Mangeram Sharma Vs ITO (ITAT Mumbai)
Income Tax Appellate Tribunal (ITAT) Mumbai ruled in favor of the assessee, Mangeram Sharma, in two appeals concerning assessment years 2005–06 and 2006–07. The disputes arose from the addition of ₹75 lakh as unexplained income under Section 69A of the Income-tax Act, 1961, and corresponding notional interest amounts of ₹1 lakh and ₹9 lakh for the respective years. The additions were based on a loan allegedly extended by the assessee to one Shri Bhanuprasad D. Trivedi (HUF), as indicated in proceedings by the DCIT, Central Circle-1(3), Ahmedabad. The Assessing Officer (AO) initiated proceedings under Section 147 after receiving information that Trivedi (HUF) claimed a ₹75 lakh loan from the assessee. This amount was not disclosed in Sharma’s balance sheet. During assessment, Sharma initially confirmed under oath, during a Section 131 summons, that the loan existed. However, he later retracted the statement via a letter dated 22/12/2011, citing confusion and mental distress at the time of the original statement. The AO rejected the retraction, considering it an afterthought, and made additions to the assessee’s income, including imputed interest. The CIT(A) upheld these additions, dismissing the retraction and confirming the loan as unexplained money.
Upon appeal, ITAT Mumbai evaluated the circumstances and submissions. It was noted that the Revenue failed to provide crucial supporting documents, including the original loan confirmation from Trivedi (HUF) or any evidence of the bank transaction, despite repeated RTI applications by the assessee. Letters from the AO confirmed that no such documents were available. Furthermore, while the CIT(A) stated that confirmations had been verified, this claim was contradicted by the AO’s own written response.
