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2023 (2) TMI 118 - AT - Income TaxAddition u/s 68 - unexplained cash credit - Unsecured Loans available during the year under consideration - HELD THAT - There is no dispute to the fact that the assessee has discharge his onus by furnishing the details about the loan parties which can be verified from the paper book. It is pertinent to note that no inquiry has been conducted by the AO from the loan parties despite having requisite details of the loan parties and having power under the statue. Assessee by furnishing the details as discussed above has discharged his onus cast u/s 68 of the Act upon it. As such, the onus shifted upon the revenue to prove the contention/details filed by the assessee based on the documentary evidence. However, what we find is this that the revenue has not pointed out any flaw in the details filed by the assessee. As regard to principles laid down in the case of NRA Iron Steel Pvt. Ltd. 2019 (3) TMI 323 - SUPREME COURT we note that the facts are distinguishable from the present facts of the case. We hold that no addition is warranted in the given case under the provisions of section 68 - Accordingly, we set aside the finding of the CIT-A and direct the AO to delete the addition made by him. Appeal of the assessee is allowed.
Issues Involved:
1. Delay in filing the appeal. 2. Addition of Rs. 15,00,000/- under Section 68 of the Income Tax Act, 1961, as unexplained cash credit. Detailed Analysis: 1. Delay in Filing the Appeal: The appeal was filed by the assessee with a delay of 3 days. The delay was not objected to by the Learned Departmental Representative (Ld. DR). Consequently, the delay was condoned, allowing the tribunal to proceed with adjudicating the issue on its merits. 2. Addition of Rs. 15,00,000/- under Section 68 of the Income Tax Act: Facts and Background: The assessee, engaged in the business of trading cotton cloth and construction, had taken loans totaling Rs. 15,00,000/- from four parties during the relevant assessment year. The details of the loans were as follows: - D.V. & Co.: Rs. 5,00,000/- - K.C. Shah: Rs. 5,00,000/- - Bhavna Sharma: Rs. 2,50,000/- - Jagdish Sharma: Rs. 2,50,000/- Assessment Proceedings: The Assessing Officer (AO) found that the assessee did not furnish sufficient documentary evidence for the loan transactions. Specifically, bank statements were missing for K.C. Shah and Bhavna J. Sharma. Additionally, there were cash deposits in the accounts of D.V. & Co. and Jagdish Sharma before transferring the loans to the assessee. The loan parties did not charge any interest, and their income levels were not sufficient to justify the loans. Consequently, the AO treated the loan amount of Rs. 15,00,000/- as unexplained cash credit under Section 68 of the Act. Appeal to CIT(A): The assessee argued that the loans were accepted through banking channels and provided confirmations, addresses, bank account details, and copies of income tax returns and bank statements. The assessee contended that there was no obligation to justify the source of the source of the loans and that the AO did not issue summons under Section 131 to verify the loan parties. However, the CIT(A) upheld the AO's addition, citing that no prudent person would advance money without charging interest and that the circumstantial evidence suggested the loans were not genuine. The CIT(A) relied on the Supreme Court judgment in PCIT vs. NRA Iron & Steel Pvt Ltd. (2019) 412 ITR 161, which emphasized that merely proving identity does not discharge the onus if capacity or creditworthiness is not established. Appeal to ITAT: The assessee presented a paper book with detailed information about the loan parties, including confirmations, income tax returns, and bank statements. The assessee argued that the AO did not verify the loan parties despite having complete details. The Ld. AR contended that the principles laid down in the NRA Iron & Steel case were not applicable as the facts were distinguishable. Tribunal's Findings: The tribunal noted that the assessee had discharged his onus by furnishing detailed information about the loan parties. The AO did not conduct any verification despite having the power to do so. The tribunal distinguished the facts of the present case from the NRA Iron & Steel case, where extensive inquiries revealed that the investor companies were non-existent or lacked creditworthiness. The tribunal referred to the Pune Tribunal's decision in Deputy Commissioner of Income Tax Central Circle, Aurangabad v. Mahalaxmi TMT (P.) Ltd. and the Bombay High Court's decision in Pr. CIT v. Ami Industries (India) (P.) Ltd., emphasizing that the principles in NRA Iron & Steel are fact-specific and not universally applicable. Conclusion: The tribunal concluded that the assessee had sufficiently furnished details to discharge his onus under Section 68 of the Act. The revenue did not point out any flaws in the details provided by the assessee. Therefore, the tribunal set aside the CIT(A)'s findings and directed the AO to delete the addition of Rs. 15,00,000/-. Final Order: The appeal of the assessee was allowed, and the addition made by the AO was deleted. The order was pronounced in the Court on 31/01/2023 at Ahmedabad.
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