2015 (2) TMI 952 - HC - Income Tax

Unaccounted cash credit - addition u/s 68 - CIT (A) deleted the additions - Held that - The initial onus to show the genuineness and identity of transaction and the credit worthiness of the party is no doubt upon the assessee. Once that is done in the form of prima facie credible material, the AO has to then exert himself/herself to quote relevant material to disprove that onus and discharge the burden placed upon the Revenue. In this case, this procedure was clearly not adopted in respect of the sum of ₹ 20,37,05,000/-. As far as the amount of ₹ 4,32,07,394/- is concerned, it reflected a solitary transaction which too was done in the course of the banking channels. The ITR and the concerned balance sheets etc. of the said company were placed on record and considered by the CIT (A) - though not by the AO. The amounts were reflected in the balance sheets. In these circumstances, the finding of fact arrived at by the CIT (A) and the ITAT cannot be considered unreasonable. - Decided in favour of assessee.

Summary

Issues:
1. Disputed confirmation of CIT (A)'s order by ITAT.
2. Addition of amounts to the assessee's claim by AO.
3. Disputed sum of Rs. 4,32,07,394/- against Taral Vincom Pvt. Ltd.
4. Revenue's appeal against CIT (A) and ITAT orders.

Issue 1:
The Revenue challenged the ITAT's confirmation of CIT (A)'s order, arguing that the AO correctly added back amounts to the assessee's claim as the entries were not satisfactorily explained. However, the CIT (A) accepted the assessee's explanations, emphasizing the need for individual scrutiny of transactions as per legal precedents like CIT vs. Kinetic Capital Finance Ltd. The AO's failure to conduct proper inquiries and lack of evidence to prove the amounts as undisclosed income led to the dismissal of the Revenue's appeal.

Issue 2:
The assessee's claim, involving amounts of Rs. 20,37,05,000/- and Rs. 4,32,07,394/-, was based on documentary evidence of transactions in the business of property purchase and sale. Despite providing detailed proofs including ledger extracts, bank statements, and confirmations, the AO added the entire amount to the income, which was later overturned by CIT (A) and ITAT. The court upheld the decision, stating that the AO failed to disprove the genuineness and creditworthiness of the transactions as required under Section 68.

Issue 3:
Regarding the disputed sum of Rs. 4,32,07,394/- against Taral Vincom Pvt. Ltd., the assessee provided evidence of the transaction through ITR and balance sheets of the company. The CIT (A) ruled in favor of the assessee, noting the authenticity of the transaction and the party's creditworthiness. The court upheld this decision based on established legal principles, including the rationale of the judgment in Lovely Exports, emphasizing the need for proper verification before adding amounts under Section 68.

Issue 4:
The Revenue's appeal against the CIT (A) and ITAT orders was dismissed as the court found no substantial question of law. The court highlighted the importance of the AO's duty to disprove the genuineness of transactions once the assessee establishes prima facie credible material. Failure to follow this procedure led to the dismissal of the Revenue's appeal, upholding the decisions of the lower authorities based on the evidence presented and legal precedents cited.