2014 (5) TMI 811 - AT - Income Tax

Cash credit - Addition made on loan raised Genuineness of transaction - Held that - The assessee produced all creditors before the AO and their statements were recorded on oath - The disputed creditors also supported the version of the assessee by filing their affidavits and other documents explaining the source of amount which was provided to the assessee as loan wherein the creditors have duly affirmed the transaction with the assessee - the primary onus on the assessee to prove the nature and source of cash credits was discharged by the assessee and further onus was shifted on the revenue to bring out relevant and cogent material on record for not accepting such cash credit as shown by the assessee - the AO has made a subjective remark about the creditworthiness of the creditors but no positive material has been brought on record by him for not accepting the cash credit shown by the assessee - the assessee has shown source of cash creditors and the creditors came forward to the desk of the Assessing Officer to support the version of the assessee by way of giving statement of oath and also submitted the affidavits and other relevant documents, explaining the circumstances and source of amount given to the assessee as loan revenue has not brought any relevant or cogent material to establish any doubt about the truthfulness of the creditors - the addition made cannot be sustained Decided in favour of Assessee.

Summary

Issues involved:
Appeal against CIT(A) order for AY 2001-02 - Addition of loans from multiple creditors - Burden of proof on assessee - Creditworthiness of creditors - Compliance with ITAT Delhi SMC Bench decision - Relief granted to partner in similar case - Assessing Officer's subjective remark - Assessee's compliance with proving source of cash credits - Identity and genuineness of transactions - Relevance of affidavits and documents - Lack of adverse material from Assessing Officer - ITAT SMC Bench precedent applicability - Deletion of additions upheld by CIT(A).

Analysis:
The appeal pertains to the addition of loans from various creditors by the Assessing Officer, upheld by the CIT(A) for AY 2001-02. The assessee challenged the additions on the grounds of creditworthiness and genuineness of the loans. The ITAT Delhi SMC Bench's decision in a similar case involving a partner of the assessee was crucial in this matter. The partner's relief granted by the ITAT was considered in the present appeal. The primary burden to prove the nature and source of cash credits was on the assessee, who produced all creditors before the Assessing Officer with affidavits and documents supporting the transactions. The ITAT found that the Assessing Officer failed to provide any cogent material to doubt the truthfulness of the creditors or the genuineness of the transactions. As a result, the additions made by the Assessing Officer and upheld by the CIT(A) were deemed unsustainable. The ITAT relied on the precedent set by the ITAT SMC Bench and directed the deletion of all additions related to cash credits for the fiscal year 2001-02. The appeal of the assessee was allowed, overturning the decisions of the lower authorities.

This detailed analysis highlights the critical aspects of burden of proof, compliance with legal precedents, and the sufficiency of evidence presented by the assessee to establish the legitimacy of the loans, leading to the favorable outcome in the appeal.