Rakesh Jayantibhai Patel Vs ITO (ITAT Ahmedabad)
Loans from father sisters duly proved with PAN, bank statements, land sale deed confirmations; CIT(A) wrongly sustained addition on mere suspicion
Assessee, engaged in AutoCAD design work, filed his return declaring ₹2,91,400. Based on information that he invested ₹20,00,000 in Cruso Granito Pvt. Ltd., the case was reopened u/s 147. Assessee explained that this investment was funded through savings & unsecured loans from his father and two sisters.
AO partly accepted the explanation but treated ₹11,70,000 as unexplained cash credit u/s 68 and taxed it u/s 115BBE. The loans disputed were:
– ₹4,80,000 from father
– ₹4,40,000 from sister Nitaben
– ₹2,50,000 from sister Alpaben
CIT(A) examined the bank accounts & accepted most of the loans but doubted ₹1,30,000 from the father, only because there were some cash deposits (₹49,500 each) in his bank account before giving the loan. CIT(A) held that only ₹1,20,000 could be explained from land sale proceeds already accepted by AO, and sustained an addition of ₹1,30,000 while deleting ₹10,40,000.
Before Tribunal, Assessee submitted full evidence for the father’s loan:
– PAN & Aadhaar of father
– Confirmation letter
– Complete bank statement
– Agricultural landholding (Form 7/12)
– Registered sale deed showing ₹6,00,000 received from sale of land
Tribunal noted that the father’s identity, capacity & genuineness were fully established. Out of ₹10,80,000 loan from father, ₹6,00,000 came from land sale-accepted by AO. The remaining was explained through past agricultural income & normal banking transactions. Tribunal held that CIT(A) rejected ₹1,30,000 only on assumptions, ignoring evidence. Cash deposits of ₹49,500 each do not prove lack of source when the lender has agricultural income, land sale receipts & banking history.
