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2010 (12) TMI 706 - AT - Income TaxUnexplained income/cash credits u/s 68 - Since, the amount has by an error been shown to have been received from Shri Reetinder Sidhu. as reflected in the balance sheet of the assessee company but in fact is the amount received from his mother Smt. Pritpal Kaur - The evidence of money received by Smt. Pritpal Kaur vide cheques/drafts from her son is furnished on record - In the absence of any contrary findings, we uphold the order of CIT(A) in holding that once the assessee has established the identity, creditworthiness and genuineness of the transactions, there is no merit in the addition under s. 68 of the IT Act.- Appeal of the Revenue dismissed.
Issues Involved:
1. Deletion of addition under Section 68 of the IT Act, 1961. 2. Admission of fresh/additional evidence regarding cash credits. 3. Opportunity for cross-examination to the Assessing Officer (AO). Issue-wise Detailed Analysis: 1. Deletion of Addition under Section 68 of the IT Act, 1961: The Revenue challenged the deletion of an addition amounting to Rs. 50,51,650 made by the AO under Section 68 on account of unexplained income/cash credits. The AO had initially treated the loans received by the assessee as unexplained income due to the failure of the assessee to furnish evidence during the assessment proceedings. The CIT(A) deleted the addition after admitting additional evidence that explained the source of the loans. The evidence showed that the loans were received from Smt. Pritpal Kaur, who in turn had received the funds from her son, Shri Reetinder Sidhu, a permanent resident of the USA. The CIT(A) found that the amounts were deposited in Smt. Pritpal Kaur's bank account and later advanced to the assessee company. The Tribunal upheld the CIT(A)'s decision, noting that the identity, creditworthiness, and genuineness of the transactions were established, and thus, there was no merit in the addition under Section 68. 2. Admission of Fresh/Additional Evidence Regarding Cash Credits: The Revenue contended that the CIT(A) erred in admitting fresh/additional evidence without providing an opportunity for cross-examination to the AO. The CIT(A) admitted the additional evidence under Rule 46A of the IT Rules after observing that the assessee was prevented by sufficient cause from presenting the evidence during the assessment proceedings. The Tribunal noted that the additional evidence was forwarded to the AO, who acknowledged that the assessee was prevented by sufficient cause and recommended that the issue be decided on merit. Consequently, the Tribunal found no merit in the Revenue's ground that no opportunity was afforded to the AO before admitting the fresh/additional evidence and rejected this ground of appeal. 3. Opportunity for Cross-Examination to the AO: The Revenue argued that the CIT(A) admitted fresh/additional evidence without giving an opportunity for cross-examination to the AO. The Tribunal observed that the additional evidence was indeed confronted to the AO, who provided a report acknowledging the sufficient cause for the assessee's failure to present the evidence initially. The AO's report also suggested that the issue of admission of additional evidence be decided on merit. Therefore, the Tribunal concluded that the CIT(A) had followed due process, and the AO was given an opportunity to examine the additional evidence. The Tribunal rejected the Revenue's ground on this issue as well. Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the addition under Section 68 of the IT Act, 1961, and to admit the additional evidence. The Tribunal found that the assessee had established the identity, creditworthiness, and genuineness of the transactions, and there was no merit in the addition made by the AO. The Tribunal also concluded that the CIT(A) had followed due process in admitting the additional evidence and providing an opportunity for the AO to examine it.
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