1994 (10) TMI 117 - AT - Income Tax

Summary

Issues Involved:

1. Addition of Rs. 95,000 on account of three cash credits.
2. Deletion of Rs. 60,000 on account of two cash credits.
3. Re-examination of cash credit of Rs. 55,000.

Detailed Analysis:

1. Addition of Rs. 95,000 on account of three cash credits:

The assessee is an individual earning income from salary, interest, and other sources. The assessment was reopened under s. 143(2)(b) of the IT Act, 1961, due to doubtful cash credits. The Assessing Officer (AO) found the identity of creditors S. Nos. 1 to 6 established but doubted their creditworthiness, adding the amounts to the assessee's income. The CIT(A) confirmed the addition of Rs. 95,000 for cash credits in the names of Smt. Padam Lata, Smt. Suva Devi, and Shri Mohan Lal Jain, rejecting their creditworthiness based on their earlier statements recorded during the enquiry. However, the Tribunal found that the creditworthiness and genuineness of these transactions were satisfactorily proved. The creditors confirmed the advances through account payee cheques, were income-tax assessees, and the amounts were reflected in their returns. The Tribunal emphasized that statements recorded behind the assessee's back and not subjected to cross-examination could not be relied upon. Consequently, the addition of Rs. 95,000 was deleted.

2. Deletion of Rs. 60,000 on account of two cash credits:

The CIT(A) deleted the additions of Rs. 30,000 each made on account of credits in the names of Shri Mahavir Chand and Shri Pabudan. The CIT(A) found their creditworthiness satisfactorily proved as they had been earning business income as partners in a jute firm and received their capitals upon the firm's dissolution. The Tribunal upheld this decision, confirming that the identity, creditworthiness, and genuineness of the transactions were well established. The Revenue's appeal against this deletion was dismissed.

3. Re-examination of cash credit of Rs. 55,000:

The CIT(A) remitted the issue of the cash credit of Rs. 55,000 in the name of Shri Surjmal Baid for re-examination and re-decision by the AO. This part of the order was not challenged by either party, and thus, no further judgment was rendered on this issue.

Conclusion:

The Tribunal concluded that the creditworthiness of all the creditors was satisfactorily proved and no addition on account of any of the disputed cash credits could be made in the hands of the assessee. The assessee's appeal was allowed, and the Revenue's appeal was dismissed.