Mahendra Singh Dasana Vs ITO (ITAT Mumbai)
No addition of cash withdrawals u/s 69C for gold loan intermediary business as there was documentary evidence for Gold Loan Business: ITAT Mumbai
Conclusion: Addition of cash withdrawal under Section 69C in relation to the legitimate gold loan intermediary business was not justified observing that the documentary evidence including gold loan recorded validated gold loan business, thus there was no unexplained nature in the withdrawal.
Held: Assessee was an individual engaging in the business of short-term mortgage loans against gold ornaments as security, had availed gold loans from the Federal Bank by pledging ornaments received from customers and advanced the funds to borrowers or original gold owners at a higher interest rate. According to AO, withdrawals amounting to Rs. 3,06,20,143/- were unaccounted, ignoring the explanations offered by assessee regarding his business model and records. Revenue relied upon the orders passed by authorities, asserting that assessee could not substantiate the arguments raised by him before the concerned authorities. Thus, upheld by CIT(A). Assessee authenticated such cash withdrawals in relation to the legitimate gold loan intermediary business. The exhibited loan ledgers, cash books, gold loan statements, and receipts from borrowers recorded the 103 loans totaling Rs. 2,15,03,000/- with repayments of Rs. 1,65,63,000/-. Assessee had two bank accounts, one his sole account where the actual cash withdrawals amounted only Rs. 89,12,916/- and not Rs. 3,06,20,143/-, the remaining transactions pertaining to the other account, jointly held with father Mohansingh Dasana, whose transactions were recorded in his father’s books. The earned interest margin amount to Rs. 4,91,010/- was the income of the business model, duly reflected. It was held that Tribunal examined the nature of the gold loan business, bank statements, gold loan accounts, borrower ledgers, customer confirmation letters, alongside other supporting documents furnished by the assessee. Tribunal noted that assessee operated in the gold loan business as an intermediary. The source of cash withdrawals and their utilization was clearly verifiable referring to the documents. Mere cash withdrawals from disclosed bank accounts could not constitute income unless AO established they represent unexplained or unaccounted income. The withdrawals had an established business purpose and were supported by bank entries and matching customer loan records. There was no evidence brought forth by Revenue authorities to refute the genuineness of the transactions or the income pattern disclosed by assessee. AO erred in adding the withdrawals as credit entries, Tribunal said that addition of cash withdrawals as income was factually incorrect, legally untenable and were therefore directed to be deleted.
