The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that no addition could be made under Section 69A of the Income Tax Act 1961 if repaid loan transactions are recorded in book of accounts of the assessee.
The assessee, Arun I Keshwarni is an individual who is engaged in the business of printing and binding, filed the return of income for the Assessment Year 2009-10 declaring a total income of Rs.32,05,681/. Subsequently, the assessment was reopened under Section 147 the Income Tax Act by issuing notice under Section 148 of the Income Tax Act.
The Ahuja Group and their connected business offices were subjected to the search/survey action under Section 132/133A of the Income Tax Act, which is why the assessee case was reopened. It was discovered that the assessee received Rs. 8,00,000 from Ahuja Group and failed to disclose the funding source.
The Assessing Officer (AO) did not accept the submissions of the assessee and added the loan amount of Rs.8,00,000 as unexplained money under Section 69A of the Income Tax Act.
Aggrieved by the order, the assesee filed an appeal before the Commissioner of Income Tax (Appeals), who dismissed the appeal of the assessee. Thus, the assessee filed a second appeal before the tribunal.
The counsel for the assessee submitted that the assessee had submitted all the relevant documentary evidences with regard to the impugned loan transactions, which have not been considered by the lower authorities. Further, the issue was already held the coordinate bench of Mumbai in favour of assesee’s own case.
The AO has reopened the assessment purely based on borrowed satisfaction without any sort of independent enquiry into the facts of the case and on alleged information received.
Conversely, the counsel for the revenue submitted that the assessee has furnished the documentary evidence supporting the transactions, the genuineness of the transaction was not established since the parties from whom the loans were taken have admitted that they have been providing accommodation entries.
The Tribunal observed that the documents evidencing the transactions had been submitted before the lower authorities, which fact has not been analyzed by the lower authorities and that nothing has been brought on record by the Revenue to contradict the contentions of the assessee.
Therefore, the Two-member bench of Pavan Kumar Gadale (Judicial Member) and Padmavathy S. (Accountant Member) held that the assessee has recorded the impugned transactions in the books of accounts and has also provided explanations/evidence explaining the source of the loan transaction. Thus, AO was not correct in treating the loan transaction as an income under Section 69A Income Tax Act.
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