2012 (7) TMI 307 - AT - Income Tax

Addition on account of unexplained cash credits u/s 68 - CIT(A)deleted the additions - Held that - After examining the relevant details and documents including bank statements of the assessee and share applicants it is to be concluded that in view of the evidences on record, the mismatch as observed by the AO is duly explained by the entries in the bank statement of the assessee as well as the share applicant and the assessee discharged its onus by establishing the identity of the share applicants, the genuineness of the transaction as well as the credit worthiness of the investors - Also DR did not place before us any material, controverting the aforesaid findings of facts recorded by the CIT(A) so as to enable to take a different view in the matter - decided in favour of assessee.

Summary

Issues:
- Addition of Rs. 15,00,000 on account of unexplained cash credits u/s 68 of the Income-tax Act.
- Deletion of the addition of Rs. 15,00,000 made u/s 68 of I.T. Act.
- Request for adding, altering, amending, deleting, or withdrawing any ground of appeal during the appellate proceedings.

Analysis:
1. The appeal was filed by the Revenue against the deletion of the addition of Rs. 15,00,000 on account of unexplained cash credits u/s 68 of the Income-tax Act. The Assessing Officer noticed discrepancies in the share capital received by the assessee from two companies. The AO added the amount as income from undisclosed sources under section 68 of the Act due to unverifiable transactions.

2. The ld. CIT(A) deleted the addition after considering the submissions and evidence. Regarding the investment received from one company, it was found that an error occurred in stating the nature of the instrument as a demand draft instead of a cheque, which was a clerical mistake. The genuineness of the transaction was established, meeting the requirements under section 68. Similarly, for the remaining amount received from the same company, the error in stating the instrument as a cheque was also considered a clerical mistake, and the source of investment was explained through bank statements.

3. Concerning the share application money received from another company, discrepancies were noted by the AO leading to the addition under section 68. However, the ld. CIT(A) found that the discrepancies were adequately explained, with entries in bank statements clarifying the transactions. The identity of the share applicant, genuineness of the transaction, and creditworthiness of the investor were established, leading to the deletion of the addition.

4. The Tribunal upheld the decision of the ld. CIT(A) after hearing both parties. The discrepancies were explained through bank statements, and the onus of proving the genuineness of the transactions was successfully discharged by the assessee. The Tribunal found no basis to interfere with the findings of the ld. CIT(A) and dismissed the appeal.

5. No additional grounds were raised, and the appeal was ultimately dismissed by the Tribunal, affirming the deletion of the addition of Rs. 15,00,000 under section 68.