2011 (11) TMI 665 - AT - Income Tax

Summary

Issues Involved:

1. Addition of Rs. 59,00,000/- as unexplained cash credit u/s 68.
2. Addition of Rs. 39,00,000/- from M/s H.G. Exim Pvt. Ltd.
3. Addition of Rs. 20,00,000/- from M/s Rashi International.

Summary:

1. Addition of Rs. 59,00,000/- as unexplained cash credit u/s 68:

The assessee appealed against the order of CIT(A) confirming the addition made by the AO of Rs. 59,00,000/- as unexplained cash credit u/s 68. The AO had added this amount to the total income of the assessee due to the failure to prove the creditworthiness and genuineness of the transactions with M/s H.G. Exim Pvt. Ltd. and M/s Rashi International.

2. Addition of Rs. 39,00,000/- from M/s H.G. Exim Pvt. Ltd.:

The assessee provided various documents to prove the identity and creditworthiness of M/s H.G. Exim Pvt. Ltd., including affidavits, bank statements, and ledger accounts. The Tribunal noted that the transactions were conducted through banking channels and the amounts were repaid in the subsequent financial year. The AO had not disputed the initial receipt of Rs. 2,50,000/- from the same account. The Tribunal concluded that the assessee had successfully proved the identity, creditworthiness, and genuineness of the transaction, and thus, deleted the addition of Rs. 39,00,000/-.

3. Addition of Rs. 20,00,000/- from M/s Rashi International:

The assessee claimed to have received Rs. 20,00,000/- from M/s Rashi International but failed to provide sufficient evidence regarding the identity and status of the creditor. The Tribunal observed that the assessee did not furnish complete bank statements or details of the transactions. The confirmation letter from Rashi International lacked essential details, and the assessee could not prove that Rashi International was a regular customer. The Tribunal upheld the addition of Rs. 20,00,000/- as the assessee failed to discharge the primary burden u/s 68 to prove the identity, creditworthiness, and genuineness of the transaction.

Conclusion:

The Tribunal partly allowed the appeal, deleting the addition of Rs. 39,00,000/- related to M/s H.G. Exim Pvt. Ltd. and upholding the addition of Rs. 20,00,000/- related to M/s Rashi International.