2017 (4) TMI 51 - AT - Income Tax

Unexplained credit u/s 68 - Held that - Keeping in view, the totality of facts, attendant circumstances, human probabilities, and in the presence of plausible explanation by the assessee, relevant material, and fulfillment of ingredients enshrined in section 68 of the Act, we find that onus cast upon the assessee was duly discharged, therefore, we find no infirmity in the conclusion drawn by the Ld. Commissioner of Income Tax (Appeal), resulting into dismissal of appeal, filed by the Revenue. - Decided in favour of assessee

Summary

Issues:
Addition of unsecured loans under section 68 of the Income Tax Act, 1961.

Analysis:
The judgment by the Appellate Tribunal ITAT Mumbai involved a dispute regarding the addition of ?55,50,000 as unexplained credit under section 68 of the Income Tax Act, 1961. The Revenue challenged the deletion of this addition by the Ld. First Appellate Authority, arguing that the onus was on the assessee to prove the genuineness of the transactions. The Revenue contended that there were suspicious deposits that remained unexplained, and parties providing the loans were not produced by the assessee. Various legal precedents were cited to support this argument.

On the other hand, the counsel for the assessee defended the order of the Ld. Commissioner of Income Tax (Appeal), stating that the onus had been discharged by providing confirmations from the concerned parties. The assessee explained that the loans were repaid, and legal precedents were cited in support of this argument as well.

After considering both sides, the Tribunal examined the facts of the case. It was noted that the concerned parties had responded to summons issued by the Assessing Officer and confirmed providing loans to the assessee. The Tribunal found that the identity of the parties, genuineness of the transactions, and the source of the loans were duly explained by the assessee. The loans were repaid, indicating the legitimacy of the transactions. Therefore, the Tribunal concluded that the onus under section 68 of the Act had been satisfactorily discharged by the assessee.

The Tribunal further analyzed the legal provisions under section 68 of the Act, emphasizing that the burden lies on the assessee to explain cash credits in the books of accounts satisfactorily. Legal precedents were cited to support the view that in the absence of a satisfactory explanation, unexplained cash credits may be charged as income. The Tribunal highlighted the importance of proving the identity, capacity, and genuineness of creditors in cases of cash entries.

Ultimately, the Tribunal dismissed the appeal of the Revenue, upholding the decision of the Ld. Commissioner of Income Tax (Appeal) to delete the addition of unsecured loans. The judgment was pronounced in the open court in the presence of representatives from both sides.