2023 (7) TMI 1039 - AT - Income Tax

Unexplained cash credit u/s 68 - Onus to prove - HELD THAT - It is not in dispute that the assessee has furnished the name and address of the lender, bank statement of the lender and confirmation of the lender before the lower authorities. The lender is situated in Ghaziabad, which is far away from the place of assessee and, hence, explanation given by the assessee that the lender could not be produced before the AO during the course of original assessment proceeding, deserves to be accepted. It is a fact on record that the assessee, indeed produced the lender for examination before the learned Assessing Officer during the remand proceedings, on which date, the AO was on official duty elsewhere and hence, the lender had handed over all the requisite materials in her possession to the assessee and the assessee had in turn furnished the same before the learned CIT(A). We also find that the learned AR has furnished affidavit from the lender duly confirming the fact of advancement of loan to the assessee by also explaining the business carried on by her. Assessee has also furnished the copy of income tax return acknowledgment of the lender for assessment year 2013-14, wherein, the lender had disclosed taxable income - However, the affidavit and the income tax return acknowledgment were placed for the first time by the assessee before this Tribunal. Since these evidences are crucial for adjudication of the issue in dispute before us, the same are hereby admitted and taken on record. Assessee had duly discharged her initial onus of providing the name, address, PAN and bank statement of the lender and confirmation of the lender. Assessing Officer had not sought to make any verification of these evidences filed on record by either issuing notice under section 133(6) of the Act or issuing summons to the lender under section 131 of the Act for recording the statement on oath from the lender. Instead, learned Assessing Officer completely shifted the onus on the assessee to produce the party before him for examination. We are unable to comprehend ourselves to accept this behavior of learned Assessing Officer as the assessee, in the instant case, had duly discharged the initial onus cast upon her. Assessing Officer has drawn adverse inferences on the assessee without making any independent examination from his side. - Decided in favour of assessee.

Summary

Issues involved: Appeal against order confirming addition of loan as unexplained cash credit for assessment year 2013-14.

Summary:
The appeal was made by the assessee against the order confirming the addition of Rs. 5,25,000 as unexplained cash credit, pertaining to the assessment year 2013-14. The key issue was whether the confirmation of the addition by the learned CIT(A) was justified.

During the assessment year, the assessee borrowed Rs. 5,25,000 from Ms. Manju Tyagi, providing necessary details and confirmation from the lender. The lender had transferred the amount through RTGS from her overdraft account to the assessee. The Assessing Officer added the sum to the total income of the assessee as unexplained when the party was not produced for examination.

The assessee requested another opportunity to produce the lender, leading to a remand report seeking to examine the lender. The lender was brought before the Assessing Officer, but due to official duties elsewhere, the lender handed over evidence to the assessee, which was presented before the CIT(A). Despite efforts, the CIT(A) upheld the addition made by the Assessing Officer.

The Tribunal found that the lender's inability to be present during the original assessment proceedings was reasonable, given the distance between her location and the assessee. The lender was eventually produced during the remand proceedings, and crucial evidence, including an affidavit and income tax return acknowledgment, was submitted. The Tribunal admitted these pieces of evidence and held that the initial burden of proof was discharged by the assessee, emphasizing that the Assessing Officer failed to independently verify the evidence before making the addition. Relying on precedent, the Tribunal concluded that the addition of Rs. 5,25,000 as unexplained cash credit was unwarranted, as the three requirements of section 68 of the Act were satisfactorily met by the assessee. Consequently, the appeal of the assessee was allowed, and the addition was deleted.

In conclusion, the Tribunal ruled in favor of the assessee, highlighting the importance of fulfilling the burden of proof and independent verification in cases involving unexplained cash credits.