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2016 (11) TMI 445 - AT - Income TaxAddition u/s 68 - borrowed fund from depositor - creditworthiness of the depositor had not been proved by the assessee - Held that - In this case, after discharging of initial onus, ld. AO raised serious concerns about the claim of the assessee, its veracity and genuineness. These concerns have not been replied by the assessee. Ld. CIT(A) without adverting to these crucial facts has gone on a tandem to hold that the source of source cannot be examined by the AO. The fact of the matter is that the AO intended to verify the correctness of the claim canvassed the assessee himself. The assessee did not endeavour to examine the source of source on its own. The ld. AO is an Investigation Officer and if the assessee files some documents, it is within the investigation power of the AO to raise questions on those documents. It cannot be held to be amounting to exploring the source of source. Therefore, in our considered opinion, the assessee has failed to meet with the rebuttal of the ld. AO as enshrined in Section 68 thus the onus which shifted to assessee has not been discharged. - Decided against assessee
Issues:
Challenge to deletion of addition made under section 68 for unexplained cash credit. Analysis: The Revenue challenged the deletion of an addition under section 68 for unexplained cash credit. The Revenue contended that the creditor was not creditworthy and was a paper entity, lacking veracity in its books of accounts. The Revenue emphasized that the surrounding circumstances did not support the claim that the creditor would stop payments to advance a loan to an unknown party. The Revenue cited the Hon'ble Supreme Court's decision in Sumati Dayal to support its argument. Additionally, the Revenue argued that the Assessing Officer (AO) has the authority to examine the source of source, as established in the Navodaya Castle case. The Revenue further relied on the judgment in CIT vs. P. Mohanakala to assert that the AO properly considered the doubtful nature of the transaction. The Revenue concluded that the assessee failed to discharge its burden under section 68, and the CIT(A) erred in deleting the addition without proper justification. The assessee, on the other hand, contended that it had fulfilled its initial onus by providing necessary details about the creditor, including PAN and IT details. The assessee relied on various judgments to support its position, emphasizing that the creditor was assessed to tax and had accepted giving the loan. The CIT(A) agreed with the assessee, stating that the AO failed to counter the contentions and did not provide evidence to show the loan was not genuine. The CIT(A) highlighted that the depositor had accepted giving the loan and confirmed the transactions through account payee cheques. The CIT(A) emphasized that the AO did not bring forth any material to prove the loan was not genuine. Therefore, the CIT(A) directed the deletion of the addition. Upon review, the Tribunal found that the assessee did not adequately address the serious concerns raised by the AO regarding the authenticity of the claim. The Tribunal noted that the assessee failed to provide evidence to counter the doubts raised by the AO. The Tribunal highlighted that section 68 places the initial onus on the assessee, and if the AO raises concerns, it is the assessee's responsibility to satisfactorily explain. The Tribunal referenced the Hon'ble Supreme Court's decision in Navodaya Castle to support the argument that mere filing of documents does not discharge the burden of proof. The Tribunal concluded that the CIT(A) erred in not properly appreciating the issue and reversed the decision, restoring the AO's order. Ultimately, the Tribunal allowed the Revenue's appeal, overturning the deletion of the addition made under section 68 for unexplained cash credit.
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