Case Law Details
Shree Samruddhi Overseas Trading Co. Vs DCIT (ITAT Ahmedabad)
It is submitted on behalf of the assessee that the assessee had taken a temporary loan of Rs.8 Lakhs and Rs.2 Lakhs aggregating Rs.10,00,000/- in the month of June 2012 from Shri Rakesh Vallabhbhai Swadia. The loan so obtained was also repaid in the month of September 2012 and therefore loan was ultimately squared off in the same year. It is the case of the assessee that all relevant details like; copy of confirmation obtained from lender, copy of return of income and relevant bank statements of the party was furnished before the lower authorities. The creditworthiness of the loan received stands proved by the return of income where gross total income declared by the lender is stated to be Rs.13.01 Lakhs. The copy of bank statement of the assessee and also of lender was also furnished before the lower authorities to support the transaction. The AO had issued notice under s.133(6) of the Act to the lender and observed from the details furnished by the lender (Rakesh Swadia) that amount of Rs.5 Lakhs in cash and Rs.3 Lakhs by cheque were deposited on 15.06.2012 prior to the transfer of Rs.8 Lakhs to the assessee. The AO accordingly doubted the genuineness of the loan transaction having regard to the cash deposits. In rebuttal, the attention was adverted on behalf of the assessee to the fact that the assessee has earlier withdrawn cash amount of Rs.10 Lakhs on 06.04.2021 out of which Rs.5 Lakhs were deposited on 15.06.2012 and therefore deposit of cash prior to issue of cheque by the lender is not of significance in view of cash in hand.
We find merit in the various plea raised on behalf of the assessee towards bonafides of credits received from Rakesh The confirmation, the bank statement of the assesse and lender showing transactions through banking channel, the return of income of the lender and also re-payment of loan in a span of 3-4 months clearly proves the bonafide of the loan when seen in totality. The lender has also responded to the notice of the AO under s. 133(6) of the Act. The AO after collecting the information in the event of any doubt, could have extended suitable enquiries if required instead of entering into arena of assumptions and presumptions. Except for a deposit of cash of Rs. 5 lakhs, there is no other cogent case made to draw the adverse inference against the assessee. The deposit of cash out of earlier withdrawal of large amount provides plausible explanation towards source of cash deposits in the absence of any enquiry in this regard by the Revenue from the lender. Needless to say, the borrower assessee could not be seen to have any perceptible control over the manner of carrying transactions by the lender. The repayment of loan exists as a strong mitigating circumstance and transcends all considerations. We thus find that the documents placed by the assessee before the Revenue authorities sufficiently discharge the onus towards the identity and genuineness of the transaction and creditworthiness of the lender contemplated under s.68 of the Act. In our view, in the facts of case, the statutory discretion available to AO under s. 68 of the Act ought to have been exercised in favour of the assessee. The action of the Revenue authorities thus cannot be countenanced having regard to the extenuating circumstances existing in the case. The addition made under s.68 of the Act on credit received from Rakesh Swadia therefore deserves to be reversed and cancelled.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The captioned appeals have been filed at the instance of the assessee against the orders of the Commissioner of Income Tax (Appeals)-12, Ahmedabad (‘CIT( A)’ in short), both dated 13.03.2018 arising in the assessment orders dated 22. 02.2016 & 07.12.2016; respectively, passed by the Assessing Officer ( AO) under s. 143( 3) of the Income Tax Act, 1961 (the Act) concerning AYs. 2013- 14 & 2014- 15.
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