2024 (3) TMI 29 - AT - Income Tax

Unexplained credits u/s. 68 - cash claimed to have been received by the assessee from recovery of farmers advances earlier granted - onus to prove - addition made based on non-appearance of few farmers - CIT(A) deleted the addition - HELD THAT - As no independent enquiries were made by Ld. AO to support the impugned addition made u/s 68 for AY 2016-17 - as further be seen that during assessment proceedings for AY 2017-18 certain enquiries on sample basis were done AO. In this year Ld. AO selected on sample basis the details of 48 farmers and forwarded them to DCIT Kolhapur for verification of the same. Out of this list 21 farmers filed details along with confirmation letters which completely matched with the details furnished by the assessee. The remaining 28 farmers did not appear. Merely because some farmers did not turn up no adverse inference could be drawn since the assessee had discharged the primary onus of furnishing the requisite details to Ld. AO and it was onus of Ld. AO to controvert the same . However there is nothing on record which would show that the details furnished by the assessee were not correct. There is not material on record to controvert the details furnished by the assessee. Once the debtors balance is accepted the recovery of the same could not be doubted unless some positive material was brought on record to establish that the cash was not received by the assessee from such debtors. As noted that the assessee has made further recoveries during AY 2016-17 and 2017-18 which have duly been credited in the cash book. The cash balance available with the assessee has been deposited in the bank and the same has been used to settle the bank loan taken by the assessee. Thus the source of cash deposit was cash balance as available with the assessee in the books of accounts. In such a case the impugned additions as made u/s 68 for AY 2016-17 has no legs to stand. The addition made u/s 69A in AY 2017-18 has also no basis since the cash deposited by the assessee is duly supported by the cash balance as available with the assessee in the cash book. The cash so deposited could not be termed as unexplained money for the assessee. The stand of Ld. AO is also fallacious since the addition made for Rs. 19.22 Crores in AY 2016-17 is a double addition as evident from the fact that the assessee has received aggregate advances of Rs. 39.78 Crores from the farmers and deposited the same during demonetized period. Out of this an amount of Rs. 19.22 Crores has been added in AY 2016-17 whereas the Ld. AO has considered the entire amount of Rs. 39.78 Crores in AY 2017-18 again for the purpose of making the proportionate addition. We are also concur with the observations of Ld. CIT(A) that Ld. AO made artificial distinction between the 21 farmers who have appeared in response to summons issued by DCIT Circle-2 Kolhapur and gave their confirmations and the remaining 27 farmers who have not responded to the summons issued for examination. The AO considered the claim of recovery of advances from the 21 farmers as genuine whereas he considered the claim of recovery of advances from the 27 farmers as unsubstantiated and bogus one. Such a conclusion is unjustified since AO is accepting only a part of the explanation offered by the assessee while accepting the fact that the assessee made advances to farmers in earlier years. No adverse conclusion could be drawn against the assessee for non-appearance of remaining farmers since the assessee had discharged the primary onus by producing confirmation letters from the farmers - Decided in favour of assessee.