2024 (7) TMI 586 - AT - Income Tax

Addition u/s 69D - assessee has repaid loan in cash - HELD THAT - According to Section 69D of the Act, where assessee borrows amount on Hundi or any amount due thereon is repaid but any person otherwise than through an account payee cheque then such amount shall be deemed to be income of the assessee. It is clarified by the Central Board of Direct Taxes that borrowal on Hundi arises without a person getting money by execution of Hundi. In the present case, there is no evidence that there is any borrowal by the assessee on Hundi. The fact shows that both these loans were taken by the assessee in earlier years and the amount of loan are opening balances, both parties are wife and daughter of the assessee therefore, apparently in this case, the addition under Section 69D of the Act cannot be made. So far as the order of the CIT (A) is concerned, as submitted CIT (A) was presented with physical documents before him earlier along with the return submissions which were neither considered nor even mentioned in the appellate order. Therefore, the order of the learned CIT (A) confirmed the addition is not sustainable. AO has also not cared of looking into how the amounts of ₹12,04,971/- is arrived at in fact the amount tabulated by the learned Assessing Officer himself shows that it should be added ₹11,76,591/-. Further it is apparent that assessee has furnished the confirmation letter and statement of loan before the learned Assessing Officer during the assessment proceedings. No merit in the addition made by AO u/s 69D. Addition of already offered income by the assessee in the revised return filed - It cannot be added once again. Accordingly, AO directed to accept the return of income revised by the assessee on 2nd January, 2014, for the computation of taxable income.Thus, the addition is deserved to be deleted. Appeal of the assessee is allowed.

Summary

Issues involved:
1. Addition under Section 69D of the Income-tax Act, 1961 for loan repayment in cash.
2. Addition of income from house property due to revised return filing.

Analysis:

Issue 1: Addition under Section 69D for loan repayment in cash
The appellant, an individual proprietor, filed an appeal against the order passed by the CIT (A) confirming the addition of loan repayment made in cash to two individuals. The Assessing Officer applied Section 69D of the Act, deeming the amount as the appellant's income. However, the ITAT found that the loans were taken in earlier years, and the repayments were made to the appellant's wife and daughter, not through Hundi borrowings. The ITAT observed that the CIT (A) did not consider the physical documents and submissions presented, rendering the confirmation of the addition unsustainable. The ITAT directed the deletion of the addition of &8377;12,04,971 under Section 69D.

Issue 2: Addition of income from house property due to revised return filing
The second issue pertained to the addition of &8377;1,12,000 in the revised return filed by the appellant, which was already offered as income. The Assessing Officer, however, added this amount again, disregarding the revised return. The ITAT held that the revised return should be accepted for computing taxable income, leading to the deletion of the &8377;1,12,000 addition. Consequently, both additions were directed to be deleted, and the appeal of the assessee was allowed, reversing the orders of the lower authorities.

In conclusion, the ITAT ruled in favor of the appellant, allowing the appeal and directing the deletion of both additions made by the Assessing Officer, emphasizing the importance of considering all relevant documents and submissions in tax assessments.