2015 (9) TMI 379 - AT - Income Tax

Addition of unsecured loans - Held that - It is clear that the assessee is unable to prove the immediate source of the transaction for the reason that the creditor is having bank account no. 071696 of UCO Bank, Barakar where an amount of ₹ 3,00,000/- was deposited on 03.10.2006 and on that very same day this amount was given as loan to the assessee i.e. her husband. Apart from this amount of ₹ 3,00,000/- there are small entries varies from ₹ 10,000/- to ₹ 20,000/- in the bank account and there was never a balance of more than ₹ 20,000 to ₹ 30,000/- in this bank account. Thus the assessee is unable to explain this transaction. Hence, confirm the orders of the lower authorities and the addition is confirmed. - Decided against assessee. Addition of unsecured loan received from Smt. Shashi Devi Poddar - Held that - As gone through the current account bank statement wherein various entries of cash deposits and cheques issued are there from 24th April, 2006 to 3rd October, 2006 and on various dates the bank balance was more than ₹ 20,000/- and sometimes even ₹ 1 lac. It means that there was regular cash flow in the bank account from which the loan of ₹ 2,50,000/- was given to the assessee i.e. her nephew. In view of the above, it is of the view that Shashi Devi Poddar was having sufficient basis and funds to give loan of ₹ 2,50,000/- to the assessee. Therefore, no reason to doubt the same. Accordingly, this is accepted as genuine and delete the addition.- Decided against revenue. Cash credit received from Shri Kanhaiya Lal Poddar - Held that - This is a merely small amount of ₹ 49,000/- advanced out of current year s income. The current year s income of the loan creditor is about ₹ 1,10,250/-, which is sufficient to meet this loan amount. Even otherwise, the loan was advanced on 23.12.2006 almost at the end of the year. Presuming that this amount was available with the loan creditor and amount was given by way of demand draft, no reason to doubt the same. Accordingly, this is accepted as genuine and delete the same.- Decided against revenue. Addition on low household withdrawal - Held that - Assessee filed the details of other family members withdrawals like assessee s wife Smt. Rinku Poddar wherein she has declared household withdrawals at ₹ 21,600/- and Smt. Shashi Devi Poddar amounting to ₹ 48,000/-. If these two withdrawals are also treated for family withdrawals then it will be more than the amount estimated by the AO at ₹ 60,000/-. Hence, there is no need to make any separate addition of ₹ 60,000/-. This ground of appeal of assessee is allowed.- Decided against revenue.

Summary

Issues:
1. Addition of unsecured loans from various creditors.
2. Estimation of household withdrawals as income from other sources.

Analysis:

Issue 1: Addition of Unsecured Loans
The first issue in this appeal pertains to the addition of unsecured loans from three different creditors. The Assessing Officer (AO) required the assessee to prove the identity, creditworthiness, and genuineness of transactions with these creditors. The first creditor, Smt. Rinku Poddar, who is the wife of the assessee, provided explanations and documents regarding the loan. However, inconsistencies in her statements led the AO to treat the amount as unexplained. The CIT(A) upheld this decision, stating that the evidence presented was insufficient. The Tribunal concurred, noting that the immediate source of the cash credit was not adequately explained, leading to the confirmation of the addition.

For the second creditor, Smt. Shashi Devi Poddar, the AO also raised concerns about the source of the loan amount. Despite explanations and documents provided by the creditor, inconsistencies in her statement led to the treatment of the amount as unexplained. However, the Tribunal, after reviewing the evidence and cash flow in the creditor's bank account, found sufficient basis and funds to support the loan, thereby deleting the addition.

Regarding the third creditor, Shri Kanhaiya Lal Poddar, the AO treated the loan as unexplained due to the assessee's alleged lack of response to notices. The CIT(A) upheld this decision, stating that the confirmation of the loan was not genuine. However, the Tribunal found the loan amount to be small and within the creditor's income capacity, ultimately accepting it as genuine and deleting the addition.

Issue 2: Estimation of Household Withdrawals
The AO estimated the family's monthly drawings and personal expenses, treating the balance as income from other sources. The CIT(A) confirmed this action without providing detailed findings. However, the Tribunal, upon reviewing the withdrawals declared by other family members, found that the total exceeded the AO's estimate, leading to the allowance of this ground of appeal and the partial success of the assessee's appeal.

In conclusion, the Tribunal partially allowed the assessee's appeal, deleting certain additions related to unsecured loans and adjusting the estimation of household withdrawals based on the evidence provided.