2019 (8) TMI 1607 - AT - Income Tax

Unexplained cash credit u/s 68 - assessee has not proved the identity and creditworthiness of the creditor and genuineness of the transactions - AO on the basis of information collected during the course of survey u/s 133A conducted on the assessee and on the basis of admission of one of the directors of the assessee company made the addition - HELD THAT - Tribunal in assessee s own case 2019 (3) TMI 1835 - ITAT MUMBAI has held that the assessee has filed all the necessary evidences before the AO and AO has not carried out any further investigation to find out the truth. The bench further held that the assessee has proved the identity and creditworthiness of the creditors and genuineness of the transactions. We, therefore, respectfully following the same uphold the order of Ld. CIT(A) and ground raised by the revenue is dismissed. Interest paid to lenders after deduction of TDS is genuine and the same has rightly been allowed by the Ld. CIT(A). Unsecured cash credit under section 68 - assessee has not proved the identity and creditworthiness of the creditors and genuineness of the transactions - HELD THAT - As during the year, the assessee allotted shares to seven parties out of which the AO made an addition in respect of three companies by stating the same to be related to Shri Pravin Kumar Jain. During the course of assessment proceedings the assessee filed all the necessary evidences in the form of share application forms, allotment returns, copy of bank statements of the investors, copy of the balance sheet of the investors, their confirmations etc. along with ITR copies. However, the AO did not carry out any further investigations to find out the truth. It is also undisputed that the corresponding investment entries were duly appearing in the respective balance sheets of these investors and were examined by the respective AOs during assessment proceedings and were accepted in the assessment framed u.s 143(3) of the Act. None of these three investors who bought share capital in the assessee company were appearing in the said statement of Shri Pravin Kumar Jain and therefore we do not find any merit in the conclusion drawn by the AO that all these three entries were related to Shri Pravin Kumar Jain. Further, we note that the AO has not made any investigation or enquiry despite the assessee having filed all the necessary evidences before the AO to prove the identities and creditworthiness of the investors and genuineness of the transactions. As investors were existing and assessee has filed all the evidences proving the identities and creditworthiness of the investors and genuineness of the transactions but the AO did not make any further enquiries or investigations to find out the truth and relied upon the statements which stood retracted. Under these circumstances we are of the considered view that order of Ld. CIT(A) is correct in deleting the addition. - Decided in favour of assessee.

Summary

Issues Involved:
1. Deletion of ?2,68,00,000/- addition by AO on account of unexplained cash credit under section 68 of the Act.
2. Deletion of interest of ?77,43,963/- by CIT(A) as made by AO towards interest on the said bogus unsecured loans.
3. Deletion of addition of ?9,84,00,000/- by CIT(A) against unsecured cash credit under section 68 of the Act.
4. Deletion of addition of ?27,00,000/- and interest thereon by CIT(A) towards unexplained cash credit under section 68 of the Act.

Issue-wise Detailed Analysis:

1. Deletion of ?2,68,00,000/- Addition by AO on Account of Unexplained Cash Credit:
The AO added ?2,68,00,000/- as unexplained cash credit under section 68 of the Act, based on a survey under section 133A and the admission of one of the directors. The AO concluded that the loans from various parties were bogus. The assessee contested this, stating that the statements of the director and another individual were retracted and thus could not be the basis for the addition. The assessee provided ITRs, bank statements, balance sheets, and confirmations to prove the identity and creditworthiness of the creditors and the genuineness of the transactions. The CIT(A) deleted the addition, noting that the AO did not conduct any further investigation and relied solely on retracted statements. The Tribunal upheld the CIT(A)'s decision, referencing a previous decision in the assessee's favor and confirming that the assessee had discharged the onus of proving the identity, creditworthiness, and genuineness of the transactions.

2. Deletion of Interest of ?77,43,963/- by CIT(A):
Since the Tribunal upheld the deletion of the ?2,68,00,000/- addition, it also upheld the deletion of the related interest of ?77,43,963/-, as the interest payments were considered genuine.

3. Deletion of ?9,84,00,000/- Addition by AO Against Unsecured Cash Credit:
The AO added ?9,84,00,000/- as unexplained cash credit, based on the survey and statements indicating that the assessee was a beneficiary of accommodation entries from dummy concerns. The assessee argued that the statements were retracted and not legally valid, and that no cross-examination was provided. The assessee provided substantial evidence, including bank statements, ITRs, confirmations, and balance sheets. The CIT(A) deleted the addition, noting that the AO relied on retracted statements without further investigation and that the assessee had provided sufficient evidence to prove the identity, creditworthiness, and genuineness of the transactions. The Tribunal upheld the CIT(A)'s decision, emphasizing that the AO did not conduct further inquiries and relied on retracted statements.

4. Deletion of ?27,00,000/- Addition and Interest Thereon by CIT(A):
This issue was identical to the previous ones, where the AO added ?27,00,000/- as unexplained cash credit. The CIT(A) deleted the addition, and the Tribunal upheld this decision, following the same reasoning and findings as in the previous issues.

Conclusion:
The Tribunal dismissed the appeals of the Revenue, upholding the CIT(A)'s decisions to delete the additions and related interest. The Tribunal emphasized the importance of proper investigation and the inadequacy of relying on retracted statements without corroborating evidence. The assessee successfully proved the identity, creditworthiness, and genuineness of the transactions through substantial documentary evidence.