Case Law Details
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.
The Revenue challenged this order before the ITAT, but the Tribunal upheld the CIT(A)’s decision and dismissed the appeal.
Before the High Court, the Revenue contended that since the assessee’s communication dated 22.12.2008 and the lender’s confirmation letter were produced before the Assessing Officer on the very day the assessment order was passed, the CIT(A) ought to have remanded the matter to enable the Assessing Officer to conduct further inquiry.
The High Court noted that the CIT(A) had examined the genuineness of the transaction and the creditworthiness of Shri Ishwar Adwani before deleting the addition. It also observed that ₹1 crore and ₹60 lakh had been advanced to the assessee through separate cheques, ₹15 lakh had been repaid, leaving ₹1.45 crore outstanding, and the balance loan amount was repaid in the immediately succeeding financial year. The Court further noted that the Department had accepted the repayment without conducting any further inquiry.
In these circumstances, the High Court agreed with the ITAT that no remand was necessary, as no other view was possible. It held that no question of law, much less a substantial question of law, arose for consideration. Accordingly, the tax appeal filed by the Revenue was dismissed.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Being aggrieved and dissatisfied with the impugned judgment and order passed by the Income Tax Appellate Tribunal (hereinafter referred to as ‘ITAT’) dated 21/06/2013 in ITA No. 1010/Rjt/2010 for the Assessment Year 2006-07, the revenue has preferred by the present Tax Appeal with the following proposed substantial question of law;
“Whether the ITAT is erred in law as well as on facts in deleting the addition of Rs.1.45 Crores added by the Assessing Officer as unexplained cash credit under Section 68 of the Income Tax Act?”
2. The assessee filed the return of income for the Assessment Year 2006-07 declaring the total income at Rs.39,10,790/-. The Assessing Officer framed the assessment under Section 143(3) of the Income Tax Act on 22/12/2008 at the total income of Rs.1,84,10,790/- wherein he made the addition of Rs.1,45,00,00 under Section 68 of the Income Tax Act on the ground that the loan taken from Shri Ishwar Adwani (out of Rs.1.6 Crores) was not explained satisfactorily.
3. On appeal before the CIT(A) the assessee reproduced the letter dated 22/12/2008 written by the assessee to the Assessing Officer alongwith the confirmation letter of Shri Ishwar Adwani submitting that he had given loan of Rs.1,45,00,000/- to the assessee by cheques and considering the same and considering the fact that the aforesaid loan amount of Rs.1,45,00,000/- came to be repaid to said Shri Ishwar Adwani in the next assessment year and considering the identity of the donors, creditworthiness and the genuineness of the loan transactions, CIT(A) deleted the additions made by the Assessing Officer.
4. Being aggrieved and dissatisfied with the order passed by the CIT(A) in deleting the addition of Rs.1,45,00,000/- made by the Assessing Officer under Section 68 of the Income Tax Act on the ground that the loan taken from Shri Ishwar Adwani was not explained satisfactorily, the revenue preferred appeal before the ITAT and by impugned judgment and order, ITAT dismissed the appeal preferred by the revenue confirming the order passed by the CIT(A) deleting the aforesaid addition. Being aggrieved and dissatisfied with the impugned judgment and order passed by the ITAT, the revenue has preferred the present Tax Appeal with the aforesaid substantial question of law;
5. Heard Shri Pranav Desai, learned Counsel appearing on behalf of the revenue. The only contention on behalf of the revenue is that on the last day of passing the order, communication dated 22/12/2008 of the assessee alongwith the confirmation letter of Shri Ishwar Adwani confirming the loan/advance of Rs.1,45,00,000/- given to the assessee, was produced before the Assessing Officer i.e. on the day the Assessing Officer passed the order and thereafter the same was reproduced before the CIT(A) and the CIT(A) considered the same, the CIT(A) ought to have remanded the matter to enable the Assessing Officer to hold further inquiry and, therefore, it is requested to admit/allow the present Tax Appeal.
6. Having heard Shri Pranav Desai, learned Counsel appearing on behalf of the revenue and on perusal of the order passed by the CIT(A) confirmed by the ITAT, it appears that CIT(A) was satisfied with respect to the genuineness of the transaction and creditworthiness of Shri Ishwar Adwani and, therefore, deleted the addition of Rs.1,45,00,000/- made by the Assessing Officer. It is required to be noted that as such an amount of Rs.1,00,00,000/- vide cheque no. 102110 and an amount of Rs.60 lakhs vide cheque no. 102111 was given to the assessee and out of the total loan of Rs.1.60 Crores, Rs.15 lakhs vide cheque no. 196107 was repaid and, therefore, an amount of Rs.1,45,00,000/- remained outstanding to be paid to Shri Ishwar Adwani. It has also come on record that the said loan amount has been repaid by the assessee to Shri Ishwar Adwani in the immediate next financial year and the Department has accepted the repayment of loan without probing into it. In the aforesaid facts and circumstances of the case, when the ITAT has held that the matter is not required to be remanded as no other view would be possible, we see no reason to interfere with the impugned order passed by the ITAT. No question of law, much less substantial question of law arises in the present Tax Appeal. Hence, the present Tax Appeal deserves to be dismissed and is accordingly dismissed.
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