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2012 (7) TMI 371 - AT - Income TaxUnexplained cash credit of 12 persons - CIT(A)deleted the additions - Held that - The assessee has failed to prove the creditworthiness of all the creditors and no source of their income has been filed. At the best the assessee is able to prove identity of the creditors, but the assessee failed to prove the genuine credit in the matter and they were having sufficient funds or savings in order to give loans to the assessee. On verification of the bank account of the depositors, it was specifically found that there were no sufficient funds available in their bank account and they were having only small bank balance, which was even not sufficient to meet out their household expenses. Therefore, it is unbelievable to accept the contention of the assessee that said persons were having creditworthiness to advance any loan to the assessee - parties have deposited the cash in their bank account before issuing cheques to the assessee, which apparently show that these were accommodation entries, not genuine and all the three creditors were not having creditworthiness CIT(A) has wrongly deleted the addition shifting the burden on the Assessing Officer to establish the creditworthiness of the depositors - only genuineness of few parties have been proved furnishing relevant bank statement of the creditors explaining that the source of loan - partly in favour of assessee.
Issues Involved:
1. Deletion of addition of Rs. 43,80,000/- being unexplained cash credit of 12 persons. Issue-wise Detailed Analysis: 1. Deletion of Addition of Rs. 43,80,000/- as Unexplained Cash Credit: i) Shri Gopal Maheshwari - Rs. 5,00,000/-: The Assessing Officer (AO) added Rs. 5,00,000/- to the appellant's income, claiming the loan was fictitious and the appellant's own unaccounted money. The AO's reasoning was based on the creditor's low income and contradictory statements about interest received. However, the appellant provided evidence showing the loan was received through account payee cheques, and the creditor had sufficient funds in his bank account. The CIT(A) found the loan to be duly explained and deleted the addition. ii) Shri Gopy Shyam Pathak and Shri Dharmendra Pathak - Rs. 3,35,000/- each: The AO added Rs. 6,70,000/- to the appellant's income, doubting the creditworthiness and genuineness of the loans. The appellant provided bank statements showing the loans were given by cheques from a joint account with sufficient funds. The CIT(A) found the loans to be explained and deleted the addition. iii) M/s Sharda Traders - Rs. 2,50,000/-: The AO added Rs. 2,50,000/- due to the appellant's failure to produce the creditor for examination. The appellant provided an affidavit and confirmation letter from the creditor, but the CIT(A) deleted the addition, noting the AO did not make further inquiries to disprove the creditor's existence and creditworthiness. However, the Tribunal restored the AO's addition, citing insufficient evidence of the creditor's creditworthiness. iv) Shri Anand Kumar - Rs. 1,00,000/-: The AO added Rs. 1,00,000/- doubting the creditworthiness of the creditor with a low income. The appellant provided bank statements and affidavits, but the Tribunal found the appellant failed to prove the creditworthiness and genuineness of the transaction, confirming the addition. v) Shri Ashok Kumar - Rs. 1,00,000/-: Similar to Shri Anand Kumar's case, the AO added Rs. 1,00,000/- doubting the creditworthiness. The Tribunal confirmed the addition, noting the appellant's failure to provide sufficient evidence of the creditor's creditworthiness. vi) M/s R.G. Finlease (P) Ltd. Etawah - Rs. 20,00,000/-: The AO added Rs. 20,00,000/- doubting the creditworthiness of the lender with a low income. The appellant provided evidence of a matured fixed deposit as the source of funds. The CIT(A) found the loan to be explained and deleted the addition. vii) Other Loans: - Shri Mahendra Pratap Singh - Rs. 1,39,249/-: The AO's addition was confirmed by the CIT(A) due to vague explanations about the lender's identity and source of funds. - Shri K.K. Dubey - Rs. 60,000/-: The Tribunal confirmed the AO's addition, noting insufficient evidence of the lender's creditworthiness despite the appellant's claims. - Shri Laloo Prasad Gupta - Rs. 2,00,000/-: The Tribunal confirmed the AO's addition, citing insufficient evidence of the lender's creditworthiness. - M/s Mishra Arms - Rs. 2,00,000/-: The Tribunal confirmed the AO's addition, noting the appellant's failure to convincingly explain the source of funds. Conclusion: The Tribunal confirmed the addition of Rs. 10,10,000/- out of the total addition of Rs. 43,80,000/-, finding the appellant failed to prove the creditworthiness and genuineness of the transactions for certain loans. The remaining addition of Rs. 33,70,000/- was deleted by the CIT(A) after finding sufficient evidence to prove the identity, creditworthiness, and genuineness of the transactions. The appeal filed by the Revenue was partly allowed.
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