2015 (10) TMI 2846 - AT - Income Tax

Addition of cash credit u/s.68 - whether Assessee has discharged the onus of proving the identity and capacity of the creditor? - CIT(A) deleted the addition - HELD THAT - CIT(A) while deleting the addition has given a finding that Assessee had submitted the copy of Pan Card, Address, confirmation letter, copy of return and bank statement of RSA Marketing, the party from whom the Assessee had received loan. She has further given a finding that the loan was taken by cheques and the perusal of the bank statement of RSA Marketing did not reflect any cash deposits immediately before issuing cheques to the Assessee. She has further noted that Assessee has discharged the onus of proving the identity and capacity of the creditor and also the genuineness of loan transaction. Before us, Revenue has not brought any material on record to controvert the findings of ld. CIT(A). No reason to interfere with the order of ld.CIT(A) and thus this ground of Revenue is dismissed.

Summary

Issues:
Appeal against CIT(A)'s order deleting addition of Rs. 15,03,432/- made on account of cash credit u/s. 68 of the IT Act for A.Y. 2006-07.

Analysis:
The appeal filed by the Revenue challenged the order of CIT(A) deleting the addition of Rs. 15,03,432/- made on account of cash credit u/s. 68 of the IT Act for A.Y. 2006-07. The appellant, a partnership firm engaged in the printing business, received a loan from RSA Marketing during a search action. The Assessing Officer (AO) added the loan amount under section 68, questioning the source of the loan. However, the CIT(A) deleted the addition, emphasizing that RSA Marketing was a related concern of the appellant and that all necessary documents proving the identity, capacity of the creditor, and genuineness of the transactions were submitted. The CIT(A) noted that the loan was received through cheques, with no cash deposits in RSA Marketing's bank account before issuing the cheques to the appellant. The appellant also deducted tax on the interest paid to RSA Marketing, further establishing the genuineness of the transactions. The CIT(A) held that the appellant had sufficiently discharged the onus of proving the identity and capacity of the creditor, as well as the genuineness of the loan transactions.

During the appeal before the ITAT, the Revenue supported the AO's order, while the appellant reiterated that the onus of proving the identity and capacity of the creditor had been fulfilled. The ITAT considered the submissions and material on record. It noted that the CIT(A) had found that the appellant had provided all necessary documents to establish the identity and capacity of the creditor, along with the genuineness of the transaction. The ITAT observed that the Revenue had not presented any new material to challenge the CIT(A)'s findings. Consequently, the ITAT upheld the CIT(A)'s order and dismissed the Revenue's appeal, concluding that there was no reason to interfere with the CIT(A)'s decision.

In conclusion, the ITAT upheld the CIT(A)'s decision to delete the addition of Rs. 15,03,432/- under section 68 of the IT Act, as the appellant had successfully proven the identity, capacity of the creditor, and genuineness of the loan transactions with RSA Marketing. The ITAT found no grounds to overturn the CIT(A)'s order, and thus, the appeal of the Revenue was dismissed.