2015 (3) TMI 1335 - AT - Income Tax

Unexplained credit u/s 68 - CIT-A deleted the addition by admitting additional evidence at appellate stage - Held that - As far as the issue of admission of additional evidences is concerned before us the assessee has filed only copies of the accounts and copies of the TDS certificate, which cannot be construed as evidences because for proving the loans u/s 68. Assessee is required to file confirmation as well as show credit worthiness of such parties therefore we decline to admit these papers as additional evidence because assessee is in the guise of these copies of accounts asking for more opportunity which is not permissible under the law. Therefore, application for admission of additional evidence is rejected. In the light of the rejection of application for additional evidence the ground raised by the assessee required to be dismissed because assessee has miserably failed to prove the loans to the extent of ₹ 41,59,000/- because no confirmation or any evidence proving such transaction was furnished before AO or even before CIT(A) or even before us. CIT(A) has discussed four items of loans in case of G.S.Bricks, New Bharat Shuttering Store, Pyare Lal Rajinder Kumar, Punjab Trading Co. from whom loans of ₹ 2 Lacs, ₹ 2 Lacs, ₹ 3 Lacs, and ₹ 3.50 lacs have respectively been taken. However the relief has been allowed to the extent of ₹ 20 lacs without any discussion in respect of the rest of the items amounting to ₹ 9,50,000/-. In the four cases, in our opinion the CIT has correctly accepted the loans because the amount comes through cheques and confirmation of PAN numbers were furnished. However, since no discussion has been made in respect of other loans to the extent of ₹ 9,50,000/- therefore we set aside the order of Ld. CIT(A) in respect of the rest of the items amounting to ₹ 9,50,000/- and remit the matter back to his file with a direction to decide the issue after recording findings in respect of such items also - Appeal of the Revenue is partly allowed for statistical purposes.

Summary

Issues Involved:
1. Addition of Rs. 21,59,000 out of Rs. 41,59,000 for unexplained credits under Section 68 of the Income Tax Act, 1961.
2. Deletion of Rs. 20,00,000 out of Rs. 41,52,670 for unexplained credits under Section 68 of the Income Tax Act, 1961 by CIT(A).

Issue-Wise Detailed Analysis:

1. Addition of Rs. 21,59,000 out of Rs. 41,59,000 for Unexplained Credits under Section 68 of the Income Tax Act, 1961:

The Assessee contested the addition of Rs. 21,59,000 out of the total Rs. 41,59,000 made by the Assessing Officer (AO) on account of unexplained credits under Section 68. The Assessee argued that the Commissioner of Income Tax (Appeals) [CIT(A)] erred in confirming this addition despite the Assessee having provided requisite details establishing the identity, genuineness, and creditworthiness of the parties involved.

During the assessment, the AO noted that the Assessee had shown unsecured loans amounting to Rs. 1,17,57,702 and was required to prove these loans. However, no confirmations were filed for certain loans totaling Rs. 41,59,000. Consequently, the AO added this amount to the Assessee's income.

On appeal, the CIT(A) allowed the admission of additional evidence, stating that the Assessee had been given multiple opportunities to file confirmations but had failed to do so. The CIT(A) acknowledged that the Assessee had received the amounts by cheque and had repaid them with interest, where tax was deducted at the source. The CIT(A) confirmed the addition of Rs. 21,59,000 due to the Assessee's failure to file confirmations for the said amount.

The Tribunal, after considering the submissions, rejected the Assessee's application for additional evidence, stating that the Assessee failed to provide sufficient evidence to prove the loans. Therefore, the Assessee's appeal was dismissed.

2. Deletion of Rs. 20,00,000 out of Rs. 41,52,670 for Unexplained Credits under Section 68 of the Income Tax Act, 1961 by CIT(A):

The Department contested the deletion of Rs. 20,00,000 out of Rs. 41,52,670 made by the AO on account of unexplained credits under Section 68. The Department argued that the CIT(A) erred in deleting this addition by admitting additional evidence at the appellate stage and not appreciating the findings in the assessment order and the remand report.

The CIT(A) admitted additional evidence, stating that the Assessee had provided confirmations, PAN numbers, and evidence of interest payments for certain loans totaling Rs. 20,00,000. The CIT(A) found that the Assessee had received the amounts by cheque and repaid them with interest, where tax was deducted at the source.

The Tribunal noted that the CIT(A) had correctly accepted the loans from G.S. Bricks, New Bharat Shuttering Store, Pyare Lal Rajinder Kumar, and Punjab Trading Co., as the amounts were received through cheques and PAN numbers were furnished. However, the CIT(A) did not discuss the remaining loans totaling Rs. 9,50,000. Therefore, the Tribunal set aside the CIT(A)'s order regarding the Rs. 9,50,000 and remitted the matter back for further examination.

Conclusion:

The Tribunal dismissed the Assessee's appeal for failing to prove the loans amounting to Rs. 41,59,000. The Tribunal partly allowed the Department's appeal for statistical purposes, remitting the matter back to the CIT(A) for further examination of the loans totaling Rs. 9,50,000. The order was pronounced in the Open Court on 25/03/2015.