2012 (7) TMI 246 - AT - Income Tax

Unexplained cash credit u/s 68 - CIT(A) deleted the additions - Held that - The assessee has furnished the copy of confirmation, copy of income tax return and bank statement of individual to whom loan was given there cannot be any doubt about his identity or creditworthiness - letter in response to summons issued by AO clearly stated the evidence of the cheque number or the bank balance of 2004-05 adjudicating the repayment of loan received during the year under consideration, thus proving the identity and creditworthiness of party as well as genuineness of transaction - in favour of assessee.

Summary

Issues:
1. Addition of Rs.25,00,000 as unexplained cash credit u/s 68 of the I.T. Act.

Analysis:
The appeal dealt with the sole issue of the addition of Rs.25,00,000 as an unexplained cash credit under section 68 of the Income Tax Act. The assessee had received back a sum of Rs. 25 lakhs, earlier given as an unsecured loan to Shri S.S.Malik. The Assessing Officer was not satisfied with the evidence provided by the assessee regarding the loan given in the earlier year. The CIT(A) accepted the assessee's contention and deleted the addition. The Revenue contended that fresh evidence was produced before the CIT(A) in violation of Rule 46A and that the assessee did not satisfactorily explain the loan given to Shri S.S.Malik in previous years.

The learned counsel for the assessee argued that the confirmation, income tax return copy, and bank statement of Shri Malik were provided, establishing his identity, creditworthiness, and genuineness of the transaction. The evidence included Shri Malik's bank balance before and after issuing the cheque to the assessee, along with his response to a summon by the Assessing Officer confirming the loan and repayment. The onus was on the assessee to explain the credit in the books of account, and the assessee had fulfilled this requirement by providing substantial evidence.

The Tribunal observed that the assessee had indeed established the identity, creditworthiness, and genuineness of the transaction with Shri S.S.Malik. Shri Malik's direct communication with the Assessing Officer confirming the loan and repayment further solidified the genuineness of the transaction. The Tribunal disregarded the argument regarding fresh evidence and upheld the CIT(A)'s order, dismissing the Revenue's appeal. The decision was pronounced in favor of the assessee on 28th June, 2012.