the assessee on 28.07.2010 which was processed u/s 143(1). Thereafter, as per information received from the ADIT(Inv.)-II, Udaipur, it was gathered that the assessee has made investment of Rs. 48,80,350/- for construction of residential complex at Nathdwara during the financial year 2009-10 relevant to assessment year 2010-11. However, as per return of income filed for the year, ld. AO noted that no sources of such investment were disclosed by the assessee in his return of income. As the assessee made investment of Rs. 48,80,350/- out of undisclosed sources therefore, income chargeable to tax amounting to Rs.48,80,350/- escaped assessment in terms of section 147 of the I.T. Act.
4.1 In the assessment proceeding the ld. AO noted that the assessee is proprietor of M/s. Mangal Jewellers and engaged in the business of trading of silver jewellery. During the year, gross profit of Rs. 7,53,503/- has been shown on total turnover of Rs 39,86,176/-declaring GP rate of 18.90% which is better than the G.P. rate of 15.22% declared for the just preceding year but lesser than the G.P. rate of 19.90% declared for the Assessment year 2008-09. During the course of assessment proceedings, the assessee was asked to furnish necessary details and to produce complete books of accounts and other records for verification of trading results declared. In compliance thereto the required details were furnished. Books of accounts consisting of cash book, ledger, bank books, purchase & sales vouchers, bills and vouchers for expenses, details of loans and advances etc. along with relevant documents were produced. The details furnished and records produced were put to test check. After scrutiny of the records produced, trading results declared by the assessee are accepted without any further interference.
4.2 During the course of assessment proceedings, it was also noticed that during the year, the assessee has made investment of Rs. 48,80,350/- for construction of complex at Nathdwara. On examination of details with regard to sources of investment, it was noticed that during the year the assessee has received Rs. 22,00,000/- on account of unsecured loans. During the course of assessment mentioned. Further in all the affidavits, mode of payment was not mentioned. It was not mentioned that whether the amounts were paid in cash or through cheques. As the affidavits produced by the assessee were not completed due to the discrepancies mentioned above, therefore, the assessee was asked to prove creditworthiness of the creditors as well as genuineness of the transactions with regard to unsecured loans of Rs 22,00,000/- taken by him during the year relevant to assessment year under consideration. In compliance, following creditors were presented by the assessee for verification and their statements were recorded during the assessment proceedings:-
