2017 (4) TMI 1003 - AT - Income Tax

Addition on account of loan unexplained - Held that - A perusal of the order of Tribunal in the case of Shri J.H. Muniyar 2012 (11) TMI 1210 - ITAT NAGPUR shows that export of software carried out by him was genuine. The assertions of the Revenue casting doubt over the software export business and creditworthiness of Shri J.H. Muniyar is without any basis. We find no merit in the grounds raised by the Revenue against deleting of addition by Commissioner of Income Tax (Appeals) on account of loan of ₹ 20 lakhs from Shri J.H. Muniyar. - Decided against revenue Addition to donations to Tirupathi Devasthan - AO held that the assessee is not having sufficient agriculture income for making donations to Tirupathi Devasthan - Held that - Assessing Officer re-casted cash flow of the assessee and transferred part of the agricultural income to the income from other sources. The exercise done by the Assessing Officer in recasting the cash flow, however, did not change the total income of the assessee. The Assessing Officer merely changed the head of income from agricultural income to income from other sources . By changing the head of income alone, it cannot be said that the assessee was not having sufficient source of funds for making donations. The Commissioner of Income Tax (Appeals) has deleted the addition on the basis that the entire income has to be taken for the purpose of cash flow, whether income is assessed as agricultural income or it is assessed as income from other sources. We do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in deleting the addition. - Decided against revenue

Summary

Issues:
1. Unexplained loan from Shri J.H. Maniyar
2. Donations to Tirupathi Devasthan

Analysis:

Unexplained Loan from Shri J.H. Maniyar:
The case involved a search and seizure under section 132 of the Income Tax Act, 1961, where the Assessing Officer added ?20 lakhs as unexplained loans received by the assessee from Shri J.H. Maniyar. Despite loans received through proper channels, doubts were raised on the creditworthiness of the lender. The Assessing Officer concluded that the assessee had circulated its own funds through Shri J.H. Maniyar. However, the Tribunal's order in another case established the genuineness of Shri J.H. Maniyar's software export business, proving his ability to lend money. The Tribunal dismissed the Revenue's appeal against the deletion of this addition.

Donations to Tirupathi Devasthan:
Regarding the donations made to Tirupathi Devasthan, the Assessing Officer questioned the source of funds, alleging insufficient agricultural income. The Assessing Officer reclassified part of the agricultural income as income from other sources, but this did not alter the total income. The Commissioner of Income Tax (Appeals) deleted the addition, emphasizing that the entire income should be considered for cash flow purposes, regardless of its classification. The Tribunal upheld this decision, dismissing the Revenue's appeal against the deletion of the ?17 lakhs donation addition.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the Commissioner of Income Tax (Appeals) decisions on both issues. The Tribunal found no merit in the Revenue's arguments against the deletion of additions related to the unexplained loan and donations. Additionally, a challenge by the Revenue regarding the findings of the Commissioner of Income Tax (Appeals) being bad in law was dismissed due to lack of arguments. Ultimately, the appeal by the Revenue was dismissed, affirming the decisions of the lower authorities.