2012 (4) TMI 800 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition of Rs. 47,50,000/- as unexplained credit entries u/s 68 of the I.T. Act, 1961.
2. Deletion of disallowance of Rs. 10,54,199/- of interest claimed on the above credit entries.
3. Observations regarding the depositors' engagement in providing bogus entries.
4. Allegation that the amounts introduced as credit entries were the assessee's own unaccounted money.

Summary:

Issue 1: Deletion of Addition of Rs. 47,50,000/- as Unexplained Credit Entries u/s 68 of the I.T. Act, 1961
The Revenue appealed against the deletion of Rs. 47,50,000/- added u/s 68 as unexplained credit entries. The AO argued that the assessee introduced its own cash through the Ganga Ram Group, which was involved in providing loan entries for a consideration. The assessee provided evidence including account copies, bank statements, and confirmation letters from creditors. The CIT(A) deleted the addition, noting the absence of concrete evidence proving that the cash belonged to the assessee. The Tribunal upheld the CIT(A)'s decision, emphasizing that the identity, creditworthiness, and genuineness of the transactions were established, and the AO failed to disprove these facts.

Issue 2: Deletion of Disallowance of Rs. 10,54,199/- of Interest Claimed on the Above Credit Entries
The AO disallowed the interest claimed on the loans, which was also deleted by the CIT(A). The Tribunal supported this deletion, as the loans were deemed genuine and the interest paid was thus allowable.

Issue 3: Observations Regarding the Depositors' Engagement in Providing Bogus Entries
The AO claimed that the depositors admitted to providing bogus entries, but the CIT(A) found no evidence supporting this. The Tribunal agreed, noting that the AO did not summon the creditors despite the assessee's request, and no material evidence was presented to prove the transactions were bogus.

Issue 4: Allegation that the Amounts Introduced as Credit Entries were the Assessee's Own Unaccounted Money
The AO alleged that the credit entries were the assessee's unaccounted money routed through loan entries. The CIT(A) and the Tribunal found no concrete evidence to support this claim. The Tribunal emphasized that the AO did not provide any material to prove that the loans were not genuine and failed to examine the creditors despite the assessee's requests.

Conclusion:
The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s deletion of the additions and disallowances, as the assessee had sufficiently proven the genuineness of the loans and the interest claimed. The order was pronounced in the open court.