2015 (6) TMI 570 - AT - Income Tax

Addition u/s 68 - Held that - In the case of CIT vs. S. Kamaljeet Singh (2005 (1) TMI 676 - ALLAHABAD HIGH COURT), it was held that where the assessee has brought on record the confirmation of creditor, their affidavits, their full address, GIR/PAN, the assessee s burden stood discharged and addition is not called for. Thus hen the assessee has established the identity of the creditor and the amount is received by account payee cheque, source of the credits need not be proved. In the present case, confirmation of all creditors with full address and PAN, bank statement and assessment particulars are brought on record. Only adverse feature is that in some cases, there is cash deposit in the bank account of the creditor. Merely on this basis alone, it cannot be said that those creditors are not having credit worthiness particularly when these creditors are assessed to tax and their PAN, address and assessment particulars are furnished and the A.O. has not made any effort to call any detail from the creditors or to verify the details from the A.O. of the creditors. Therefore no addition is justified u/s 68 of the Act in respect of any of the cash credits. - Decided in favour of assessee. Disallowance of car expenses - Held that - Element of personal use of car cannot be ruled out and disallowance is only 10% of the expenses and hence justified. It is not shown that the assessee was having any personal vehicle for personal use, expenses of which were not claimed as business expenses. - Decided in favour of assessee.

Summary

Issues Involved:
1. Addition made by the Assessing Officer under Section 68 in respect of various cash credits.
2. Deletion of addition made by the Assessing Officer under Section 68.
3. Disallowance of car expenses.
4. Disallowance of household expenses.

Issue-Wise Detailed Analysis:

1. Addition Made by the Assessing Officer under Section 68 in Respect of Various Cash Credits:
The primary dispute in the assessee's appeal (I.T.A. No.184/Lkw/2010) concerns the addition of Rs. 59,65,729/- made by the Assessing Officer under Section 68 for various cash credits. The assessee argued that sufficient evidence was provided to establish the identity, creditworthiness, and genuineness of the transactions involving the loan creditors. This included confirmations from creditors, bank statements, and copies of income tax returns. The assessee relied on several judgments, including CIT vs. Rohini Builders and Nemi Chand Kothari vs. CIT, to argue that the initial burden of proof was discharged by establishing the identity of the creditors and the receipt of amounts through account payee cheques. The Tribunal examined the applicability of the judgments cited by both the assessee and the Revenue. It concluded that none of the judgments cited by the Revenue were applicable to the present case. Instead, the Tribunal found that the judgments cited by the assessee supported their case, particularly since the assessee had provided comprehensive details of the creditors, including PAN and bank statements. The Tribunal held that no addition was justified under Section 68 in respect of the cash credits.

2. Deletion of Addition Made by the Assessing Officer under Section 68:
In the Revenue's appeal, the dispute centered on the deletion of an addition of Rs. 27.91 lakh made by the Assessing Officer under Section 68. The Revenue contended that the assessee failed to prove the creditworthiness of the depositors. However, the Tribunal found that the assessee had provided sufficient evidence, including confirmations, PAN, and bank statements of the creditors. The Tribunal noted that merely because there were cash deposits in the creditors' bank accounts before issuing cheques to the assessee, it could not be concluded that the cash belonged to the assessee. The Tribunal dismissed the Revenue's appeal, supporting the deletion of the addition.

3. Disallowance of Car Expenses:
The assessee challenged the disallowance of Rs. 31,830/- out of car expenses. The Tribunal upheld the CIT(A)'s decision, which justified the disallowance based on the possibility of personal use of the car. The Tribunal found no infirmity in the CIT(A)'s order, noting that the assessee did not demonstrate having a personal vehicle for non-business use. Consequently, the disallowance of car expenses was upheld.

4. Disallowance of Household Expenses:
The assessee also contested the disallowance of Rs. 50,000/- on account of household expenses. The CIT(A) had reduced the original addition from Rs. 1,56,000/- to Rs. 50,000/-, considering the size of the family. The Tribunal found no infirmity in the CIT(A)'s decision, noting that the partial addition was justified based on the family's size. Therefore, the disallowance of household expenses was upheld.

Conclusion:
The Tribunal dismissed the Revenue's appeal and allowed the assessee's appeals in the case of Shri Suresh Chandra (Individual and HUF) concerning the addition under Section 68. The Tribunal partially allowed the assessee's appeal in the individual case by upholding the disallowances related to car and household expenses. The judgment was pronounced in the open court.