Saraswati Buildcon Vs ITO (ITAT Mumbai)
SECTION 68: ₹10 LAKH LOAN NEED NOT FACE A FULL RETRIAL—ONLY ₹5.50 LAKH CASH DEPOSITS SENT BACK FOR VERIFICATION
₹10 lakh unsecured loan questioned
The assessee, a partnership firm engaged in the business of builders & developers, filed its return declaring total income of ₹180 after claiming deduction u/s 80-IBA.
During scrutiny assessment, the AO examined an unsecured loan of ₹10 lakh received from Shri Pravin J. Patil on 06.11.2019.
To establish the transaction, the assessee furnished the lender’s PAN, confirmation of account, return of income, computation of income & bank statement. The loan was received through normal banking channels.
The AO, however, noticed four cash deposits of ₹1 lakh, ₹1.50 lakh, ₹1.50 lakh & ₹1.50 lakh, aggregating to ₹5.50 lakh, in the lender’s bank account before the loan was advanced.
Principally doubting the lender’s creditworthiness, the AO treated the entire loan of ₹10 lakh as unexplained cash credit u/s 68.
Low returned income raises Revenue’s suspicion
The CIT(A) noted that the lender had declared total income of only ₹4,55,460 against turnover of approximately ₹19.25 lakh. He had also purchased a motor vehicle during the relevant year.
Considering the lender’s income profile, motor-vehicle purchase & cash deposits immediately preceding the loan, the CIT(A) agreed with the AO that the lender’s financial capacity had not been satisfactorily established.
