2023 (8) TMI 288 - AT - Income Tax

Tribunal upholds deletion of additions under Section 68 of Income Tax Act, 1961

DCIT, Central Circle-2 (4) Ahmedabad, ACIT, Circle-5 (2) Ahmedabad., ITO, Ward-5 (2) (2) Ahmedabad., Jt. CIT, Circle-2 (1) (1) Ahmedabad Versus Shri Asit Surendrabhai Shah, Chetnaben Surendrabhai Shah, Shri Surendra Mangaldas Shah, Surendra Mangaldas Shah (HUF), Smt. Savitaben Mangaldas Trust Amola Chambers

DCIT, Central Circle-2 (4) Ahmedabad, ACIT, Circle-5 (2) Ahmedabad., ITO, Ward-5 (2) (2) Ahmedabad., Jt. CIT, Circle-2 (1) (1) Ahmedabad Versus Shri Asit ... Issues Involved:1. Legitimacy of unsecured loans received by various assessees.2. Application of Section 68 of the Income Tax Act, 1961.3. Assessment of the identity, genuineness, and creditworthiness of the creditors.Summary:Issue 1: Legitimacy of Unsecured Loans Received by Various AssesseesThese eight appeals by the Revenue challenge the deletion of additions made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961, regarding unsecured loans received by different assessees from Smt. Hansaben M. Patel, Shri Kamal Gohil, and Shri Mukesh Jayantilal Shah. The loans were repaid in the next financial year, leading the Commissioner of Income Tax (Appeals) [CIT(A)] to delete the additions.Issue 2: Application of Section 68 of the Income Tax Act, 1961The AO added the unsecured loans to the total income of the assessees under Section 68, citing that the identity, genuineness, and creditworthiness of the creditors were not satisfactorily proven. The AO noted that Smt. Hansaben M. Patel had not filed her Return of Income except for AY 2009-10 and had continuous credit and debit entries in her bank account, suggesting she was an accommodation entry provider.Issue 3: Assessment of the Identity, Genuineness, and Creditworthiness of the CreditorsThe CIT(A) deleted the additions, stating that the loans were obtained through account payee cheques, and the identity of Smt. Hansaben M. Patel was proven through PAN details, IT returns, and bank statements. The CIT(A) also noted that the transactions were genuine and the creditworthiness was established as Smt. Patel sold land worth Rs. 149 crores and was assessed at Rs. 103.02 crores for AY 2009-10.The Tribunal upheld the CIT(A)'s decision, emphasizing that the identity, genuineness, and creditworthiness of the creditors were satisfactorily proven by the assessees. The Tribunal referenced previous decisions where similar unsecured loans were deemed genuine, and the AO had not provided contrary evidence.In cases involving loans from Shri Kamal Gohil and Shri Mukesh Jayantilal Shah, the Tribunal found that the identity, genuineness, and creditworthiness were similarly established through documentary evidence, including PAN cards, sale deeds, and bank statements. The Tribunal also noted that the loans were repaid through banking channels, further proving their legitimacy.Consequently, the Tribunal dismissed the Revenue's appeals, confirming that the provisions of Section 68 did not apply to the transactions in question.Conclusion:The appeals filed by the Revenue in ITA Nos. 945/Ahd/2018, 1249/Ahd/2018, 1252/Ahd/2018, 1253/Ahd/2018, 1254/Ahd/2018 (for A.Y. 2009-10), ITA No. 457/Ahd/2020, 477/Ahd/2020, and IT(SS)A No. 54/Ahd/2021 (for A.Y.2010-11) are hereby dismissed.