2015 (2) TMI 529 - AT - Income Tax

Unexplained cash credit - CIT(A) deleted the addition - Held that - The appellant had furnished the detailed list before the Assessing Officer with amount and some affidavits during the assessment proceedings. In remand report proceedings, the learned Assessing Officer had not doubted the genuineness and creditworthiness of the farmers. The learned Assessing Officer should have issued the 131 summons to all the farmers for appearance before him. In set aside proceedings, out of 23 farmers selected for verification. 11 farmers were examined by the learned Assessing Officer and were also cross examined by the assessee/respondent. One had died, one had brain hemorrhage, one had paralysis, four couldn't come due to harvest season and four were already examined in the set-aside proceedings. All the farmers who came-up had accepted that they are having long term dealing with the assessee/respondent and that they used to collect their sale consideration after 1-2 months, which is general practice in the line of farming and selling in the mandis. The appellant also furnished the details of land holdings of all the farmers, which shows that they belonged to farming community. The case laws relied upon by the assessee are squarely applicable on the case of the assessee, therefore, we uphold the order of the learned CIT(A). - Decided in favour of assessee.

Summary

Issues involved:
Appeal against deletion of addition of unexplained cash creditors without examining creditworthiness and genuineness of transactions.

Detailed Analysis:
1. The department appealed against the deletion of an addition of Rs. 34,74,538 on account of unexplained cash creditors without assessing the creditworthiness and genuineness of transactions. The ITAT Jaipur 'B' Bench had previously directed the Assessing Officer to provide an opportunity for the assessee to be heard and cross-examine the farmers/creditors. The Assessing Officer issued notices and the assessee produced four farmers for verification. The Assessing Officer raised concerns about the authenticity of the creditors, discrepancies in submissions, and added back the outstanding creditors in the assessee's income.

2. The CIT(A) allowed the appeal observing that non-production of some persons couldn't be held against the assessee as no summons were issued by the Assessing Officer. The CIT(A) found that the statements of the farmers recorded by the Assessing Officer were acceptable, and the lapse of time affected the exact details provided. The CIT(A) directed the deletion of the addition based on the farmers' statements and lack of adverse inferences.

3. The Revenue appealed, arguing that the Assessing Officer was justified in adding back the outstanding creditors as not all farmers were produced for verification. The assessee contended that they complied with instructions to bring farmers for verification, but the Assessing Officer didn't issue summons directly. The assessee highlighted that most farmers confirmed their dealings with the assessee, and their genuineness and creditworthiness were established over years of transactions.

4. The ITAT considered the evidence and arguments, noting that the farmers were illiterate and not well-versed in legal proceedings. The ITAT found that the Assessing Officer should have issued summons to all farmers for verification. Despite difficulties in producing all farmers, the statements of those presented, along with the details provided by the appellant, supported the genuineness and creditworthiness of the transactions. Relying on relevant case laws, the ITAT upheld the CIT(A)'s order, dismissing the Revenue's appeal.