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2023 (6) TMI 1432 - AT - Income TaxUnexplained cash credit u/s 68 - onus to prove - HELD THAT - Since the assessee has discharged the primary onus cast upon it under the provisions of section 68 of the Act, whereas, no further inquiry based on the information or documents submitted by the assessee were conducted by the AO, to arrive at a conclusion that unsecured loan received by the assessee during the year were bogus and are subject to addition by invoking the provisions of section 68 of the Act was bad in law, based on presumptions, suspect and therefore, the additions u/s 68 of the Act is liable to be deleted. CIT(A) has discussed the issue and decided the same lawfully. We, therefore, are in agreement with the decisions of the ld. CIT(A) on this issue and do not have any different view on the same. Thus, we refrain ourselves to interfere with the findings recorded by the ld. CIT(A) and, thus uphold the same. Accordingly, Ground number 1 of the appeal of the revenue is dismissed. Cash deposit during demonetisation treated as bogus sales - When the assessee has sufficient opening cash balance at the time of pronouncement of demonetization which was not disputed by the department, if the same is being deposited by the assessee in its bank accounts, the same cannot be treated as unexplained or bogus unless any contrary observations borne from available records or otherwise brought on by the revenue against the assessee. CIT(A) has appreciated the facts of the case, considered all the aspects correctly and has appropriately allowed the appeal of the assessee. The case of the Vaishnavi Bullion 2022 (12) TMI 1309 - ITAT HYDERABAD since has distinguishing facts and circumstances not comparable with the present case, the same cannot be applied to rescue the contention of the revenue. The department was unable to brought before us anything which inspires us to agree with the contentions of the department to substantiate their claim that the deposits made by the assessee out of its cash sales were not explained or are bogus, we therefore having no distinguished view then the view taken by ld. CIT(A), upheld the finding of the ld. CIT(A) and therefore, decided this issue against the revenue.
Issues Involved:
1. Deletion of addition of Rs. 39,09,000/- as unexplained cash credits under Section 68. 2. Deletion of addition of Rs. 2,90,00,000/- as unexplained cash credits from cash deposits during the demonetization period. 3. Ignoring amendments to Section 68 regarding the verification of the source of share capital. 4. Ignoring the Supreme Court judgment in NRA Iron & Steel Pvt. Ltd. vs. Principal Commissioner of Income Tax. 5. Unsecured loan received from nine persons and the substantial balance before the cash deposit. 6. Exponential increase in sales during the demonetization period. 7. The CIT(A)'s dismissal of the AO's order without considering the merits of the case. Issue-wise Detailed Analysis: 1. Deletion of addition of Rs. 39,09,000/- as unexplained cash credits under Section 68: The Tribunal noted that the assessee had furnished confirmations, copies of ITRs, and bank statements for all nine loan creditors, thereby discharging its primary onus to prove the identity, creditworthiness, and genuineness of the transactions as required under Section 68. The AO had not conducted any further inquiry based on the information provided by the assessee. The Tribunal upheld the CIT(A)'s decision to delete the addition, citing the judgment in CIT vs. Orissa Corporation Pvt. Ltd., where the Supreme Court held that if the assessee provides the name and address of the creditors, and the revenue does not pursue further inquiries, the burden on the assessee is discharged. Similarly, in Rohini Builders' case, the Gujarat High Court held that no additions under Section 68 can be made if the primary onus is discharged by the assessee. 2. Deletion of addition of Rs. 2,90,00,000/- as unexplained cash credits from cash deposits during the demonetization period: The Tribunal observed that the assessee had regular cash sales and maintained proper books of accounts, including quantitative details of stock. The AO had accepted the assessee's purchases and overall turnover but treated the cash sales during the demonetization period as bogus without rejecting the books of accounts. The Tribunal cited several judgments, including Harshila Chordia vs. ITO and ACIT vs. Dewas Soya Ltd., which held that when all records relating to purchases and sales are maintained, no addition under Section 68 is called for treating the sale proceeds as cash credits. The Tribunal concluded that the AO's addition was based on assumptions without any material evidence and upheld the CIT(A)'s decision to delete the addition. 3. Ignoring amendments to Section 68 regarding the verification of the source of share capital: The Tribunal did not find any specific discussion or ruling on this issue in the provided judgment text. The focus was primarily on the deletion of additions under Section 68 related to cash credits and cash deposits during the demonetization period. 4. Ignoring the Supreme Court judgment in NRA Iron & Steel Pvt. Ltd. vs. Principal Commissioner of Income Tax: The Tribunal did not specifically address this issue in the provided judgment text. The primary discussion centered around the deletion of additions under Section 68 and the evidence provided by the assessee to substantiate the cash credits and cash deposits. 5. Unsecured loan received from nine persons and the substantial balance before the cash deposit: The Tribunal noted that the assessee had received loans from nine parties, who had deposited cash during the demonetization period. The AO had treated these loans as bogus due to the lack of substantial balance in the creditors' accounts before the cash deposits. However, the Tribunal found that the assessee had provided sufficient evidence, including loan confirmations and bank statements, and the AO had not conducted any further inquiry. The Tribunal upheld the CIT(A)'s decision to delete the addition. 6. Exponential increase in sales during the demonetization period: The Tribunal acknowledged the AO's observation that there was a significant increase in sales during the demonetization period. However, it noted that the assessee had provided evidence of regular cash sales in previous years and maintained proper books of accounts. The Tribunal found that the AO's addition was based on assumptions without any material evidence and upheld the CIT(A)'s decision to delete the addition. 7. The CIT(A)'s dismissal of the AO's order without considering the merits of the case: The Tribunal found that the CIT(A) had considered the merits of the case and the evidence provided by the assessee. The CIT(A) had appropriately concluded that the additions made by the AO were based on assumptions and lacked material evidence. The Tribunal upheld the CIT(A)'s decision to delete the additions. Conclusion: The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision to delete the additions of Rs. 39,09,000/- and Rs. 2,90,00,000/- made by the AO under Section 68. The Tribunal found that the assessee had provided sufficient evidence to substantiate the cash credits and cash deposits, and the AO's additions were based on assumptions without any material evidence. The Tribunal's decision was based on the principles laid down in various judicial pronouncements, which emphasized the requirement for the revenue to conduct further inquiries and not base additions on mere suspicions.
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