2019 (2) TMI 1998 - AT - Income Tax

Addition u/s.68 towards unexplained cash credit - case of the assessee was selected for scrutiny under CASS and statutory notices were duly served upon the assessee - HELD THAT - The undisputed facts are that the assessee filed copies of confirmations ledger accounts bank statements ITRs PANs and audited balance sheets and profit and loss accounts in respect of these three parties who lent money to the assessee. The authorities below have only relied on statement of Shri Pravin Kumar Jain that said he and related entities were engaged in providing accommodation entries of which the assessee was one of the beneficiaries without having brought anything to disbelieve and disprove various documents filed by the assessee. The assessee has filed necessary proofs and documents supporting the borrowings of money and repayment thereof. Under these circumstance we are not in agreement with the conclusion given by learned CIT(A). Accordingly by respectfully following the decision of Shreedham Builders 2018 (6) TMI 1282 - ITAT MUMBAI we allow the appeal of the assessee.

Summary

Issues:
Confirmation of addition of ?70 lakhs as unexplained cash credit under section 68 of the Income Tax Act.

Analysis:
The appeal was against the order of the Commissioner of Income Tax (Appeals) regarding the addition of ?70 lakhs by the Assessing Officer under section 68 of the Act as unexplained cash credit for the assessment year 2012-13. The Assessing Officer observed loans taken by the assessee from three parties during the assessment proceedings. Information received during a search indicated that these parties were involved in providing accommodation entries, leading to the addition of ?70 lakhs as unexplained cash credit. The CIT(A) upheld the addition, stating that the appellant failed to prove the identity, creditworthiness, and genuineness of the loans. The appellant's submissions and evidence were considered insufficient, and the AO's order was sustained based on the evidence provided by the investigating authorities.

The appellant contended that all necessary evidence was submitted before the AO, including details of temporary business loans repaid within a few months, supported by bank statements, ledger accounts, confirmations, and other documents. The appellant also highlighted the inability to attend a hearing due to a prior commitment in the High Court, supported by relevant documentation. The Assessing Officer's lack of objective investigation beyond relying on a statement and non-compliance with summons were emphasized. Reference was made to a similar case where the Coordinate Bench accepted loans under comparable circumstances, arguing for the deletion of the addition.

The Department, however, supported the CIT(A)'s decision, asserting that evidence from the search revealed the appellant's involvement in a hawala racket operated by certain entities. The Department sought affirmation of the CIT(A)'s order based on the facts uncovered during the search and the admission made by one of the individuals involved.

Upon review, the Tribunal found that the appellant had submitted various documents supporting the loans, including confirmations, bank statements, and audited financial statements of the lending parties. The Tribunal noted the reliance on a statement without sufficient evidence to discredit the documents provided by the appellant. Referring to a precedent involving similar entities and loan transactions, the Tribunal disagreed with the CIT(A)'s conclusion and allowed the appeal, directing the deletion of the addition of ?70 lakhs as unexplained cash credit under section 68 of the Act for the assessment year 2012-13.