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2015 (2) TMI 1335 - AT - Income TaxAddition u/s 68 - addition for loan unexplained - AY 1997-98 - HELD THAT - What we notice is that AO had not doubted the VDIS declaration in respect of Shri D.I.Kamalakar. As for Shri K.I.Raghavendra, his only grievance is that bank details were not produced. He has not doubted the credit worthiness of Shri K.I.Raghavendra. In the case of Shri Vyjanath R Patil as well as Shri Naganna Swadi, these persons had appeared before the AO and confirmed the loans. They had also produced evidence for the agricultural land in their possession - such confirmations when read along with the affirmations made before the AO by these creditors on their personal appearance before him could not have been brushed aside. Assessee in our opinion had discharged his onus, vis- -vis the loans claimed to have been taken from these 4 persons. These additions therefore, were not called for. We confirm the order of the learned CITA) to the extent he deleted the addition for the loans from Shri D.I.Kamalakr and Shri K.I.Raghavendra and set aside his orders in so far it relates to the confirmation of the addition for the loan from Shri Vyjanath R Patil and Shri Naganna Swadi. Addition on disbelieving the confirmation filed by one Shri Parakash Kattimani - AY 1999-2000 - HELD THAT - It is an admitted position that Shri Prakash Kattimani in his confirmation dated 14-02-2012 had stated that he had no banks statement or books of accounts with him to show the source of the payment. A look at the affidavit of Shri Prakash Kattimani does not prove anything. It simply gives the cheque Nos. through which payment of ₹ 10,00,955/- was effected. This would not in any way show that the payments were made by Shri Prakash Kattimani himself. Nor does it show any light of the credit worthiness of Shri Prakash Kattimani. Further, the assessee had changed his version before the CIT(A). Before the AO it had given in the confirmation letter from one Dasharath and one M/s Amar Trading Co., against the above sum. Before the CIT(A) assessee roped in one Shri Prakash Kattimani as the creditor, to whom he claimed he had given sub-lease of Ron Taluk Range. We are of the opinion that the lower authorities were justified in disbelieving the version given by the assessee and making addition Demand drafts deposited with Excise department for the purpose of bidding for arrack ranges - Assessee had given the PAN of Shri Basant Kumar Patil and Smt.D.Pushpalatha before the CIT(A). In the remand report AO had made no comments whatsoever on the confirmations. Once the PAN of the creditor is given, the AO could have verified the veracity of the claim of the assessee. It is also a fact that the payments effected to excise department were through DD s and details of all such DD s were with the AO. Hence, we are of the opinion that in so far as the loans claimed by the assessee to have taken from Shri Basanth Kumar Patil and Smt D.Pushpalatha are concerned, it requires a fresh verification from the AO. However, in so far as the loan alleged to have been taken from Shri M.J.Torgal, assessee was unable to produce any substantiating evidence or document. We are of the opinion the addition by the AO to this extent was justified. Thus, we set aside the orders of the CIT(A) on this issue. Loan shown as outstanding to Standard Chartered Bank CIT(A) has mentioned that documents were produced before him. AO has not made any comments in the remand report. The amount shown as due to Shri D.I.Kamalakar, who is assessee s father, is stated to be three instalments of ₹ 9,390/- each paid by Shri D.I.Kamalakar,to M/s ANZ Grindlays Bank, against the Car loan. On this also, AO has not made any comments in his remand report. However, in the Balance sheet a sum of ₹ 98,000/- was shown as due to Shri Chidambara Shetty whereas before the CIT(A) assessee had given confirmation from one Smt.D.Chitra, Proprietrix of M/s Chitra Enterprises. Nevertheless, confirmation which stated that the amount was paid by cheque to the assessee was not doubted by the AO in the remand report. We are therefore, of the opinion that CIT(A) was justified in considering the loans of ₹ 4,36,170/- appearing in the liability side of the balance sheet of the assessee to be genuine. Assessment year 2001-02 - Confirmation if any received from M/s Raghavendra Dall Industries, Sri Goverdhan Auto Finance, M/s Sangameshwara Enterprises, and Sri B Manik Rao are not before. However, learned CIT(A) does mention that the confirmation of all the 12 persons were available with him. Hence, with respect of the balance of ₹ 68,00,000/- we are of the opinion that the matter requires a fresh look by the AO. If the assessee is able to show that the confirmations had the details of the DD s, and source for raising the amounts, and if the DD numbers tally, with the list given by the AO of his order reproduced by us in the annexure and provide details as to the account from which the money for which the DD s were drawn, then, in our opinion the additions would not stand - we do make a note that it is the onus of the assessee to substantiate its contentions regarding the claim. Thus, against the deletion of ₹ 96,96,996/- the order of the CIT(A) is sustained to the extent whereas for the balance of sum of ₹ 68 lakhs pertaining to his order is set aside and issues remitted back to the file of the AO for consideration afresh in accordance with law. Addition by the CIT(A) admittedly, Sri D.I.Kamalakar, was an assessee and his financial statement reflected the loans given to assessee, who was his son, has not been disputed by the revenue. Hence, we are of the opinion that the CIT(A) justified in deleting this addition. Sustaining the addition against DD s obtained from Thirupathaiah, we find that the assessee had indeed furnished a certificate from Allahabad Bank which clearly gave the DD numbers and the account from which the DD s were taken. We find that the such DD nos. tallied with the list given by the AO and the Allahabad Bank had certified that the accounts belonged to M/s Kanakadurga Wines owned by Sri Thirupathaiah and Sri B.Venkatesah M. In such circumstances, we are of the opinion out of the total addition of ₹ 42,50,000/- sustained by the CIT(A) the addition was not justified. This addition stands deleted. Addition which the assessee claims to have obtained from Sri Govindaiah Goud, it is an admitted position that confirmation of Sri Govindaiah Goud, itself was only for ₹ 20.00 lakhs and not for ₹ 34,50,000/-. Similarly, assessee was unable to produce any credible evidence for loan alleged to have been obtained from Sri U.A.Ballal and Sri M.J.Torgal, ₹ 2.00 lakhs and 5.00 lakhs respectively. We are therefore, of the opinion the CIT(A) justified in confirming these additions.
Issues Involved:
1. Addition of loans disbelieved by the Assessing Officer (AO). 2. Deletion of additions by the Commissioner of Income Tax (Appeals) [CIT(A)]. 3. Verification of creditworthiness and identity of creditors. 4. Submissions and confirmations provided by the assessee. 5. Remand reports and their implications. 6. Specific assessment years (1997-98, 1999-2000, and 2001-02) and corresponding appeals. Issue-wise Detailed Analysis: 1. Addition of Loans Disbelieved by AO: - For the assessment year 1997-98, the AO disbelieved loans amounting to Rs. 10,65,000/- from four individuals and made corresponding additions. The loans were from Shri D.I. Kamalakar (Rs. 4,50,000/-), Shri K.I. Raghavendra (Rs. 4,75,000/-), Shri Vyjanath R Patil (Rs. 1,00,000/-), and Shri Naganna Swadi (Rs. 50,000/-). - For the assessment year 1999-2000, the AO disbelieved a loan of Rs. 10,00,955/- from Shri Prakash Kattimani and made an addition. Additionally, the AO disbelieved loans totaling Rs. 9,50,000/- from various sources. - For the assessment year 2001-02, the AO disbelieved loans amounting to Rs. 23,00,000/- from Shri Thirupathaiah and associates, Rs. 14,50,000/- from Shri Govindaiah Goud, Rs. 2,00,000/- from Shri U.A. Ballal, and Rs. 5,00,000/- from Shri M.J. Torgal. 2. Deletion of Additions by CIT(A): - CIT(A) deleted the additions for loans from Shri D.I. Kamalakar and Shri K.I. Raghavendra for the assessment year 1997-98 but confirmed the additions for loans from Shri Vyjanath R Patil and Shri Naganna Swadi. - For the assessment year 1999-2000, CIT(A) deleted the addition of Rs. 9,50,000/- but confirmed the addition of Rs. 10,00,955/-. - For the assessment year 2001-02, CIT(A) deleted an addition of Rs. 96,99,996/- out of DDs claimed to have been mobilized by the assessee but confirmed the addition of Rs. 42,50,000/- and Rs. 2,00,000/-. 3. Verification of Creditworthiness and Identity of Creditors: - The AO rejected confirmations from creditors on the grounds of incompleteness and lack of supporting evidence. - The CIT(A) accepted some confirmations based on remand reports and additional evidence provided during appellate proceedings. - The Tribunal noted that the AO had not adequately doubted the VDIS declaration for Shri D.I. Kamalakar or the creditworthiness of Shri K.I. Raghavendra. 4. Submissions and Confirmations Provided by the Assessee: - The assessee provided confirmations from creditors during assessment and appellate proceedings. - For the assessment year 1997-98, confirmations from Shri Vyjanath R Patil and Shri Naganna Swadi were initially disregarded by the AO but were later accepted by the Tribunal. - For the assessment year 1999-2000, the assessee provided confirmations and affidavits from various creditors, which were partially accepted by the CIT(A). - For the assessment year 2001-02, the assessee provided confirmations for DDs mobilized from various individuals, which were scrutinized and partially accepted by the CIT(A). 5. Remand Reports and Their Implications: - The Tribunal noted that the AO provided remand reports during appellate proceedings, which influenced the CIT(A)'s decisions. - The remand reports highlighted the AO's concerns regarding the lack of verification of creditors' identities and creditworthiness. - The Tribunal emphasized the need for fresh verification by the AO for certain loans and DDs. 6. Specific Assessment Years and Corresponding Appeals: - For the assessment year 1997-98, the Tribunal allowed the assessee's appeal and dismissed the revenue's appeal. - For the assessment year 1999-2000, the Tribunal dismissed the assessee's appeal and partly allowed the revenue's appeal for statistical purposes. - For the assessment year 2001-02, the Tribunal partly allowed both the assessee's and the revenue's appeals for statistical purposes. Conclusion: The Tribunal's judgment involved a detailed examination of the additions made by the AO, the deletions by the CIT(A), and the evidence provided by the assessee. The Tribunal emphasized the need for proper verification of creditors' identities and creditworthiness and remanded certain issues back to the AO for fresh consideration. The appeals for different assessment years were decided based on the specific facts and evidence presented for each year.
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