2013 (2) TMI 527 - HC - Income Tax

Unexplained Cash Credit AO found that the amount was credited in the account of assessee - Assessee contended that he had taken temporary loan from friends and relatives abroad for the purpose of filing immigration application for L1 visa for USA Held that - Confirmation of the cash credits of eight persons were submitted - As per e-mail under question, the appellant s son Shri Janak Patel informed his father about collection of US 67260 from the different persons who have credited the same in his bank account at USA - The assessing officer has also admitted that the confirmations letters were filed before him on 29.10.2003 but the same were not accepted by him due the reasons that they were not notarized However, at the remand report stage, the assessing officer has accepted that later on notarized confirmations were received by him from the appellant. Since the notarized confirmations have been received by the assessing officer as required by him and as he has not given any adverse comments on the same in the remand report, the same is acceptable. AO was directed to accept the credits as stated in notarized confirmation letters, after proper verification of the same from the bank statements - Assessee had established the necessary ingredients for the cash credit received and notably before the CIT(Appeals) the assessee had produced notarized confirmation which was also sent to the Assessing Officer and remand report was called for Assessee s case was found acceptable Against the revenue.

Summary

Issues:
Appeal against Tribunal's judgment on addition of unexplained cash credits of Rs.43,66,300.

Analysis:
The sole issue in this case revolves around the addition of Rs.43.66 lacs as unexplained cash credit by the Assessing Officer. The Assessing Officer observed that this amount was credited to the assessee's account without a clear explanation of its source despite providing an opportunity. The assessee claimed to have taken temporary loans from friends and relatives abroad for filing an immigration application for an L1 visa for the USA. However, the Assessing Officer noted that the confirmation from creditors was not duly notarized, leading to the addition.

During the appeal before the CIT (Appeals), the additions were deleted based on the submissions made by the appellant. The CIT (Appeals) carefully considered the facts, submissions, and supporting documents. The assessing officer had initially stated that confirmations of cash credits were submitted but not notarized, leading to the addition. However, the appellant later provided notarized confirmations, which were accepted by the assessing officer during the remand report stage. The CIT (Appeals) directed the assessing officer to verify the details from bank statements before accepting the credits stated in the notarized confirmation letters.

The Tribunal upheld the CIT (Appeals) decision, emphasizing that the assessee had established the necessary elements for the cash credit received. Both the CIT (Appeals) and the Tribunal found the assessee's case acceptable, especially after the notarized confirmations were provided and verified. The High Court, after hearing the arguments and examining the records, concluded that the issue primarily involved the evaluation of evidence. Since both lower authorities had found in favor of the assessee based on the evidence presented, the High Court found no legal question to address and dismissed the Tax Appeal.

In summary, the judgment focused on the adequacy of evidence and the verification of notarized confirmations in the context of unexplained cash credits. The decision highlighted the importance of providing proper documentation and verifying details to support claims during tax assessments.