Arun I Keshwarni Vs ITO (ITAT Mumbai)
ITAT Mumbai held that once the transaction is duly recorded in the books of accounts and due explanation with regard to source of loan transaction is provided, addition u/s 69A towards unexplained money unsustainable.
Facts- The assessment of the assessee was reopened u/s 147 by issuing notice u/s 148. It is mainly alleged that amount of Rs.8,00,000/- in the form of cheques is issued to Shri Arun Keswani and cash is given to M/s Ahuja and Associates. The source of this cash component of Rs.8,00,000/- is not explained and is to be added as unaccounted cash income.
The Assessing Officer did not accept the submissions of the assessee and added the loan amount of Rs.8,00,000 as unexplained money under section 69A of the Act
CIT(A) dismissed the appeal. Being aggrieved, assessee has preferred the present appeal.
Conclusion- Held that it is clear that when the assessee is found to be the owner of money bullion etc., that is not recorded in books and that the assessee offers no explanation about the nature and source then the said money bullion etc., may be deemed to be the income of the assessee u/s.69A. In the case under consideration we notice that the assessee has recorded the impugned transactions in the books of accounts and has also provided explanations/evidences explaining the source of the loan transaction. Given this and considering other facts and evidences we are of the considered view that the AO is not correct in treating the loan transaction as an income u/s.69A. We according delete the addition made and allow the appeal in favour of the assessee.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal is against the order of the Commissioner of Income Tax Appeals, National Faceless Appeal Centre (NFAC) [hereinafter ‘Ld.CIT(A)’] dated 27/01/2023 for the assessment year 2009-10. The assessee raised the following grounds of appeal:-
1. In the facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the action of the Ld. Assessing Officer in making addition of loan amounting to Rs. 8,00,000/- under section 69A of the Income Tax Act, 1961; disregarding the factual and legal matrix of the case; inter-alia the following:
a) that the impugned addition of Rs. 8,00,000/- is made disregarding the documentary evidences produced by the Appellant to substantiate the genuineness of the transaction, identity of the lender and creditworthiness of the lender.
b) that the amount of Rs. 8,00,000/- credited in Appellant’s bank account represents short term loan; which was duly repaid back within a short span of time.
2. In the facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) has erred upholding the action of the Ld. Assessing Officer in reopening the assessment under section 147 and making impugned addition of Rs. 8,00,000/- under section 69A merely based on borrowed satisfaction and merely on the basis of surmises & conjectures drawn from un-confronted dumb documents; without any independent application of mind or conducting independent inquiry in the matter.
3. In the facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the action of Ld. Assessing Officer in making addition under section 69A; disregarding the fact and law that during the relevant financial year the Appellant was not found to be owner of any money; whereas one of the pre-requisite to invoke provisions of section 69A is that the Assessee must be found to be owner of money, etc.”
2. The assessee is an individual and is engaged in the business of printing and binding. The assessee filed the return of income for A.Y. 2009-10 on 30/09/2010 declaring a total income of Rs.32,05,681/-. The return was processed under section 143(1) of the Income Tax Act (the Act) on 165/09/2020. Subsequently, the assessment was reopened under section 147 by issuing of notice under section 148 which was duly served on the assessee. The reasons recorded by the Assessing Officer for reopening is extracted as below:-
“A search/survey act/on under sect/on 132/133A of the Income Tax Act, 1961 was carried out on 2$h June, 2015 in the case of Ahuja Group and their associated concerns at their offices branches, side offices, and key offices of the subsidiaries and associate concerns and residences of M/s Ahuja Group in Mumbai,
During the search action the unaccounted parallel books of the Ahuja Group reveals cash transactions of unaccounted money in respect of purchases, sales, loan transactions, accommodation entries, expenses inflation etc wherein the key persons of the group and large numbers of other parties admitted into entering such transactions by the Ahuja Group,
Accordingly, the transactions in respect of Shri Arun Keswani maintained in the unaccounted parallel hooks in tally accounting software/package maintained by Directors and Promoters by M/s Ahuja Group reveals accommodation entry transaction and cash transaction as under:-
