2017 (6) TMI 437 - AT - Income Tax

Addition u/s.69A - unexplained money - Held that - Assessee has been able to prove the identity, genuineness and creditworthiness of the cash credits of ₹ 57,00,000/- received from following four parties who appeared before the assessing authorities and accepted to have provided cash to the assessee with the documents showing agriculture land ownership. Except the above said five parties, assessee has been unable to satisfy genuineness and creditworthiness of cash creditors of ₹ 12,48,000/-. We therefore in the given facts and circumstances of the case partly allow the assessee s appeal by deleting addition of ₹ 57,00,000/- and confirm the remaining addition of ₹ 12,48,000/- u/s. 69A of the Act.

Issues Involved:
1. Addition of ?69,48,000/- under Section 69A of the Income Tax Act as unexplained money.
2. Consideration of evidence submitted by the appellant regarding the identity, genuineness, and creditworthiness of loan parties.
3. Application of peak theory for the benefit of the appellant.
4. Charging of interest under Section 234A/B/C/D of the Act.
5. Initiation of penalty proceedings under Section 271(1)(c) of the Act.

Issue-wise Detailed Analysis:

1. Addition of ?69,48,000/- under Section 69A of the Income Tax Act:
The Assessing Officer (AO) added ?69,48,000/- under Section 69A, considering it unexplained money deposited in the assessee's IDBI bank account. Despite partial details provided for ?28,00,000/-, the AO was not satisfied with the identity, genuineness, and creditworthiness of the cash creditors, leading to the addition.

2. Consideration of Evidence Submitted by the Appellant:
The appellant submitted additional evidence before the Commissioner of Income Tax (Appeals) [CIT(A)], including documents and details of cash creditors. The CIT(A) admitted these documents and called for a remand report. Four out of five cash creditors appeared before the AO and confirmed the transactions. The CIT(A), however, upheld the AO's addition, stating that the appellant failed to satisfactorily explain the source of the cash deposits.

3. Application of Peak Theory:
The appellant alternatively requested the benefit of the peak theory, which was not granted by the CIT(A). The peak theory reduces the taxable amount by considering the highest balance during the period under scrutiny instead of cumulative deposits.

4. Charging of Interest under Section 234A/B/C/D:
The CIT(A) confirmed the AO's action of charging interest under Sections 234A, 234B, 234C, and 234D of the Income Tax Act.

5. Initiation of Penalty Proceedings under Section 271(1)(c):
The CIT(A) also upheld the AO's initiation of penalty proceedings under Section 271(1)(c) for concealment of income or furnishing inaccurate particulars of income.

Tribunal's Findings:

1. Identity, Genuineness, and Creditworthiness of Cash Creditors:
The Tribunal noted that the identity, genuineness, and creditworthiness of four out of five cash creditors were satisfactorily proven. These creditors appeared before the AO, provided statements, and submitted documents showing agricultural land ownership and income. For the fifth creditor, Laxmanji C. Thakor, who could not appear due to medical reasons, sufficient documentary evidence, including affidavits and a medical certificate, was provided to establish the genuineness and creditworthiness of the ?23,00,000/- loan.

2. Unexplained Money:
The Tribunal concluded that the appellant successfully proved the identity, genuineness, and creditworthiness of the ?57,00,000/- received from five parties. However, the appellant failed to satisfy the genuineness and creditworthiness of the remaining ?12,48,000/-. Consequently, the Tribunal deleted the addition of ?57,00,000/- and confirmed the addition of ?12,48,000/- under Section 69A.

3. Peak Theory:
The Tribunal did not specifically address the application of the peak theory, focusing instead on the evidence provided for each cash creditor.

4. Interest and Penalty:
The Tribunal's decision did not explicitly address the charging of interest under Sections 234A/B/C/D or the initiation of penalty proceedings under Section 271(1)(c), implying that these aspects were not contested further.

Conclusion:
The appeal was partly allowed, with the addition of ?57,00,000/- being deleted and the remaining addition of ?12,48,000/- confirmed under Section 69A. The order was pronounced on 25/05/2017 at Ahmedabad.

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