Income Tax Appellate Tribunal - Mumbai
Ramesh N. Vora, Mumbai vs Department Of Income Tax on 8 July, 2010
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "D", MUMBAI
BEFORE SHRI R.V. EASWAR (PRESIDENT)
AND
SHRI R.K. PANDA (ACCOUNTANT MEMBER)
I.T.A. No. 4962/Mum/2008
(Assessment year : 2004-05)
Income-tax Officer-11(3)(2) Vs. Shri Ramesh N. Vora
Room No. 448, 4th Floor, M/s. Ramesh Vora & Co., CAs
Aayakar Bhavan, M.K. Road, 11, Heena Madhu Park Society
Mumbai-400 020 1st Floor, 1st Road, Plot No.
128, Opp. CCD Khar (W),
Mumbai-400 052
PAN: AACPV4788L
Appellant Respondent
Shri Jitendra Yadav
Appellant by :
Respondent by : Shri Sanjiv Shah
ORDER
Date of hearing: 08.07.2010
Date of order: 06.08.2010
PER R.K.PANDA, AM,
This appeal filed by the Revenue is directed against the order dated 2nd June, 2008 of the CIT(A) Central-VII, Mumbai relating to assessment year 2004-05.
2. Grounds of appeal No. 1 by the Revenue reads as under:
"On the facts and in the circumstances of the case and in law the learned CIT(A) erred in deleting addition of Rs.2,38,000/- in respect of gifts shown by the assessee."
3. Facts of the case, in brief, are that the assessee is a professional chartered accountant and had shown to have received gifts of Rs.2,74,000 from the following persons:
2 ITA No. 4962/Mum/2008Shri Ramesh N. Vora =================== S. Amount Name No. (Rs.)
1. M.G. Soparkar (HUF) 1,00,000
2. Mrs. Sonal K. Piparia 15,000
3. Mrs. Akta P. Piparia 15,000
4. Mrs. Bharati Badani 16,000
5. Mrs. Dimple N. Shah 15,000
6. Mrs. Nutan Soparkar 18,000
7. Mrs. P.M. Soparkar 59,000
8. Mr. Vijay Bhayani 18,000
9. Ms. Forum Vora 18,000 Total 2,74,000
4. The Assessing Officer during the course of assessment proceedings asked the assessee to give details to justify the claim of gifts received from various persons. It was explained by the assessee that he has received loans from the above parties in the preceding years which were reflected in the Balance Sheet. The assessee furnished the photocopies of the bank statement, income-tax acknowledgement, Balance Sheet. capital account as well as computation of total income in respect of the above persons to support the loans taken from the parties in the previous year. It was explained that on 2nd April, 2003 some of the parties have expressed their willingness to gift these amounts and gifted a sum of Rs.2,74,000 to the assessee.
5. However, the Assessing Officer was not satisfied with the explanation given by the assessee. He noted that gift deeds filed by the assessee suffer from serious manipulations. The gifts were received during the accounting period 1.4.2003 to 31.3.2004 whereas all the gift deeds were prepared in the month of August 2006 i.e., after purchase of franking stamp paper and when the assessee failed to file the gift deeds during the course of assessment proceedings. The gifts were given by foregoing the loan liability. The gift transaction was arranged by the assessee from his distant relative and family member in cash and cheques through circulating transaction. The gifts were not taken actually but routed through book adjustments. The return 3 ITA No. 4962/Mum/2008 Shri Ramesh N. Vora =================== of income filed by donor is much below the taxable limit and none of them has capacity to give the gift. The gift deeds filed do not bear the date of acceptance by the assessee. Further the assessee has not given any gifts but he was only receiving the gifts from his clients. The Assessing Officer thereafter discussed the individual gift items. Not being satisfied with the various explanations given by the assessee and doubting the genuineness of the transaction and the capacity of the donor to give the gift the Assessing Officer disallowed the entire gift of Rs.2,74,000 as income from undisclosed sources u/s. 68 of the Act.
6. Before CIT(A) it was submitted that the assessee has discharged the initial and primary onus of establishing and substantiating the identity, capacity and genuineness of the donors by producing positive, direct, overriding and unexceptionable material and evidences such as gift deed, PAN, address of the donor, copy of bank passbook of the donor as well as the donee and copies of income-tax return, Balance Sheet and other details of the donor during the course of assessment proceedings. A number of case decisions were relied upon for acceptance of the gifts under the facts and circumstances of the case.
7. It was further submitted that wherever the addition is proposed to be made u/s. 68, 69, 69A, 69B or 69C the word deployed is "may" and consequently the Assessing Officer has discretionary power to make or not to make an addition. Under the assessee's facts and circumstances, the discretion should have been exercised in its favour because of the presence of overwhelming and overriding preponderances of probabilities.
8. It was further submitted that the loan transaction except item Nos. 8 and 9 pertain to the earlier assessment year and consequently in any view of the matter the impugned cash credits are not 4 ITA No. 4962/Mum/2008 Shri Ramesh N. Vora =================== assessable in the year under appeal i.e., A.Y. 2004-05 and the addition should have been deleted on this ground alone. It was submitted that in conformity with section 123 of Transfer of Property Act, 1882 the gift of immovable property can be effected by delivery of possession. In other words, oral gifts of immovable properties are permissible in law. Therefore, notwithstanding that the written gift deed recording the oral gift of money to the assessee in the accounting year 2003-04 was executed only on 12th August, 2006, such oral gift of money is legal, valid and binding inasmuch as in the books of account of the assessee all the gift entries have been recorded during the previous year ended 31st March, 2004. However, the Assessing Officer has failed to consider all these facts. Relying on a number of decisions it was submitted that the addition made by the Assessing Officer u/s. 68 was not justified.
9. Based on the arguments advanced by the assessee, the learned CIT(A) deleted the gift from 7 parties (as per Sl. Nos. 1 to 7 at para 3 of this order) amounting to Rs.2,38,000. However, he confirmed addition of the gift of Rs.18,000 received from Mr. Vijay Bhayani and Rs.18,000 from Ms. Forum Vora. While doing so he noted that as far as the first 7 names are concerned the observations and findings of the Assessing Officer are too general to be accepted without any cogent piece of evidence. The assessee has been able to bring on record all relevant evidences which are on record and which have not been refuted by the Assessing Officer in a forceful manner. Further the said gifts are already credited in the books of the assessee in earlier assessment year in the form of loans and as such could not be treated as unexplained during the year under consideration. Since the assessee had produced evidences to show that all the persons concerned were duly identified being tax papers in their own right and had necessary creditworthiness for advancing funds to the assessee are enough to discharge the initial onus on the assessee. There is no basis with the Assessing Officer to conclude that the amounts received 5 ITA No. 4962/Mum/2008 Shri Ramesh N. Vora =================== by way of loans represent unaccounted income of the assessee and do not belong to the respective persons. Therefore, the very basis for making the addition in the impugned assessment year lacks any substance. Further the Assessing Officer has not examined any of the persons concerned. He accordingly deleted the gifts received amounting to Rs.2,38,000 from the persons mentioned at Sl.Nos.1-7.
10. However, as regards the gift received from Vijay Bhayani and Ms. Forum Vora he rejected the contention of the assessee on the ground that both of them are not assessed to income-tax nor have any ostensible source of income to establish their creditworthiness as the affidavits filed show that the said gifts were given out of past savings which remain unsubstantiated. In such a situation, the creditworthiness as well as the genuineness of the said gifts could not be proved by the assessee. Aggrieved with such order of the CIT(A), the Revenue is in appeal before us.
11. The learned DR while supporting the order of the Assessing Officer drew the attention of the Bench to the various comments made by the Assessing Officer in the order. He submitted that the assessee is a chartered account and although the alleged gifts were received during the financial year 1.4.2003 to 31.3.2004 the gift deeds were prepared in the month of August, 2006. There is no relationship between the donors and the donee and there was no occasion for giving or receiving the gifts. Out of Rs.2,74,000 the learned CIT(A) has sustained the addition of only Rs.36,000 and deleted an amount of Rs.2,38,000. He submitted that although the amount is very small but the way it was done is not correct. Referring to pages 91 and 92 of the Paper Book which is the gift of Rs. 1 lakhs given by Manohar Ganpat Soparkar (HUF), he submitted that the gift is not dated nor was it accepted by the donee. It was not even a certified copy and it has been signed by one Nutan Soparkar who is the constituent attorney for the donor. Referring to page 98 of the Paper Book, he 6 ITA No. 4962/Mum/2008 Shri Ramesh N. Vora =================== drew the attention of the Bench to the copy of the acknowledgement of return of Manohar Ganpat Soparkar (HUF) where the HUS has declared the income of only Rs.9000. He submitted that this is the only return of the HUF and a copy of which was filed and there is absolutely no creditworthiness of the HUF who gave such a huge loan as a gift. Referring to the declaration of gift of Rs.15,000 by Sonal K. Piparia, a copy of which is placed at Paper Book page 111 and the gift of Rs.15000 from Akta P. Piparia, a copy of which is placed at page 121 of the Paper Book, he submitted that the facts in these two cases are also identical to that of Manohar Ganpat Soparkar (HUF). Referring to the various gift deeds placed in the Paper Book, he submitted that the stamp papers were purchased from the Kapol Co- operative Bank Ltd. on the same date and at the same time. Further the contents of each of the gift deed are identical. Therefore when six different persons who are not related to each other and not related to the assessee go to the same bank and purchase the stamp papers at the same time the only inference that can be drawn is that the documents are mere self serving documents. He accordingly submitted that the order of the CIT(A) be reversed and that of the Assessing Officer be restored on this issue.
12. The learned counsel for the assessee, on the other hand, while supporting the order of the CIT(A) submitted that the gifts were already credited in the preceding year as loan. Therefore, even assuming that the gifts were not as per law even then also it cannot be added. Referring to page 93 of the Paper Book [which is the confirmation of Manohar Ganpat Soparkar (HUF)] he submitted that an amount of Rs. 1 lakh was obtained as loan on 5th January, 2000 by cheque which was shown on the Balance Sheet of the assessee as loan. Referring to page 113 of the Paper Book he submitted that the loan of Rs.15000 was obtained from Ms. Sonal K. Piparia on 2nd May, 2002 by cash. Referring to page 123 of the Paper Book he submitted that an amount of Rs.15000 was obtained as loan from Ms. Akta P. 7 ITA No. 4962/Mum/2008 Shri Ramesh N. Vora =================== Piparia on 16th May, 2002 by cash. Referring to Paper Book page 127 he submitted that cash loan of Rs.16000 was obtained from Ms. Bharati Badani on 14th April, 2002. Referring to the copy of the letter addressed to the Assessing Officer on 4th November, 2006 a copy of which is placed at Paper Book pages 82 to 88, he drew the attention of the Bench to page 6 of the said letter (Paper Book page 87) and submitted that the assessee had requested the Assessing Officer to either issue summons u/s. 131 and/or issue notice u/s. 133(6) for any information and if the Assessing Officer did not receive any reply then the assessee requested to take necessary action under the Act. However, the Assessing Officer has not issued a single summon to any of the donors. Refuting the allegation of the learned DR regarding the deficiency in gift deed, he submitted that it is only a declaration and not a gift deed. Referring to the decision of the Hon'ble Rajasthan High Court in the case of CIT vs. Padam Singh Chouhan reported in 315 ITR 433 he submitted that for accepting a gift blood relation is not required for the donor for giving a gift and natural love and affection is sufficient. He submitted that in the instant case the loan was already lying with the assessee. Book adjustment was already made and it is constructed delivery. Referring to page 71 of the Paper Book he submitted that the gift of Rs.2,74,000 is already added to the capital account of the assessee. Referring to the copy of the bank account of Manohar Ganpat Soparkar (HUF), a copy of which is placed at Paper Book pages 96 and 97, he submitted that the loan of Rs. 1 lakh given during January, 2000 was out of clearing of two cheques of Rs.50,000 each on 3rd January, 2000 and the assessee need not give source of the source. Referring to the various pages of the Paper Book he drew the attention of the Bench to various documents produced before the Assessing Officer and the CIT(A) to substantiate the genuineness of the transactions and the capacity of the persons who extended such loans.
8 ITA No. 4962/Mum/2008Shri Ramesh N. Vora ===================
13. The learned counsel further submitted that the Assessing Officer has power to verify the evidences filed before him. The assessee has discharged the primary onus cast on him and the Assessing Officer has not done anything to show that the assessee's explanation was untrue. For this proposition he relied on the decision of the jurisdictional High Court in the case of CIT vs. V.M. Shah.
14. We have considered the rival submissions made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that the assessee, who is a chartered accountant by profession, has credited an amount of Rs.2,74,000 to the capital account being gifts received during the year. There is also no dispute to the fact that out of the above Rs.2,74,000 an amount of Rs.2,38,0800 was received as loan in the preceding assessment year and only Rs.36,000 was received during the year from Mr. Vijay Bhayani and Ms. Forum Vora. We find the Assessing Officer added the entire amount of Rs.2,74,000 on the ground that the assessee was unable to prove the genuineness of the transaction and creditworthiness of the donor. We find the CIT(A) deleted the addition of Rs.2,38,000 out of Rs.2,74,000 made by the Assessing Officer on the ground that the assessee has discharged the primary onus and the Assessing Officer has not been able to refute the evidences in a forceful manner and that all the gifts were already credited in the books of the assessee in earlier assessment year in the form of loan and as such could not be treated as unexplained cash credit during the year under consideration. We do not find any infirmity in the observations of the learned CIT(A). Admittedly an amount of Rs.2,38,000 was received by the assessee from 7 persons as loan in the preceding assessment year and these were transferred to gifts only during the relevant assessment year through book entries.
9 ITA No. 4962/Mum/2008Shri Ramesh N. Vora ===================
15. We find the provisions of section 68 read as under;
"68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year."
16. From the above it is clear that addition can be made u/s. 68 of the Act where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not satisfactory in the opinion of the Assessing Officer. In the instant case an amount of Rs.2,38,000 was already credited in the books of account by way of loan in the preceding assessment year. Therefore, addition if any could have been made only during the assessment year in which the assessee has accepted the loan. Since during the year the assessee has merely converted the loans into gifts through book entries, we, therefore, do not find any infirmity in the order of the CIT(A) holding that the said gifts were already credited in the books of the assessee in the earlier assessment year in the form of loans and as such could not be treated as unexplained during the year under consideration. In this view of the matter and in view of the detailed order passed by the CIT(A) on this issue, we do not find any infirmity in his order deleting the addition. The ground raised by the Revenue is accordingly dismissed.
17. Grounds of appeal No. 2 by the Revenue reads as under:
"On the facts and in the circumstances of the case and in law the learned CIT(A) erred in deleting Rs.11,62,474/- received as unsecured loan and disallowed as unexplained cash credit u/s. 68 of the IT Act."
18. Facts of the case, in brief, are that the Assessing Officer during the course of assessment proceedings noted that the assessee has 10 ITA No. 4962/Mum/2008 Shri Ramesh N. Vora =================== shown to have received unsecured loan of Rs.11,62,474, the details of which are as under:
Sl. Amount
Party
No. (Rs.)
1. Ms. Himanshi Ramesh Vora (daughter) 5,24,861
2. Ms. Miloni Ramesh Vora (daughter) 3,59,500
3. Mrs. Kanan Ramesh Vora (wife) 2,78,113
Total 11,62,474
19. The Assessing Officer asked the assessee to give the loan confirmations with details of bank account of loans, furnish evidence in respect of the genuineness of the loans and the date since when the loans are outstanding. From the copies of the loan confirmations the Assessing Officer noted that the two daughters are school going and minors and do not have the capacity to enter into an agreement to give the loans, sign confirmations, etc. He noted that the loan details from Ms. Himanshi Ramesh Vora shows the opening balance at Rs.3,24,361, new loan availed during the year at Rs.2,00,500 and the closing balance was at Rs.5,24,861. The return of income filed shows her source only as income from other sources. The new loans availed from Ms. Himanshi Ramesh Vora during the year amounting to Rs.35,000, 3,000, 1,22,500 and Rs. 1 lakh on various dates were transferred to immediate credits in her bank account. The assessee was unable to explain the source of her income. Therefore, the Assessing Officer held that Ms. Himanshi Ramesh Vora does not have the capacity to give the loan.
20. In the case of Ms. Miloni Ramesh Vora the Assessing Officer noted that the opening balance was shown at Rs.2,27,000, new loan availed during the year at Rs.1,32,5080 and the closing balance was shown at Rs.3,59,500. The loans of Rs.12,500, 5,000, 1 lakh and Rs.1,50,000 given on different dates were out of immediate transfer of equivalent amount into her account from the assessee himself. Since the assessee was unable to explain the source of various entries 11 ITA No. 4962/Mum/2008 Shri Ramesh N. Vora =================== credited in her account, the Assessing Officer held that Ms. Miloni Ramesh Vora has no capacity to give loan to the assessee.
21. The Assessing Officer similarly noted that the loan from Mrs. Kanan Ramesh Vora (wife) shows opening balance of Rs.14,65,800. During the year the assessee used her loan account as running account for payments made on her behalf for Pune flat and she made the payments on his behalf for Khar flat and other payments on her behalf. Cheques received on sale of shares in her account were transferred to the loan account. The closing balance shown in the books was Rs.2,78,113. Looking to the multiple debit and credit entries appearing in the bank statement, the Assessing Officer came to the conclusion that the assessee has purchased the shares and transferred the money into her account and in turn the amounts were used for various payments and shown the loans outstanding at Rs.2,78,113. From the acknowledgement of the return of income of Mrs. Kanan Ramesh Vora the Assessing Officer noted that she had income from business or profession at Rs.48,400, capital gain of Rs.30,372 and income from other sources of Rs.1,32,005. This according to the Assessing Officer proves that she had no capacity to give the loan.
22. Not being satisfied with the various explanations given by the assessee, the Assessing Officer treated the entire amount of unsecured loan appearing at the end of the year at Rs.11,62,474 as unexplained cash credit u/s. 68 of the Act and made addition to the total income of the assessee.
23. Before the CIT(A) it was submitted that the assessee has discharged the initial and primary onus of establishing and substantiating the identity, capacity and genuineness of the loan creditors by producing the positive, direct, overriding and unexceptionable material and evidences during the course of 12 ITA No. 4962/Mum/2008 Shri Ramesh N. Vora =================== assessment proceedings by producing the various evidences such as loan confirmations, bank statements, income-tax acknowledgements, etc. It was submitted that the legal submissions, arguments, propositions of law and case laws advanced and cited in respect of gift transactions apply mutatis mutandis to the additions with reference to the cash credits with necessary and consequent changes. It was submitted that the loans were received from family members by account payee cheques, all transactions are identifiable, verifiable and traceable in their respective bank accounts. Relying on a number of decisions it was submitted that the assessee cannot be called upon to prove the source of source. If the Assessing Officer was not satisfied and doubted about the credibility and genuineness of the sources of the credit, it was incumbent upon him to corroborate and verify the claim of the assessee by summoning the loan creditors for obtaining necessary information and the returns by the loan creditors filed before the Department. If such a step is not resorted to by the Assessing Officer so as to cross check the capacity of the loan creditors, the assessee cannot be made to suffer for the lapse and tardiness of the Assessing Officer.
24. On the basis of the arguments advanced by the assessee and the decisions cited before him, the CIT(A) deleted the addition of Rs.11,62,474 by holding as under;
"10. I have carefully considered the above facts. It is quite evident from the foregoing discussion that the appellant has been able to discharge the primary onus in the matter in a conclusive manner. The appellant has furnished confirmations of the persons concerned and has also demonstrated that all of them were assessed to income tax having their own sources of income. The transactions have also been made through banking channels. On the other hand, the observations and findings of the Assessing Officer are quite superficial. Nothing has been brought on record to show that the appellant introduced his own unaccounted income under the garb of cash credits. The Assessing Officer has not been able to refute the evidences filed. He has not even 13 ITA No. 4962/Mum/2008 Shri Ramesh N. Vora =================== bothered to examine any of the creditors in this regard before drawing adverse inference. There is no restriction as such to accept loan from family members. It is, therefore, held that in the absence of any contrary finding by the Assessing Officer, the appellant has been able to prove the identity as well as the creditworthiness of the creditors and also the genuineness of the transaction and thus fulfilled all the three ingredients u/s. 68 of the Act. There is not sufficient basis for treating the loans as unexplained. The addition made is, therefore, deleted."
Aggrieved with such order of the CIT(A), the Revenue is in appeal before us.
25. The learned DR while supporting the order of the Assessing Officer submitted that the assessee has obtained loans from the school going minor daughters and his wife. The Assessing Officer could not have examined the minor daughters by issuing summons. Referring to page 67 of the Paper Book, he submitted that Ms. Himanshi Ramesh Vora's date of birth is 1.12.1985, filed her return of income for the first time on 7th July, 2006 for the A.Y. 2006-07 declaring an income of Rs.2,29,040. This return is subsequent to the period under assessment. No income of the minor has been clubbed in the hands of the parents. Therefore, the order of the CIT(A) holding that the assessee has proved the creditworthiness of Ms. Himanshi Ramesh Vora is a perverse one. Referring to page 275 of the Paper Book, he submitted that the copy of the acknowledgment of return of Ms. Miloni Ramesh Vora does not show her date of birth and the first return has been filed for the A.Y. 2008-09. The loan was received during the A.Y. 2004-05 and no income of the minor has been added in the hands of the parents u/s. 64 of the Act. As regards the loan obtained from wife of the assessee Ms. Kanan Ramesh Vora, the learned DR submitted that her total income of past 24 years does not even come to Rs.14,65,800 which is the loan outstanding from the wife of the assessee as on the first day of the assessment year. Therefore, the creditworthiness of the loan creditor and the 14 ITA No. 4962/Mum/2008 Shri Ramesh N. Vora =================== genuineness of the transaction are not proved. Therefore, the order of the CIT(A) being contrary to the facts and a perverse one should be set aside and that of the Assessing Officer be restored.
26. The learned counsel for the assessee, on the other hand, submitted that the assessee has discharged the onus cast on him by filing the various details and the onus is now shifted to the Department. If the Assessing Officer fails to do anything the assessee cannot be blamed. Referring to the loan statement of Ms. Kanan Ramesh Vora, he submitted that it is a running account and no fresh loan has been taken during the year. As regards the loan obtained from Ms. Himanshi Ramesh Vora the learned counsel for the assessee referred to page 206 of the Paper Book and submitted that on 1st April, 2004, the loan creditor has become a major and signed the confirmation letter. Further the assessee has subsequently repaid the loan which has been accepted by the Department which is evident from the ledger account of Ms. Himanshi Ramesh Vora in the books of Ramesh Vora & Co. which are as per Paper Book pages 264 and 265. As regards the loan obtained from Ms. Miloni Ramesh Vora he referred to page 22 of the Paper Book and submitted that Ms. Miloni Ramesh Vora had given the loan during the year out of various deposits in her bank account. The learned counsel for the assessee relied on the submissions made before the CIT(A). In his alternate contention, he submitted that only the loans obtained during the year at best could have been added and the entire loan outstanding at the close of the year could not have been added.
27. The learned DR, in his rejoinder, submitted that nothing has been said about the source of the daughters i.e., Ms. Himanshi Ramesh Vora and Ms. Miloni Ramesh Vora and the assessee is not clear about the source of the deposits. As regards the submission of the learned counsel for the assessee that the Assessing Officer has not issued summons, he submitted that in case of school going minor 15 ITA No. 4962/Mum/2008 Shri Ramesh N. Vora =================== girls how the Assessing Officer can issue summons. As regards the submission of the learned counsel for the assessee that the loan has been repaid to Ms. Himanshi Ramesh Vora, he submitted that repayment of loan subsequent to the acceptance is totally irrelevant. However, he submitted that the addition can be restricted to the loans obtained during the year.
28. We have considered the rival submissions made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that the unsecured loan at the end of the assessment year has been shown at Rs.11,62,474. There is also no dispute to the fact that in the case of Ms. Himanshi Ramesh Vora and Ms. Miloni Ramesh Vora the assessee has accepted fresh loan of Rs.2,00,500 and Rs.1,32,500, respectively during the year. However, in the case of Ms. Kanan Ramesh Vora the opening balance of Rs.14,65,800 has gone down to Rs.2,78,113. The Assessing Officer doubting the creditworthiness of the loan creditors and genuineness of the transactions added the entire unsecured loan u/s. 68 of the Act outstanding as on 31.3.2004 at Rs.11,62,474. We find the CIT(A) deleted the entire addition merely on the basis of the submissions advanced by the assessee. In our opinion the Assessing Officer could not have added the opening balance of the unsecured loans outstanding as on 1st April, 2003 and could have added only the loan obtained during the year in case he is not satisfied with the capacity of the loan creditors and the genuineness of the transaction. In the instant case, from the various details furnished by the assessee during the course of assessment proceedings as well as before us, we find the minor daughters do not have adequate known source of income to extend loan of Rs.2,00,500 and Rs.1,32,500, respectively. We find the CIT(A) without appreciating the facts of the case properly has deleted the entire addition. Since the assessee was unable to 16 ITA No. 4962/Mum/2008 Shri Ramesh N. Vora =================== explain the source of the income of minor daughters even before us, the loans advanced by the minor daughters has to be added u/s. 68 of the Act. However, such addition has to be restricted to the loans taken during the year and not the opening balances which relate to other assessment years. We, therefore, set aside the order of the CIT(A) on this issue and sustain the addition in the case of Ms. Himanshi Ramesh Vora at Rs.2,00,500 and Rs. 1,32,500 in the case of Ms. Miloni Ramesh Vora.
29. As regards the loan from Ms. Kanan Ramesh Vora we find as against the opening balance of Rs.14,65,800 the closing balance has been declared at Rs.2,78,113. It is the submission of the learned counsel for the assessee that since no fresh loan has been taken during the year and the closing balance is less than the opening balance no addition can be made u/s. 68 of the Act. However, the learned counsel for the assessee could not explain the amount of Rs.2,91,000 give by Ms. Kanan Ramesh Vora to the assessee on 1st April, 2003 especially when the loan creditor has apparently exhausted her entire capital by giving the loan to the assessee which was shown at Rs.14,65,800 on 1st April, 2003 u/s. 68 of the Act. The assessee is required to explain any sum found credited in her book maintained for any previous year. Since the learned counsel for the assessee was unable to explain the source of Rs.2,91,000 as on 1st April, 2003, therefore, we in the interest of justice, deem it proper to restore the matter back to the file of the Assessing Officer with a direction to give an opportunity to the assessee to substantiate with evidence to his satisfaction regarding the source of the loan of Rs.2,91,000 received on 1st April, 2003. The Assessing Officer shall decide the issue afresh and in accordance with law. We hold and direct accordingly. This ground raised by the Revenue is accordingly partly allowed for statistical purposes.
17 ITA No. 4962/Mum/2008Shri Ramesh N. Vora ===================
30. In the result, the appeal filed by the Revenue is partly allowed for statistical purposes.
Pronounced in the open court on 6th August, 2010 Sd/- Sd/-
(R.V. EASWAR) (R.K. PANDA)
PRESIDENT ACCOUNTANT MEMBER
Mumbai, date 6th August, 2010
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A), Central-VII, Mumbai
4. The CIT-XI, Mumbai
5. The DR "D" Bench.
//True copy//
BY ORDER
ASSISTANT REGISTRAR
ITAT Mumbai Benches, Mumbai
Tprao