ITA No. 184/PUN/2017

Assessment Year: 2013-2014

Decided On: 05.03.2020

Appellants: Girish Madhukar Rathi Vs. Respondent: The Dy. Commissioner of Income Tax, Circle-6

Hon'ble Judges/Coram:
D. Karunakara Rao, Member (A) and S.S. Viswanethra Ravi


D. Karunakara Rao, Member (A)

1. This appeal filed by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-4, Pune, dated 28.10.2016 for the Assessment Year 2013-14.

2. The grounds raised by assessee are extracted as under:-

On the facts and in law-

1] The learned CIT(A) erred in confirming the addition of Rs. 79 lakhs made u/s. 68 in respect of the loan taken from Shri Madhukar Rathi, father of the appellant.

2] The learned CIT(A) erred in holding that the assessee had failed to prove the creditworthiness of Shri Madhukar Rathi and accordingly, the addition made of Rs. 79 lakhs u/s. 68 was justified.

3] The learned CIT(A) failed to appreciate that Shri Madhukar Rathi had confirmed giving of loan to the assessee and further the sources were also proved from which Shri Madhukar Rathi had given loan to the assessee and hence, the addition made u/s. 68 of Rs. 79 lakhs was not justified at all and the same ought to have been deleted.

3. Briefly stated the relevant facts include that the assessee is son of Shri Madhukar Rathi. The assessee filed his return of income declaring total income of Rs. 56,10,180/-. At the end of the scrutiny proceedings, the assessment was completed determining the assessed income at Rs. 1,75,53,770/-. Apart from others, the Assessing Officer made an addition of Rs. 79 lakhs u/s. 68 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'). The contents of para 7 and its sub-paras are relevant in this regard. As per discussion given in the said para the assessee has Running Account in matters of taking and repayment of loans from his father Shri Madhukar Rathi. Further, it is also discussed that Shri Madhukar Rathi (father) in turn takes and repays loans from Birla family (Rahul Anil Birla, Rakesh N. Birla and Nand Sales Corporation). The details of taking loans and repayment of loans are tabulated as under:-

"Annexure I: Statement showing details of Interest received from Girish Rathi by Mr. Madhukar Rathi

Annexure II: Statement showing details of Interest paid by Mr. Madhukar Rathi

4. The Assessing Officer is of the view that despite the filers income tax return by concerned loan creditors, banking transactions, the loan transactions are not genuine. According to Assessing Officer, Shri Madhukar Rathi lacks creditworthiness. Despite the documentation furnished by the assessee with regard to creditworthiness of Shri Madhukar Rathi, loan transactions through banking channels, repayment of loans with interest, compliance of TDS provisions, wherever applicable, the AO invoked the provisions of section 68 of the Act and made addition on account of unsecured loan of Rs. 79 lakhs. No such additions were made in the past although similar loans were taken in earlier assessment years.

5. During the first appellate proceedings, the assessee could not win the appeal before the CIT(A). The CIT(A) as per discussion given in para 8.3 of his order, the CIT(A) dismissed the appeal of assessee and confirmed the additions.

6. Aggrieved with the order of the CIT(A), the assessee is in appeal before us with the grounds extracted above.

Addition of Rs. 79 lakhs u/s. 68 of the Act

7. Before us, ld. Counsel brought our attention to the facts relating to the said loan transactions i.e. taking loans from Shri Madhukar Rathi and Shri Madhukar Rathi in turn taking loans from Rahul Anil Birla, Rakesh N. B........