2014 (7) TMI 375 - AT - Income Tax

Appellant's Evidence Upheld, Unsecured Loans Deemed Genuine, Revenue's Objection Dismissed

ITO Ward-1(4), Faridabad Versus Shri Nirmal Singh Lamba

The appellant successfully admitted additional evidence to establish the genuineness of unsecured loans totaling Rs. 1,95,50,000, with the CIT(A) ... Acceptance of additional evidences as per Rule 46A(3) of the Act - No relevant books of accounts produced – Held that:- The additional evidences filed along with the application go to the root of the matter in explaining the genuineness of transaction of loan received from M/s. Piyush Buildwell India Ltd. and M/s. Piyush Colonizer Ltd. to the extent of ₹ 1,95,50,000 - CIT(A) was of the view that he had examined the additional evidences submitted in the appeal proceedings which were also subjected to AO’s examination under Rue 46A (3) - the AO had not been able to find anything adverse or any anomalies on the basis of which he could establish that the deposits of ₹ 1,95,50,000/- were bogus or in-genuine – the order of the FAA is upheld that the requirement provided under Rule 46A of the Rules while allowing the application seeking admission of additional evidence filed by the assessee before him – Decided against Revenue. Unexplained bogus unsecured loans – Failure to discharge genuineness of loans – Held that:- FAA was rightly of the view that the assessee has been able to establish the genuineness of the claimed loan of ₹ 1,95,50,000/- from M/s. Piyush Colonisers Ltd. and M/s. Piyush Buildwell Ltd. by furnishing sufficient evidence in support - The evidences were confirmations from both the parties , their bank statements as well as the bank statement of the assessee - By way of additional evidence the assessee has furnished some more documents before the CIT(A) - These documents were cash book, ledger and trial balance sheet with vouchers filed in two volumes of the proprietary firm M/s. Infra Developers which were admitted by the CIT(A) after calling reaction of the AO on the application - These documents also supported the claim of the assessee discussed by the CIT(A) – thus, there was no infirmity in the order of the FAA – Decided against Revenue. Issues:1. Admission of additional evidence to establish genuineness of unsecured loans.2. Deletion of addition of unexplained bogus unsecured loans.Analysis:1. Admission of additional evidence: The appellant, engaged in real estate development, faced an addition of Rs. 1,95,50,000 on account of unexplained bogus unsecured loans. The appellant moved an application under Rule 46A(2) of Income Tax Rules for admission of additional evidence, including cash book, ledger, and trial balance, not submitted during assessment proceedings. The CIT(A) allowed the application after considering the reasons for non-production before the AO. The revenue contended that the additional evidence was admitted without proper satisfaction by the CIT(A). However, the CIT(A) examined the additional evidence in detail, including the AO's examination, and found no adverse findings to establish the loans as bogus. The CIT(A) fully complied with Rule 46A, and the first appellate order was upheld.2. Deletion of addition of unexplained bogus unsecured loans: The AO added Rs. 1,95,50,000 as unexplained bogus unsecured loans based on deposits from certain parties. The CIT(A) deleted this addition after detailed analysis. The appellant provided confirmations, bank statements, and explanations for the loans. The CIT(A's findings indicated the genuineness of the loans, supported by various documents and submissions. The CIT(A) examined the sources of deposits and confirmed the legitimacy of the transactions. The appellant's additional evidence, including cash book and ledger, further substantiated the loan claims. The CIT(A) provided a comprehensive explanation in the order, concluding that the loans were genuine and properly explained. The first appellate order was upheld, and the appeal was dismissed on 12th June 2014.