2017 (11) TMI 315 - AT - Income Tax

Addition of unexplained cash credits - addition u/s 68 - CIT(A) has appropriately considered the evidence on record and found that the transaction stood properly explained - Held that - CIT(A) not only relied upon the confirmation filed by the creditor, but also the utilisation of the loan received, which substantiated the plea of the assessee that the amount was received to effectuate the purchase of land on behalf of the creditor, Shri Arvind Jain. Moreover, at page 37 of the Paper Book is placed a Certificate issued by the said creditor, which brings out the relevant facts. The said creditor is an income-tax payee and is stated to have advanced money to the assessee in connection with the purchase of land through banking channels. It is also averred by the creditor that he has sufficient own funds, and the factum of assessee having deployed such funds towards the purchase of land for the said creditor has also been verified by the CIT(A), which is evident from the aforesaid extracted portion of his order. There is no controversion to any of the aforesaid findings recorded by the CIT(A) and, therefore, in this view of the matter, hereby affirm the order of the CIT(A) on this aspect. Thus, on this aspect, Revenue fails.

Summary

Issues:
- Challenge to deletion of additions made by Assessing Officer under Sec. 68 of the Income Tax Act, 1961 regarding unexplained cash credits.

Analysis:
1. Addition of ?5,00,000 from M/s. Bhakti Book Distributors:
- The Assessing Officer treated the amount as unexplained cash credit under Sec. 68 as the loan confirmation was not provided.
- The Tribunal had set aside the issue for detailed examination of bank account details and sources of deposits.
- The CIT(A) deleted the addition, but the Accountant Member disagreed, stating that the assessee failed to satisfy Sec. 68 requirements.

2. Addition of ?30,00,000 from Shri Arvind Jain:
- The Assessing Officer added the amount as unexplained cash credit due to doubts on creditor credit-worthiness and genuineness of the transaction.
- The CIT(A) reversed the addition based on confirmation from Shri Arvind Jain and evidence of land purchase transaction.
- The Accountant Member upheld the CIT(A)'s decision, emphasizing the unchallenged confirmation and evidence of loan utilization for land purchase.

3. Conclusion:
- The appeal of the Revenue was partly allowed, with the Accountant Member affirming the CIT(A)'s decision on the addition from Shri Arvind Jain but setting aside the deletion of the addition from M/s. Bhakti Book Distributors.
- The Accountant Member highlighted the importance of satisfying Sec. 68 requirements and the necessity of providing complete documentation and evidence to support transactions to avoid additions of unexplained cash credits.