2015 (10) TMI 590 - AT - Income Tax

Unexplained cash credit - CIT(A) deleted the addition - Held that - On a careful perusal of the orders of the lower authorities, we find that undisputedly the Inspector s report submitted to the ADIT, Kolkata was not furnished to the assessee, therefore, the assessee could not make his comments thereon. It is also undisputed fact that the creditor was assessed to tax as his PAN and assessment order were furnished before the Assessing Officer. Moreover, the balance sheet and profit and loss account of the creditors were also furnished and from the balance sheet, it has been established that the creditors were having sufficient balance to make deposit in the assessee-company. Moreover, the assessee has received depositors through banking channel, therefore, its nature cannot be doubted. Since the assessee has placed all the relevant evidence to prove the genuineness of the transaction and creditworthiness & identity of the creditors, addition under section 68 of the Act is not called for. We have also carefully perused the judgments referred to by the assessee and we find that it has been repeatedly held that once the assessee has discharged his onus of proving the creditworthiness & identity of the creditors and genuineness of the transaction, no addition under section 68 of the Act is called for. In the light of these judicial pronouncements, we are of the view that the ld. CIT(A) has properly adjudicated the issue in the light of the given facts. Therefore, we find no infirmity in his order. Accordingly we confirm the same. - Decided in favour of assessee.

Summary

Issues:
Appeal against deletion of addition under section 68 of the Income-tax Act, 1961 on account of unexplained cash credit.

Detailed Analysis:

Issue 1: Deletion of Addition under Section 68 of the Income-tax Act

- The Assessing Officer made an addition of Rs. 1.50 crores under section 68 of the Act due to unexplained cash credit received by the assessee from M/s Shubhang Exports Ltd.
- The Assessing Officer conducted inquiries, including writing to the company and issuing summons, but faced difficulties in obtaining relevant information.
- The ld. CIT(A) examined the evidence provided by the assessee, including PAN, bank accounts, and balance sheets of M/s Shubhang Exports Ltd., and found the company had sufficient funds for the transactions.
- The ld. CIT(A) noted that deposits were made through cheques, with nominal cash deposits, and deleted the addition based on the evidence presented by the assessee.
- The ld. CIT(A) highlighted that the assessee had discharged the onus of proving the identity, genuineness, and creditworthiness of the transaction.
- The Revenue appealed to the Tribunal, arguing in favor of the Assessing Officer's order, while the assessee's counsel relied on the evidence submitted to establish the genuineness of the transaction.
- The Tribunal observed that the Inspector's report, which was the basis for the addition, was not provided to the assessee for comments.
- Considering the evidence presented, including PAN cards, bank accounts, and balance sheets of the creditors, the Tribunal upheld the ld. CIT(A)'s decision to delete the addition under section 68 of the Act.
- The Tribunal emphasized that once the assessee proves the creditworthiness, identity of the creditors, and genuineness of the transaction, no addition under section 68 is warranted.
- Citing relevant case laws, the Tribunal confirmed the ld. CIT(A)'s order and dismissed the Revenue's appeal.

This detailed analysis covers the issues involved in the legal judgment regarding the deletion of the addition under section 68 of the Income-tax Act based on the evidence presented by the assessee to establish the genuineness of the transaction and the creditworthiness of the creditors.