2012 (10) TMI 673 - AT - Income Tax

Unexplained cash credits - CIT(A) deleted the addition considering additional evidence - AO appeal against contravention of Rule 46A - Held that - CIT(A) has duly sent the documents furnished by the assessee at the appellate stage to the AO for a remand report, thus under these circumstances, there cannot be any issue that AO was not provided adequate opportunity in this regard. The contravention of Rule 46A does not arise in this case, as the AO has been provided with adequate opportunity and the remand report obtained from him - against revenue.

Summary

Issues:
1. Addition of unexplained cash credits of Rs. 96,65,438.
2. Compliance with Rule 46A in providing the Assessing Officer with an opportunity to consider evidence at the appellate stage.

Analysis:
1. Addition of unexplained cash credits:
- The Assessing Officer disallowed and added back Rs. 96,65,438 as cash credit from unexplained sources due to unverified unsecured loans raised by the assessee company during the year.
- The assessee submitted evidence including confirmatory letters, bank statements, and acknowledgments to prove the genuineness of the loans taken from M/s Pilot Consultants Ltd. and M/s Sanjeevani Estates (P) Ltd.
- The Ld. Commissioner of Income Tax (A) found that the loans were taken through banking channels, interests were paid, and TDS was made, supporting the genuineness of the transactions. Consequently, the addition made by the Assessing Officer was deleted.
- The Ld. Commissioner directed the Assessing Officer to send the confirmatory letters to the respective Assessing Officers of the creditors for necessary action.

2. Compliance with Rule 46A:
- The Revenue contended that the Ld. Commissioner erred in deleting the addition without providing the Assessing Officer with a reasonable opportunity to consider the evidence at the appellate stage, contravening Rule 46A.
- However, it was found that the Ld. Commissioner had forwarded the evidence to the Assessing Officer for a remand report, providing him with an opportunity to review the submissions.
- The Departmental Representative acknowledged that Rule 46A was not contravened as the Assessing Officer was given adequate opportunity and a remand report was obtained.
- Consequently, the Tribunal upheld the order of the Ld. Commissioner, dismissing the appeal filed by the Revenue.

In conclusion, the Tribunal upheld the deletion of the addition of unexplained cash credits and found no infirmity in the order of the Ld. Commissioner regarding compliance with Rule 46A, ultimately dismissing the Revenue's appeal.