2014 (7) TMI 1178 - AT - Income Tax

Addition made under section 68 - CIT(A) allowed the claim - Held that - Carefully examined the order of the ld. CIT(A) and we find that except one all the cash credits are within the range between 3, 881/- and 50, 000/- and the assessee has placed relevant evidence to prove the genuineness of the cash credit and identity of the creditors. Since the ld. CIT(A) has properly examined the cash credits in the light of various judicial pronouncements and also in the light of evidence placed by the assessee we find no infirmity in the order of the ld. CIT(A). - Decided against revenue

Summary

Issues:
Appeal against deletion of addition made under section 68 of the Income-tax Act, 1961.

Analysis:
The appeal was filed by the Revenue against the order of the ld. CIT(A) solely on the ground that the ld. CIT(A) erred in deleting the addition made under section 68 of the Income-tax Act, 1961. The Assessing Officer had observed a cash credit of &8377; 27,99,139/- in the assessee's books, out of which a major portion was accepted as genuine. However, a remaining amount ranging between &8377; 3,881/- and &8377; 1,50,712/- was considered non-genuine, leading to an addition of &8377; 10,97,380/- under section 68. The assessee contended that these cash credits were small, interest-bearing amounts, supported by PAN cards and confirmation letters. The ld. CIT(A) accepted the cash credits as genuine based on the evidence provided by the assessee and various judicial pronouncements.

The ld. CIT(A) emphasized the importance of proving the identity of creditors, creditworthiness, and genuineness of transactions under section 68. The assessee demonstrated the identities of creditors, provided PAN numbers, and transaction details through cheques, with interest payments duly made. The ld. CIT(A) noted that the AO's addition lacked justification for loans from unexamined persons, especially when confirmations and interest payments were in order. Citing legal precedents, the ld. CIT(A) highlighted that the burden of proof under section 68 was met by the assessee, and the addition was unwarranted without evidence linking the credits to the assessee's own funds.

The Tribunal, upon reviewing the ld. CIT(A)'s order, found no defect and upheld the decision. The Tribunal noted that the assessee substantiated the genuineness of cash credits and identities of creditors for most amounts, within the specified range. As the ld. CIT(A) appropriately considered the evidence and legal principles, the Tribunal confirmed the decision, dismissing the Revenue's appeal. Consequently, the appeal against the deletion of the addition made under section 68 of the Income-tax Act, 1961 was rejected.