×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
1. This appeal is filed by the assessee, Lakshya Educational Trust, AOP, through its trustee against the order of the ld CIT (A), Muzaffarnagar dated 26.03.2017, wherein, the addition made by the ld AO of Rs. 30 lakhs on account of unexplained credit u/s 68 is upheld. The assessee has challenged the same as per following grounds:-
1. The learned CIT (A) grossly erred in sustaining addition of Rs. 30 lakhs, being loan received from a party supported with ITR, confirmation, B/s disclosing loans and bank a/c of said party and even after verifying rat loan is repaid cases of subsequent years are accepted, which is against the ratio of decision of hon‟ble Jurisdictional high court/other courts etc.
2. That in addition to above, Id. CIT(A) failed to appreciate that the allegation of AO about enquiries about address of company is found wrong beside there is no material against the mass evidences/material placed on record and accepted other loans Id. AO failed to discharge the shifted onus lay upon him even after remanding case twice.
3. That in addition to above, learned CIT(A) failed to appreciate that loans was taken long before the start of activities hence neither there was any possibility to have earned so much of income and failed to follow the ration of apex / jurisdictional courts etc. on the issue.
4. That without prejudice to above and without any dilution in above grounds but in alternative, learned CIT(A) failed to follow the ratio of jurisdictional/other courts holding that provisions of s. 68 has no applicability where deemed income u/s 68 is applied for charitable purposes.
2. The brief facts of the case shows that the assessee is a charitable trust assessed as Association of Persons, running an educational institute, filed its return of income on 12.10.2010 showing total income of Rs. Nil.
3. During the course of assessment proceedings, it was found that the assessee has obtained unsecured loan of Rs. 30 lakhs from M/s. Atoll Vyapaar Pvt ltd, Kolkata, and West Bengal during the financial year 2009- 10. Assessee submitted confirmation, copy of the income tax return wherein, the gross total income of the depositors was of Rs. 37989/- only. Assessee submitted the bank statement of the lenders from Punjab National Bank from 09-03-2010 to 12.03.2010 which showed that there are debits and credits of huge amounts ranging from Rs. 5 lakhs to Rs. 50 lakhs resulting into meager income to the lender despite such heavy deposit and withdrawals. The ld AO conducted an enquiry through the Investigation Wing of Kolkata and such enquiry confirmed that no such company exists at the given address. The ld AO also noted that he has made repeated requests to produce the directors of that company which were not complied with. Therefore, the ld AO held that the assessee failed to prove the identity, creditworthiness of the lenders as well as genuineness of the transaction of unsecured loan of Rs 30 lakhs and he made an addition u/s 68 of the Act. He further relied upon several judicial precedents to make the above addition. Further, he held that as the addition has been made u/s 68 of the Act the benefit of application of provision of section 11 and 12 are also not eligible to the assessee because the cash credit is not genuine, is not voluntary contribution. Accordingly, order u/s 143(3) of the Act was passed on 15.03.2013 determining the total income of the assessee of Rs. 30 lakhs.
4. The assessee aggrieved with the order of the ld AO preferred an appeal before the ld CIT (A). It also made an application for admission of additional evidence in the form of annual accounts of the depositor, Form NO. 18, the copy of ledger account and the copy of bank account of the lender for subsequent year stating that the above amount has also been repaid. The ld CIT (A) also obtained the remand report from the AO dated 21.03.2016 which objected to admission of additional evidences. Assessee also submitted the rejoinder to the same. The ld CIT(A) admitted the additional evidence and thereafter vide Para No. 10 onwards proceeded to decide the ground No. 3 and 5 of the appeal of the assessee vide page No. 17 to 24 as under:-
“10. Grounds of appeal Nos.3 to 5 are against the addition of Rs.30,00,000/- on account of unexplained unsecured loans u/s 68 of the Act and application of section 11/12 of the Act.
11. The facts of the case, submissions made by the appellant, remand report of the AO and rejoinder of the appellant have been considered. The appellant is a society which is not registered u/s 12Aof the Act during the year under consideration.
The AO has required the appellant to prove identity, creditworthiness‟ 'and genuineness in respect of above unsecured loans. The appellant has received loan of Rs.30 lac from M/s Atoll Vyapaar Pvt. Ltd., registered at 19, Ilnd Floor Main Building, R.N. Mukerjee Road, Calcutta. Similar loans have been raised in the case of
Society for Institute of Professional Studies for 2010-11 where trustees are common with the appellant and being assessed with the same AO. It was found by the AO that its director is Sh. Sunil Kumar Gupta whose address as per the ROC/MCA records is 234, DDA Office Complex, Jhandewalan Extension, New Delhi. The AO has issued notice u/s 131 of the Act on 16 04-2012 in the case of Sh. Sunil Kumar Gupta in the case of Society for Institute of Professional Studies to verify the unsecured loans taken by the appellant from 3 companies including M/s Atoll Vyapaar. The Inspector Income Tax deputed to serve the said notice has reported that there was a firm in the name of M/s Alok and Company about a year back on this address and presently there is a sign board of M/s Niwas Associates. On the local enquires it has been gathered that Shri Sunil Kumar Gupta had never lived at that address. The AO on 12-03-2013 after going through, the documents furnished by the appellant and other material on record has required" the appellant to produce the Director of M/s Atoll Vvapaar. No compliance was made by the appellant. The AO in view of discussion made in the assessment order has treated the amount of Rs.30 lac in respect of Atoll Vypaar Pvt. Ltd. Calcutta as unexplained sum and added the same u/s 68 of the Act.
During the appellate proceedings the appellant has relied on the confirmations giving addresses, details of loan, mode of payment through banking channel, copy of ITR, bank statement and repayment of loan in subsequent years, copy of the balance sheet and profit and loss account in respect of M/s. Atoll Vypaar. The AR has argued that primary onus has been sufficiently discharged it. The AR has stated that he was not required to prove the source of source of loan. In the rejoinder the AR has stated that the AO has made addition merely on presumptions. The AR has argued that the appellant was never confronted with the adverse findings made by the AO as discussed in the assessment order. In the rejoinder the AR has stated that no such addition can be made which has been received before the start of