CIT Vs Ayachi Chandrashekhar Narsangji (Gujarat High Court)
The Revenue filed a tax appeal before the Gujarat High Court challenging the order of the Income Tax Appellate Tribunal (ITAT) dated 21.06.2013 for Assessment Year 2006-07. The principal issue was whether the ITAT was justified in deleting the addition of ₹1.45 crore made by the Assessing Officer under Section 68 of the Income Tax Act as unexplained cash credit.
The assessee had filed a return declaring total income of ₹39,10,790. During assessment under Section 143(3), the Assessing Officer added ₹1.45 crore under Section 68 on the ground that the loan received from Shri Ishwar Adwani, out of a total loan of ₹1.60 crore, had not been satisfactorily explained.
Before the Commissioner of Income Tax (Appeals) [CIT(A)], the assessee relied upon a letter dated 22.12.2008 submitted to the Assessing Officer along with a confirmation letter from Shri Ishwar Adwani confirming that loans aggregating to ₹1.45 crore had been advanced through cheques. After considering these documents, the identity of the lender, his creditworthiness, the genuineness of the loan transaction, and the fact that the outstanding loan amount of ₹1.45 crore was repaid in the immediately succeeding assessment year, the CIT(A) deleted the addition.
