2023 (10) TMI 1191 - AT - Income Tax

Addition u/s 68 - Unexplained loan - assessee's case was selected under complete scrutiny with various flagged parameters - CIT(A) deleted the addition - HELD THAT - CIT(A) noted that assessee had produced the confirmation before the AO which was signed by the son of the assessee and the bank statement evidencing the debit in the account of the giver of the loan Mr. Ishwarbhai D Patel, who had expired on 20.11.2017 as per the death certificate filed and hence, nobody attended to the summons issued by the AO during the assessment proceedings. As decided in the case of CIT Vs Patel Ramniklal Hirji 2012 (8) TMI 1078 - GUJARAT HIGH COURT that where the assessee received loan through account Payee Cheques and in support of loan transaction if he submits copy of books of accounts, bank statement, ITR of the lender, transaction in question was to be regarded as genuine and loan amount could not be added to assessee's taxable income u/s 68 - CIT(A) noted that from the above facts, the creditworthiness of the loan giver Late Ishwarbhai D. Patel has been established. The transactions in question are through banking channels wherein the loan has been received by the assessee through banking channels and even repaid subsequently through banking channels which proves the genuineness of the transaction. Hence, CIT(A) therefore deleted the addition made by the AO u/s 68 correctly - Decided in favour of assessee. Agriculture income - assessee has failed to submit, any sales bill and any other evidences to prove genuineness of the transactions - assessee received income from growing sugarcane, vegetables, mangoes, chickoos etc. The assessee had approximately 900 chickoo trees and 400 mango trees - CIT(A) deleted addition - HELD THAT - The agricultural income offered by the assessee was accepted in scrutiny assessment of AY 2015-16 as evident from the copy of assessment order produced during the Appellate Proceedings. All these facts go to show that the assessee has agricultural land and is having agricultural income since several years which has been accepted by the Department. Having an agricultural income of Rs. 26,28,436/- for an agricultural land of about 30 acres seems to be quite reasonable and possible. CIT(A) deleted the addition made by the AO - We do not find any infirmity in the above findings of ld CIT(A) - Grounds of appeal of the Revenue are dismissed.

Summary

Issues Involved:

1. Deletion of addition of Rs. 1,00,00,000/- made under section 68 of the Income Tax Act on account of unexplained cash credit.
2. Deletion of addition of Rs. 16,02,000/- made on account of agricultural income.

Summary:

Issue 1: Deletion of Addition of Rs. 1,00,00,000/- under Section 68

The Revenue challenged the deletion of an addition of Rs. 1,00,00,000/- made by the Assessing Officer (AO) under section 68 of the Income Tax Act, claiming it was an unexplained cash credit. The AO had issued a show cause notice to the assessee, questioning the genuineness and creditworthiness of a loan received from Mr. Ishwarbhai D. Patel. The AO treated the amount as cash credit under section 68 due to insufficient evidence provided by the assessee. The CIT(A) deleted the addition, noting that the assessee had repaid the loan and submitted necessary documents such as the PAN number, confirmation from the creditor, and bank statements. The Tribunal upheld the CIT(A)'s decision, emphasizing that the documents justified the identity, genuineness, and creditworthiness of the loan giver. The Tribunal cited several judgments, including CIT-I v. Patel Ramniklal Hirji and PCIT v. D & H Enterprises, to support its decision.

Issue 2: Deletion of Addition of Rs. 16,02,000/- on Account of Agricultural Income

The Revenue also contested the deletion of an addition of Rs. 16,02,000/- made by the AO, who had treated part of the assessee's agricultural income as unexplained cash credit. The AO had rejected the sale bills provided by the assessee, questioning their authenticity. The CIT(A) deleted the addition, noting that the assessee had consistently shown agricultural income in previous years and provided sufficient evidence, including land records and 7/12 extracts. The Tribunal upheld the CIT(A)'s decision, stating that the agricultural income claimed was reasonable given the assessee's land holdings and historical income records.

Conclusion:

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s deletion of the additions under both issues. The order was pronounced on 16/10/2023.