2016 (4) TMI 582 - AT - Income Tax

Addition of unexplained cash credit - Held that - Advance has been given by the trust to the assessee on or before the date of deposit in bank account. The assessee has also filed receipt corresponding to these advances from pages 65 to 68 of the paper book. The trust has also confirmed the above advances which has been field at page no. 15 of the paper book. On verification of the balance-sheet of the trust which is filed, we find that the trust has advanced money to its Karyakarta (i.e. volunteers) including the assessee, for different purposes of the trust, thus the name of the assessee was appearing as debtor in the books of account of the trust and, therefore, the contention of learned Sr. Departmental Representative that it was not appearing as debtor in the books of account of the trust is not correct. The assessee submitted all the documents in support of identity, creditworthiness and genuineness of the transaction. However, the Assessing Officer merely made addition without any evidence in support of his claim. Once the assessee filed all the documents, the burden of proof shifted on the Revenue and if the Revenue was unable to carry out inquiry even after request of the assessee to summon the creditors, the Assessing Officer failed to discharge his burden of proof and unable to establish that the credit of the deposit of ₹ 14,55,575/- in the bank account was from undisclosed sources - Decided in favour of assessee.

Summary

Issues Involved:
1. Addition of unexplained cash credit of Rs. 14,44,575.

Analysis:
1. The case involved the addition of unexplained cash credit of Rs. 14,44,575. The assessee, a Chartered Accountant, declared income and explained cash deposits in a bank account. The Assessing Officer rejected the explanation and added the entire sum as unexplained cash credit under Section 68 of the Income Tax Act. The Commissioner of Income Tax(Appeals) also did not accept the claim. The assessee argued that the cash belonged to a trust and provided evidence including receipts, balance sheets, and confirmations. The Authorized Representative cited legal precedents to support the claim that if the assessee provided evidence and requested further inquiries, no adverse inference should be drawn. The Departmental Representative disputed the claim, stating no such amount was shown in the trust's balance sheet.

2. The Tribunal considered the evidence presented by the assessee, including the trust's imprest account, receipts, and balance sheets. The assessee explained the source of the deposits and provided details of advances from the trust before the bank deposits. The trust confirmed the advances, and the balance sheet showed the trust had advanced money to volunteers, including the assessee. The Tribunal noted that the assessee submitted all required documents to establish the genuineness of the transactions. The Assessing Officer failed to conduct any inquiry or summon creditors despite the assessee's request. Citing a Supreme Court judgment, the Tribunal emphasized that if the assessee provided creditor details and the Revenue failed to investigate, no adverse inference could be drawn. Consequently, the Tribunal reversed the Commissioner's findings and held in favor of the assessee, allowing the grounds related to the unexplained cash credit.

3. The Tribunal concluded that the rest of the grounds were general in nature and did not require adjudication. Therefore, the appeal of the assessee was allowed, and the decision was pronounced in open court on 24th February 2016.