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2022 (11) TMI 120 - AT - Income TaxAddition u/s. 68 - unexplained cash credits - Advance received by the assessee from 18 parties - CIT-A vacated the addition made by the A.O u/s. 68 - HELD THAT - We concur with the CIT(Appeals) that the failure on the part of the stamp vendor to properly maintain his records could not have on such standalone basis justified drawing of adverse inferences as regards the genuineness of the transactions under consideration which the assessee had duly substantiated on the basis of supporting documentary evidence. Also, we are persuaded to subscribe to the view taken by the CIT(Appeals) that now when both the parties to the respective agreements to sell had confirmed the transactions, then, due weightage was required to be given to their respective statements and the same could not have been brushed aside merely on the basis of the unsubstantiated claim of the stamp vendor who had declined of having sold the stamp papers in question. The assessee in order to substantiate the authenticity of his claim of having received an advance of Rs. 128.50 lac from the aforementioned 18 parties had filed with the A.O duly notarized affidavits of all the aforementioned 18 parties who had admitted of having advanced the respective amounts to the assessee for purchase of land at Village Urkura, Phase No. 108, RIC, Raipur (C.G), Kh No. 100/2, Page 252 to 318 of APB. Also, the respective parties in their 'affidavits' had categorically given the reasons for cancelling the deal and receiving back of the advance/earnest money from the assessee. On a perusal of the aforesaid affidavits , it transpires that all of the said parties were being assessed to tax and had categorically mentioned their PAN in their respective depositions. A.R rebutting the aforesaid claim of the A.O had stated that 8 parties had though appeared before the A.O, however, he had recorded the statements of only 2 parties who had in their respective statements confirmed the transactions in question. It is further the claim of the ld. A.R that the assessee was never intimated by the A.O about the fact that the notices issued to some of the parties were returned unserved. In our considered view though the assessee had duly substantiated the authenticity of the transactions of having received advances from 18 parties (supra), but the A.O had failed to dislodge the same by placing on record any such material which would irrefutably disprove the authenticity of the said claim. Also, we are unable to persuade ourselves to subscribe to the view taken by the A.O that the authenticity of the transaction was to be summarily rejected on the basis of the unsubstantiated claim of Shri Zafar Ali, Stamp vendor. We, thus,finding no infirmity in the view taken by the CIT(Appeals) who in our considered view had rightly vacated the addition made by the A.O u/s. 68 of the Act uphold his order to the said extent. Advance received from M/s. Tirthyatra Investment Properties Ltd. for sale of land - As the assessee on the basis of irrefutable documentary evidences had duly substantiated his claim of having received the advance/earnest money from the aforementioned party, viz. M/s. Tirthayatra Investment Properties Ltd., Raipur, and thus, discharged the primary onus that was cast upon it to prove the nature and source of the credit in its books of account, while for the A.O had absolutely failed to dislodge the authenticity of the said claim on the basis of any material proving to the contrary, therefore, there was no justification for the A.O to have dubbed the amount so received by the assessee as an unexplained cash credit u/s. 68 of the Act - Accordingly, finding no infirmity in the view taken by the CIT(Appeals) who had rightly vacated the addition - Decided in favour of assessee. Disallowance u/s. 14A r.w.r. 8D(2)(iii) - HELD THAT - As no disallowance u/s. 14A in absence of any exempt income could have been made in the hands of the assessee. We, thus, in the backdrop of the facts involved in the case before us r/w. the aforesaid settled position of law find substance in the claim of the Ld. AR that now when the assessee company had not received any exempt dividend income during the year under consideration, therefore, no disallowance u/s. 14A of the Act was warranted in its case.- Decided in favour of assessee.
Issues Involved:
1. Deletion of addition of Rs. 1,28,50,000/- made by the AO under Section 68 of the Income-Tax Act, 1961 on account of unexplained cash credits. 2. Deletion of addition of Rs. 2,10,00,000/- made by the AO under Section 68 of the Income-Tax Act, 1961 on account of impugned advance received from M/s. Tirthyatra Investment & Properties Ltd. for sale of land. 3. Failure of the assessee to justify the cash credits on account of impugned advance received against the sale of land and impugned advance from customers by producing necessary documents/evidences. 4. Ignoring evidence brought on record by the AO that the assessee failed to prove the identity, creditworthiness, and genuineness of the transaction as per legal parameters. 5. Deletion of additions made by the AO against the settled law of the Apex Court. 6. Deletion of additions made by the AO without distinguishing the findings supported by the judgment of the Hon'ble Gujarat High Court. 7. Deletion of additions contrary to the decision in CIT Vs Precision Finance Pvt. Ltd. 8. Deletion of additions contrary to the decisions of the Hon'ble Supreme Court in similar cases. 9. Deletion of additions without considering the totality of circumstances. 10. Deletion of disallowance of Rs. 6,52,712/- made under Section 14A of the IT Act read with Rule 8D of the IT Rules. 11. Error in deleting the addition made under Section 14A despite provisions of Section 14A(2). 12. Justification of CIT(A) in giving findings contrary to the evidence on record. 13. Justification of CIT(A) in accepting the identity, creditworthiness, and genuineness of the customers as genuine. 14. Justification of CIT(A) in giving a decision in favor of the assessee without a nexus between the conclusion of facts and primary facts. 15. General errors in the order of CIT(A). 16. Any other grounds that may be adduced at the time of hearing. Detailed Analysis: Issue 1: Deletion of Addition of Rs. 1,28,50,000/- under Section 68 The AO added Rs. 1,28,50,000/- as unexplained cash credits based on the finding that the stamp papers for the "agreements to sell" were not sold by the concerned stamp vendor, Shri Zafar Ali. The CIT(A) observed that the assessee received Rs. 62.50 lacs through banking channels and refunded Rs. 108.50 lacs through banking channels, substantiating the transactions. The CIT(A) noted that the AO did not raise doubts about the affidavits filed by the parties confirming the transactions. The CIT(A) concluded that the adverse inference drawn by the AO based on the stamp vendor's statement was unjustified, especially when both parties confirmed the transactions. Issue 2: Deletion of Addition of Rs. 2,10,00,000/- under Section 68 The AO added Rs. 2,10,00,000/- as unexplained cash credits based on the absence of the stamp paper entry in the vendor's register. The CIT(A) found that the director of M/s. Tirthyatra Investment & Properties Ltd. confirmed the transaction, and the amount was repaid through banking channels. The CIT(A) observed that the AO did not comment on the affidavit of the stamp vendor confirming the sale of the stamp paper. The CIT(A) concluded that the addition was unwarranted as the transaction was substantiated by documentary evidence and confirmations. Issue 3: Failure to Justify Cash Credits The AO argued that the assessee failed to produce necessary documents/evidences. However, the CIT(A) found that the assessee provided affidavits and confirmations from the parties, substantiating the transactions. The CIT(A) noted that the AO did not conduct independent inquiries or disprove the submitted evidence. Issue 4: Ignoring Evidence by AO The CIT(A) found that the AO ignored the affidavits and confirmations provided by the assessee. The CIT(A) emphasized that the AO's reliance on the stamp vendor's statement without allowing cross-examination was unjustified. Issue 5: Deletion Against Settled Law The CIT(A) observed that the assessee substantiated the transactions with documentary evidence, and the adverse inference by the AO was based on uncorroborated statements, which did not align with settled legal principles. Issue 6: Deletion Without Distinguishing Findings The CIT(A) distinguished the facts of the case from the judgment of the Hon'ble Gujarat High Court, noting that the assessee provided sufficient evidence to substantiate the transactions. Issue 7: Contrary to CIT Vs Precision Finance Pvt. Ltd. The CIT(A) found that the assessee proved the identity, creditworthiness, and genuineness of the transactions through affidavits and banking records, contrary to the AO's findings. Issue 8: Contrary to Supreme Court Decisions The CIT(A) observed that the assessee provided satisfactory evidence for the source and nature of the credits, aligning with the principles laid down by the Supreme Court. Issue 9: Totality of Circumstances The CIT(A) considered the totality of circumstances, including the affidavits and banking transactions, concluding that the transactions were genuine. Issue 10: Deletion of Disallowance under Section 14A The CIT(A) vacated the disallowance of Rs. 6,52,712/- under Section 14A, noting that the assessee did not earn any exempt income during the year. This decision was upheld based on judicial precedents. Issue 11: Error in Deleting Addition under Section 14A The CIT(A) and the Tribunal upheld that no disallowance under Section 14A was warranted as the assessee did not earn any exempt income. Issue 12: Justification of CIT(A)'s Findings The CIT(A) justified the findings based on the evidence provided by the assessee, which the AO failed to disprove. Issue 13: Acceptance of Identity, Creditworthiness, and Genuineness The CIT(A) accepted the identity, creditworthiness, and genuineness of the transactions based on affidavits and banking records. Issue 14: Decision Without Nexus The CIT(A) provided a detailed analysis linking the conclusions to the primary facts and evidence on record. Issue 15: General Errors in CIT(A)'s Order The Tribunal found no general errors in the CIT(A)'s order. Issue 16: Other Grounds No additional grounds were adduced at the time of hearing. Conclusion: The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s order in favor of the assessee, based on the detailed analysis and substantiation of the transactions with documentary evidence and confirmations. The Tribunal also upheld the deletion of the disallowance under Section 14A, aligning with judicial precedents.
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