George George K.#10IL500MiscellaneousMANUGeorge George K.,TRIBUNALSAct#Additional Evidence#Appeal#Appellate Authority#Assessee#Assessing Officer#Assessment#Assessment Year#Books#Books of Account#Case#Commissioner#Concern#Consideration#Income#Interest#PAN#Person#Previous Year#Repayment of Loan#Return#Return of Income#Total Income2021-10-1840537,40605,43816 -->

MANU/IL/0404/2021

IN THE ITAT, BANGALORE BENCH, BANGALORE

ITA No. 710/Bang/2020

Assessment Year: 2012-2013

Decided On: 11.10.2021

Appellants: M.S. Amarnath
Vs.
Respondent: The Asst. Commissioner of Income Tax, Circle 2(3)(1)

Hon'ble Judges/Coram:
George George K.

ORDER

George George K., Member (J)

1. This appeal at the instance of the assessee is directed against CIT(A)'s order dated 21.09.2020. The relevant assessment year is 2012-2013.

2. The grounds raised read as follows:-

(i) On the facts and in the circumstances of the case, the learned CIT Appeals erred in upholding the order of the Assessing Officer in the manner in which he did.

(ii) The learned CIT(A) erred in upholding the addition of Rs. 14,00,000 being unsecured loan creditors under section 41(1) of the Income Tax Act, 1961.

(iii) The learned CIT(A) erred in enhancing the addition made under section 41(1) of the Act from Rs. 14,00,000 to Rs. 14,75,000 without issuing notice of enhancement as required under the Act.

(iv) The learned CIT(A) as well as the below authorities failed to appreciate that the assessee was not required to satisfy the conditions as per section 68 of the Act, as the additions were made under section 41(1) of the Act.

(v) For these and such other grounds that may arise at the time of hearing the appellant prays that the appeal may please be allowed."

3. The brief facts of the case are as follows:

The assessee is an individual. For the assessment year 2012-2013, the return of income was filed on 26.03.2013 declaring total income of Rs. 26,63,180. The assessment was taken up for scrutiny by issuance of notice u/s. 143(2) of the I.T. Act. During the course of assessment proceedings, the A.O. noticed that the assessee has got unsecured loans to the extent of Rs. 33,25,000. The A.O. asked for confirmation for the same. The assessee had furnished the details. The A.O. noticed that the assessee could not produce PAN on confirmation to the extent of Rs. 14,00,000. Hence, the same was added back u/s. 41(1) of the I.T. Act on account of cessation of liability. The relevant finding of the A.O. reads as follows:-

"3. On verification of the details it is noticed that the assessee has got unsecured loans to the extent of Rs. 33,25,000. Confirmations were sought from the assessee to gather evidence about the unsecured loans. On examining the details of confirmations furnished, it was noticed that the assessee could not produce the PAN on the confirmations to the extent of Rs. 14,00,000. Hence, the same is added back u/s. 41(1)(on cessation of liability."

4. Aggrieved by the order of assessment in making an addition u/s. 41(1) of the I.T. Act amounting to Rs. 14 lakh, the assessee preferred an appeal to the first appellate authority. The CIT(A) reexamined the entire issue. The CIT(A) held that out of the total amount of unsecured loans of Rs. 33,25,000, the details of the creditors to the extent of Rs. 18,50,000 is available on record. According to the CIT(A), the balance credits of Rs. 14,75,000 is unexplained and he added the same u/s.