2023 (10) TMI 184 - AT - Income Tax

Unexplained cash credit and interest thereon u/s 68 - HELD THAT - As addition on the basis of the statement recorded by the investigation wing of the department of one Shri Sharad Dharak in some other cases of search - AO has not brought on record any material to show that these loans transactions are nothing but assessee s own undisclosed income routing back through these loan creditors in the garb of unsecured loans - As decided in assessee own father case SHRI SANJAY SHUKLA, INDORE 2022 (4) TMI 385 - ITAT INDORE as held that loan taken from alleged company has been treated as genuine and the additions made in the hands of other loan receivers have been deleted by this Tribunal in the case of M/s Tirupati Construction 2016 (9) TMI 436 - ITAT INDORE - Decided in favour of assessee.

Issues Involved:
1. Deletion of addition made by AO under Section 68 of IT Act for unexplained cash credit.
2. Non-appreciation of documentary evidence and statements by AO.
3. Onus of proving identity, creditworthiness, and genuineness of transactions.
4. Enquiry and investigation by AO.
5. Addition of interest on unexplained cash credit.

Issue-wise Summary:

1. Deletion of Addition under Section 68:
The Revenue contested the deletion of an addition amounting to Rs. 4,50,00,000/- made by the AO under Section 68 of the IT Act, 1961, on account of unexplained cash credit and interest thereon amounting to Rs. 31,64,774/-. The Tribunal upheld the CIT(A)'s decision, noting that the AO had not provided material evidence to show that the loan transactions were bogus or not genuine.

2. Non-appreciation of Documentary Evidence and Statements:
The AO's assessment was based on statements recorded during the search in the case of the Sharad Doshi group and the statements of the assessee's father and Sharad Darak, a known entry provider. The CIT(A) found that the AO did not conduct an independent enquiry to disprove the identity, creditworthiness, and genuineness of the transactions and relied solely on past enquiries and general findings.

3. Onus of Proving Identity, Creditworthiness, and Genuineness:
The Tribunal noted that the assessee had discharged the onus of proving the identity, creditworthiness, and genuineness of the transactions by providing ample evidence, including confirmation of loans, bank statements, copies of ITR, and audit reports. The CIT(A) found that the AO had not brought any cogent evidence to support his findings.

4. Enquiry and Investigation by AO:
The Tribunal emphasized that the AO is duty-bound to investigate the issue once the assessee discharges its onus under Section 68 of the Act. The AO failed to conduct any independent enquiry or investigation to discredit the information or documents provided by the assessee.

5. Addition of Interest on Unexplained Cash Credit:
The Tribunal upheld the CIT(A)'s decision to delete the addition of interest expenses amounting to Rs. 31,61,774/- in AY 2013-14 and Rs. 20,72,666/- in AY 2014-15, as the loans were found to be genuine and the interest was paid through proper banking channels.

Conclusion:
The Tribunal dismissed the Revenue's appeal, finding no error or illegality in the CIT(A)'s order, which deleted the additions made by the AO under Section 68 of the IT Act for unexplained cash credit and interest thereon. The Tribunal reiterated the importance of independent enquiry and cogent evidence in such cases.

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