Income Tax Appellate Tribunal - Chandigarh
M/S Bhandari Knit Exports, Ludhiana vs Dcit, Circle- Iii, Ludhiana on 16 April, 2019
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, "ए" च डीगढ़
I N T H E I NC O ME T A X A P PE L L A T E T RI B U N AL
D I VI S I O N B E NC H , ' A ' , CH A ND I G AR H
ी संजय गग , या यक सद य एवं डा. बी.आर.आर, कुमार, लेखा सद य
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND
DR. B.R.R. KUMAR, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No. 1 4 6 4 / C H D / 2 0 1 7
नधा रण वष / Assessment Year : 2010-11
Bhandari Knit Exports, बनाम The DCIT, Circle III,
Bhandari House, Ludhiana
Village Meharban Rahon Road,
Ludhiana Punjab -147007
थायी लेखा सं./PAN NO. AAIFB3055A
अपीलाथ /Appellant यथ /Respondent
नधा रती क ओर से/Assessee by : Sh. Vibhor Garg, CA
राज व क ओर से/ Revenue by : Smt. Chandrakanta, Sr.DR
सन
ु वाई क तार%ख/Date of Hearing : 12.02.2019
उदघोषणा क तार%ख/Date of Pronouncement : 16.04.2019
आदे श/Order
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the orders dated 10.08.2017 of the Commissioner of Income Tax-2, Ludhiana [herein referred to as 'CIT(A)']. The assessee in this appeal has agitated the action of the CIT(A) in confirming the addition of ₹ 4 lacs treating the undisclosed loan raised by the assessee as unexplained income of the assessee u/s 68 of the Income-tax Act, 1961 (in short 'the Act').
2. The Assessing officer during the assessment proceedings, noted that the assessee during the year had received a loan of ₹ 4 lacs from one Shri Sham Singh. On being asked to explain the genuineness of the transactions and creditworthiness of the creditor, the assessee stated that Shri Sham ITA Nos. 1464/Chd/2017- M/s Bhandari Knit Exports, Ludhiana 2 Singh had advanced the loan from his bank account. That he had applied to the bank for supply of copy of the bank statement. However, since the bank authorities did not supply the copy of the bank statement, the Assessing officer completed the assessment making the addition of ₹ 4 lacs into the income of the assessee treating the same as unexplained income of the assessee.
3. In appeal, the assessee furnished the copies of the bank statement and also confirmations from the creditor Shri Sham Singh about the aforesaid loan transaction. The assessee also further supplied the confirmation from the creditor of Shri Sham Singh namely M/s Sunil Kumar Goel HUF who duly confirmed that they had given a loan amount of ₹ 4 lacs to Shri Sham Singh and Shri Sham Singh further had given the said amount to the assessee. During the course of appellate proceedings, the Ld. CIT(A) also directed the assessee to produce the copy of the accounts of Shri Sham Singh in the books of Shri Sunil Kumar Goel, HUF along with copy of the bank statement of the said HUF, which was duly produced before the CIT(A). On perusal of the aforesaid documents, the Ld. CIT(A) observed that though Shri Sham Singh had given loan to the assessee without an y interest, however, Shri Sham Singh while paying back the said amount of ₹ 4 lacs to Shri Sunil Kumar HUF on 6.3.2010 had also paid the interest amount of ₹ 27000/-. The Ld. CIT(A) under the circumstances observed that it was very unlikely that a person would take loan on interest and give it interest free to the assessee. Even the necessity of the loan by the assessee was not established as he as was having sufficient own funds. He also observed that even it was not clear that what was the source of Shri Sham Singh to return the loan to 'Sunil Kumar Goel, HUF' along with ITA Nos. 1464/Chd/2017- M/s Bhandari Knit Exports, Ludhiana 3 interest. He therefore, held that from the circumstances it appeared that assessee had routed its own unaccounted money through different accounts which ultimately had been shown as a loan from Shri Sham Singh. He, therefore, held that the assessee had failed to establish creditworthiness of Shri Sham Singh. He, accordingly confirmed the order of the Assessing officer making the impugned addition of ₹ 4 lacs.
4. Being aggrieved by the above order of the CIT(A), the assessee came in appeal before the Tribunal.
5. We have heard the rival contentions and have also gone through the record. A perusal of the order of the CIT(A) reveals that the assessee had duly furnished not only the bank statement of Shri Sham Singh, creditor but also the bank statement of 'Sunil Kumar Goel, HUF' from whom Shri Sham Singh had taken loan which was further advanced to the assessee. All the transactions were routed through banking channel. The confirmations of the aforesaid transactions were duly filed before the Assessing officer, whereby, not only 'Sunil Kumar Goel, HUF' confirmed the loan transactions with Shri Sham Singh but also Shri Sham Singh further confirmed the loan transactions with the assessee. Now, so far as the question that the CIT(A) raised that why a person would take loan on interest to pay it further interest free to the assessee, is concerned, we are of the view, that the aforesaid fact is not sufficient to hold that it was the own money of the assessee which was routed through Shri Sham Singh. Had it been so, in those circumstances, Shri Sham Singh would not have required to pay the interest to 'Shri Sunil Kumar HUF'. Whether Shri Sham Singh had paid interest on the loan amount to Shri Sunil Kumar Goel HUF or not, in our view, is not relevant and cannot form the basis to hold ITA Nos. 1464/Chd/2017- M/s Bhandari Knit Exports, Ludhiana 4 that it was the own money of the assessee routed though Shri Sham Singh. So far as the view of the Ld. CIT(A) that it was not clear as to from where Shri Sham Singh returned the money to 'Sh. Sunil Kumar Goel HUF', in our view, that is a matter of subsequent transaction between Shri Sham Singh and Shri Sunil Kumar Goel HUF and the assessee is not supposed to explain about that subsequent transaction. The Ld. CIT(A) did not choose to summon and cross examine of Shri Sham Singh about any subsequent transaction as it was only Shri Sham Singh who could have explained the source of the returned money to Shri Sunil Kumar Goel HUF. The said transaction however, is not related to the appellant and thus he is not supposed to answer that question. The assessee in this case has not only duly proved the transaction but has also proved the source of the aforesaid loan amount in the hands of the creditor.
We therefore, do not find any justification on the part of the lower authorities in making the impugned addition, the same is ordered to be deleted.
In the result, the appeal of the assessee is, hereby, allowed. Order pronounced in the Open Court on 16.04.2019.
Sd/- Sd/-
( बी,आर.आर. कुमार / B.R.R. KUMAR) (संजय गग / SANJAY GARG )
लेखा सद य/ Accountant Member या यक सद य /Judicial Member
Dated : 16/04/2019
"आर.के."
आदे श क त,ल-प अ.े-षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आय/ ु त/ CIT
4. आयकर आय/ ु त (अपील)/ The CIT(A)
5. -वभागीय त न2ध, आयकर अपील%य आ2धकरण, च4डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File ITA Nos. 1464/Chd/2017- M/s Bhandari Knit Exports, Ludhiana 5 आदे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar