2014 (6) TMI 252 - AT - Income Tax

Deletion made u/s 68 of the Act Unexplained unsecured loan Onus to prove - Held that - Following Commissioner of Income-Tax, Orissa Versus Orissa Corporation Pvt. Limited 1986 (3) TMI 3 - SUPREME Court - merely because the assessee could not produce the creditors, adverse inference cannot be drawn against the assessee - there was no effort made to pursue the so called alleged creditors - the assessee not only produced the confirmation of the creditors, their permanent account numbers but also the copy of their assessment order and bank accounts - there were certain fresh evidences furnished before the CIT(A), he called for the remand report from the Assessing Officer. The assessee produced the confirmation, copy of bank account, copy of income tax return of the creditors and, on verification by the AO by calling the information u/s 133(6) and also through the Inspector of Income-tax, no adverse material was found - merely because the creditors were not produced by the assessee, it cannot be said that the assessee was not able to discharge the onus of proving the cash credit which lay upon him - the assessee has discharged the initial onus of proving the cash credit which lay upon him Decided against Revenue.

Summary

Issues:
1. Appeal against deletion of addition of unexplained unsecured loan under section 68 of the Income Tax Act for AY 2006-07.
2. Appeal against deletion of addition of unexplained unsecured loan and bogus share capital/share premium under section 68 of the Income Tax Act for a different case.

Analysis:

Issue 1:
The first issue in the judgment concerns an appeal by the Revenue against the deletion of an addition of Rs. 4,00,00,000 under section 68 of the Income Tax Act for the assessment year 2006-07. The Assessing Officer disallowed the unsecured loans received by the assessee from two parties, questioning the source of the loans. The CIT(A) deleted the addition after the appellant submitted fresh evidence, including bank statements and income tax acknowledgments. The Assessing Officer's remand report confirmed the genuineness of the transactions. The Tribunal noted that the appellant had produced confirmations, permanent account numbers, assessment orders, and bank statements of the creditors. The Tribunal referred to a previous Supreme Court decision where the Court held that the burden of proof was on the assessee, but the mere inability to produce creditors did not warrant adverse inferences. The Tribunal upheld the CIT(A)'s decision based on the evidence provided by the appellant and the findings of the remand report.

Issue 2:
The second issue involves an appeal by the Revenue against the deletion of additions of unexplained unsecured loans and bogus share capital/share premium under section 68 of the Income Tax Act for a different case. The facts and arguments presented were found to be identical to the first case discussed in the judgment. Both parties agreed that the arguments remained the same as in the previous case. The Tribunal, having already considered and upheld the CIT(A)'s decision in the first case, dismissed the appeal in this case as well. The Tribunal noted that the appellant had successfully discharged the burden of proving the cash credits, similar to the first case.

In conclusion, the Tribunal dismissed both appeals by the Revenue, upholding the CIT(A)'s decisions in both cases based on the evidence provided by the appellants and the findings of the Assessing Officer's remand reports. The judgment emphasized the importance of producing relevant evidence to establish the genuineness of transactions and the creditworthiness of parties in cases involving unexplained cash credits under section 68 of the Income Tax Act.