2016 (11) TMI 1659 - AT - Income Tax

Unexplained cash credit u/s.68 - Unsecured loan received - HELD THAT - Source of deposit of cash by the loan creditor Shri Simachal Panda could not be satisfactorily explained by the assessee either before the Assessing Officer or before the ld CIT(A) or even before me. Thus, the creditworthiness of the loan creditor Sri Simachal Panda could not be proved. Hence, find no good reason to interfere with the order of the ld CIT(A) and, therefore, this part of ground of appeal is dismissed. Laon from Late Banamali Besoyee, it is observed from the bank statement of United Bank of India, B.D.Pur placed at page 5 of PB that ₹ 4 lakh was advanced out of agricultural loan obtained from UBI and thus, the creditworthiness of the loan creditor is proved for advancing the loan of ₹ 4 lakh to the assessee. Hence set aside the orders of lower authorities on this issue and delete the addition - Ground No.1 of the appeal is partly allowed. Addition u/s.68 for deposit of cash and cheque in the bank - assessee failed to explain the source of the same - HELD THAT - Source of the deposit also could not be explained before the ld CIT(A). Before us A.R. submitted that the deposit of ₹ 8 lakhs in the bank was the sale proceeds from the business of the assessee of fruits and bricks. However, he could not place any evidence on record to substantiate his claim. Therefore, the argument of the ld A.R. of the assessee that entire ₹ 8 lakhs cannot be treated as income of the assessee but the income embedded of such receipts from the business of fruits and bricks of the assessee of ₹ 8 lakhs could only be treated as income of the assessee, cannot be accepted Assessee could not produce the creditors before the Assessing Officer for examination - action taken by the Assessing Officer to secure the appearance of the creditors before him. In our considered view, in the above circumstances, CIT(A) was not justified in confirming the additions action taken by the Assessing Officer to secure the appearance of the creditors before him. In my considered view, in the above circumstances, the ld CIT(A) was not justified in confirming the additions Under the Income tax Act, the power has been conferred on the Assessing Officer to secure the presence of a person and no power has been conferred upon the assessee by exercise of which he can compel the creditors to appear before the Assessing Officer. - Decided in favour of assessee.

Summary

Issues:
- Addition of unsecured loans received from late Banamali Bisoye and Sri Simachal Panda
- Addition of cash deposits in bank account
- Treatment of sale proceeds from business as income
- Addition of unsecured loan received from Late Sannyasi Jena

Analysis:

Issue 1: Addition of unsecured loans received from late Banamali Bisoye and Sri Simachal Panda
In the case of unsecured loans totaling ?6 lakhs received by the assessee, the Assessing Officer treated it as unexplained cash credit under section 68 of the Act due to lack of satisfactory explanation regarding the source of funds. The CIT(A) upheld the AO's decision. However, during the appeal, the assessee provided bank statements showing the loan amounts were received through cheques. The tribunal found that while the loan from Sri Simachal Panda lacked creditworthiness proof, the loan from late Banamali Bisoye was proven to be from an agricultural loan. Consequently, the addition of ?4 lakhs was deleted, partially allowing the appeal.

Issue 2: Addition of cash deposits in bank account
Regarding the addition of ?8 lakhs in the bank account, the AO added this amount to the assessee's income under section 68 due to unexplained sources. The CIT(A) affirmed this decision, noting the lack of explanation from the assessee. The assessee claimed the amount was the sale proceeds from their business, but failed to provide evidence to support this claim. The tribunal upheld the CIT(A)'s decision, stating that without evidence, the entire amount could not be treated as income, dismissing the appeal.

Issue 3: Treatment of sale proceeds from business as income
The assessee argued that the ?8 lakhs deposited in the bank were sale proceeds from their business, but failed to substantiate this claim with evidence. The tribunal found no reason to interfere with the CIT(A)'s decision, confirming the addition of ?8 lakhs to the income of the assessee.

Issue 4: Addition of unsecured loan received from Late Sannyasi Jena
In the case of the unsecured loan of ?5 lakhs received from Late Sannyasi Jena, the AO added this amount to the assessee's income under section 68 as the loan creditor was not produced for examination. The CIT(A) upheld this addition, citing the lack of creditor's presence and creditworthiness proof. The tribunal, however, noted that the AO did not take steps to secure the creditor's appearance and ruled in favor of the assessee, deleting the addition of ?5 lakhs and allowing the appeal for the assessment year 2009-2010.