Ramesh Bhayana, Rewari vs Assessee

This appeal by the assessee is directed against the order passed by

the CIT on 28.12.2012 under section 263 of the Income-tax Act, 1961 ITA No.1471/Del/2013

(hereinafter also called 'the Act') in relation to the assessment year

2008-09.

2. Briefly stated, the facts of the case are that the assessment in this

case was completed u/s 143(3) on 14.07.2010 accepting the income

returned as the total income. On a perusal of the case records, the ld.CIT

invoked his jurisdiction u/s 263 by treating the assessment order as

erroneous and prejudicial to the interest of the Revenue on the ground

that the Assessing Officer (AO) did not properly verify: (i) the receipt of

loan of Rs.26 lac from Shri Vivek Bhayana; and (ii) the receipt of loan

from Shri Ramesh Bhayana & Sons, HUF which had two cash deposits

amounting to Rs.3 lac and 1 lac in its bank account before giving the

said loan by cheque to the assessee. The assessment order was set aside

and the AO was directed to make a fresh assessment. The assessee is

aggrieved against this order.

3. We have heard the rival submissions and perused the relevant

material on record. It is manifest that the assessment order has been

held to be amenable to revision on two issues. The facts apropos the first

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issue are that the assessee accepted a fresh loan of Rs.26 lac from Shri

Vivek Bhayana which was stated to have been given out of a sum of

Rs.37,53,600/- realized by the lender from the sale of a plot. The ld.

CIT, on perusal of the statement of income of Shri Vivek Bhayana,

observed that he had deposited a sum of Rs.37,53,600/- in a Capital

Gains Scheme account for claiming deduction u/s 54 and as such he had

no money left for lending to the assessee.

4. It can be observed that Shri Vivek Bhayana received a sum of

Rs.37.53 lac by sale of his property on 27.12.2007. Out of such receipts,

a sum of Rs.26 lac was given as loan to the assessee by means of two

cheques dated 01.02.2008 and 05.02.2008 for Rs.16 lac and Rs.10 lac

respectively. On 24th July, 2008, the assessee repaid loan of Rs.14 lac to

Shri Ramesh Bhayana by means of cheque. On 26th July, Shri Ramesh

Bhayana invested the full sale consideration in Capital Gain Scheme.

These submissions were made before the ld. CIT, who refused to accept

the same. On going through the copy of bank account of Shri Ramesh

Bhayana, which is available on pages 46 onwards of the paper book, it

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can be seen that he advanced a loan of Rs.26 lac to the assessee on the

given dates and immediately before the deposit of Rs.37.53 lac in

Capital Gain Scheme account on 26th July, he received repayment of

loan from the assessee to the tune of Rs.14 lac on 24th July, 2008. Apart

from that, there are other transactions in the bank account making up the

bank balance at Rs.37.63 lac, out of which a sum of Rs.37.53 lac was

deposited in Capital Gain Scheme account. These facts clearly bring out

that the loan amount of Rs.26 lac was actually received by the assessee

from Shri Vivek Bhayana out of realization from transfer of property.

Under such circumstances, we do not find any reason to disturb the view

taken by the AO on this score. The impugned order is overturned on this

score.

5. The second issue which has been considered by the ld. CIT in his

order leading to the revision, is the cash deposit of Rs.4 lac by Ramesh

Bhayana & Sons, HUF in its bank account before giving a loan of Rs.13

lac to the assessee. It can be seen that Ramesh Bhayana, HUF is

carrying on business and is a regular income-tax assessee. Not only that,

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it maintains regular books of account. A copy of cash book of this entity

for the relevant period is available on record. It can be seen that the said

amount of Rs.4 lac was deposited in its bank account from the

transactions recorded in the regular cash book. When the facts are so

clear that the deposit in the bank account emanated from the business

operations and Ramesh Bhayana, HUF has properly disclosed these

transactions into its cash book, there is no reason to doubt the deposit of

Rs.4.00 lac by it in its bank account before advancing loan of Rs.13.00

lac to the assessee. We, therefore, vacate the view taken by the ld.CIT in

this regard.

6. In the result, the appeal is allowed.

The order pronounced in the open court on 11.02.2015.

Sd/- Sd/-

[C.M. GARG] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated, 11th February, 2015. dk

5 ITA No.1471/Del/2013

Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT (A) 5. DR, ITAT

AR, ITAT, NEW DELHI.

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