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2023 (10) TMI 40 - HC - Income TaxAddition u/s 68 - unexplained cash credit - ITAT has held that the credit worthiness of the creditors and genuineness of transaction have been established - HELD THAT - In view of the findings of CIT (A) on the facts of the case as well as the view taken by the Tribunal to give opportunity to the assessee to prove the identity of the lenders, the ingredients to be complied with for invoking section 68 of the Act as held by the Apex Court in case of NRA Iron and Steel Pvt Ltd. 2019 (3) TMI 323 - SUPREME COURT cannot be stated to have been violated or ignored because if the assessee would be able to prove identity of the lenders, then the creditworthiness and genuineness, as held by the CIT (A), are already proved. In such cases, there cannot be any addition under section 68 In view of the above facts emerging from the record as well as in view of the fact that the Tribunal has remanded the matter back to the Assessing Officer by partly allowing appeal of the Revenue, no question of law much less any substantial question arises.
Issues Involved:
The issues involved in this case are related to the assessment of unexplained cash credit under section 68 of the Income Tax Act, 1961. The primary concerns include establishing the identity, creditworthiness, and genuineness of the creditors who provided unsecured loans to the assessee. Judgment Details: Issue (a): The first substantial question of law raised was whether the order of the Income Tax Appellate Tribunal (ITAT) was perverse regarding the creditworthiness and genuineness of the creditors. The Tribunal had held that despite the lack of proof of the identity of the creditors, the creditworthiness and genuineness of the transactions were established. The sequence of identity, creditworthiness, and genuineness was emphasized. Issue (b): The second question raised concerned the ITAT's decision on the creditworthiness and genuineness of the transactions, even though the creditors did not respond to notices and were not available at the given addresses. The ITAT allowed the assessee to prove these aspects despite the lack of cooperation from the creditors. Issue (c): The third issue was whether the ITAT erred in deleting the addition of Rs. 20,87,54,237 made under section 68 of the IT Act, 1961, as unexplained cash credit. The Assessing Officer had added this amount after finding discrepancies in the business activities of the lenders. Case Summary: The respondent-assessee declared income from various sources, including unsecured loans received during the assessment year 2014-15. The Assessing Officer conducted inquiries and issued notices to verify the loans' authenticity. Despite the lack of response from the creditors, the assessee provided documentation to support the loans' legitimacy. The Assessing Officer added the unexplained cash credit to the assessee's income, but the CIT (Appeal) later deleted this addition, stating that the assessee had proven the creditworthiness and genuineness of the loans. The Revenue appealed to the Tribunal, which remanded the matter to verify the creditors' identity. The Revenue contended that the Tribunal's decision was erroneous, citing the need to establish the creditors' identity first. However, the Tribunal's decision was upheld based on the findings that the creditors were tax-assessed in Surat, had active banking accounts, and the loans were repaid through banking channels. The High Court dismissed the appeal, stating that the Tribunal's decision to give the assessee another opportunity to prove the creditors' identity was justified. The Court emphasized the importance of establishing the identity of creditors as a primary onus under section 68 of the Act. Since the Tribunal's decision was based on factual findings and legal principles, no substantial question of law arose, leading to the appeal's dismissal.
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