2024 (12) TMI 497 - AT - Income Tax

Addition u/s 68 - unexplained cash credit being unexplained unsecured loans - Discharge of burden of proof or not? - HELD THAT - The first and foremost aspect noticed during the course of hearing is that the assessee had filed her additional evidence under Rule 46A of the Income Tax Rules, 1962 in the lower appellate proceedings which included confirmation, income tax return, acknowledgement as well as bank statement of M/s. Mahendra Dairy Pvt. Ltd. and M/s. Sunder Singh HUF. CIT(A) thereafter appears to have duly sought for a remand report from the Assessing Officer, which came to be submitted twice on 05.10.2023 and 05.12.2023, not making any adverse comment thereupon during verification process. This clinching fact has gone unrebutted from the departmental side before us. DR quotes Sumati Dayal 1995 (3) TMI 3 - SUPREME COURT , Durga Prasad More 1971 (8) TMI 17 - SUPREME COURT and NRA Iron Steel Co. 2019 (3) TMI 323 - SUPREME COURT that it was the assessee s bounden duty only to plead and prove all the relevant facts explaining identity, genuineness and creditworthiness, which she failed to discharge. We find no merit in the Revenue s instant former substantive ground once the assessee had discharged its onus of proving genuineness/creditworthiness of the impugned unsecured loans in foregoing terms. Addition u/s 56(2)(vi)(b)(ii) - actual difference between the stamp price paid by the assessee as against the actual price of the agricultural land - HELD THAT -There is admittedly no indication in the AO s twin remand reports that the assessee s land purchased herein forms a capital asset so as to satisfy the rigor of section 56(2)(vii)(b)(i) wherein the legislature has itself incorporated the clinching statutory expression property; means the following capital asset of the assessee. We thus see no reason to interfere with the learned CIT(A) s findings deleting the impugned addition in very terms. This Revenue s instant latter substantive ground also fails.

Summary

Issues Involved:

1. Deletion of addition under Section 68 of the Income Tax Act for unexplained cash credit.
2. Deletion of addition under Section 56(2)(vi)(b)(ii) concerning the sale of agricultural land.
3. Consideration of judicial precedents and the onus of proof in tax proceedings.

Detailed Analysis:

1. Deletion of Addition under Section 68:

The primary issue was whether the CIT(A) erred in deleting the addition of Rs. 3,73,00,000/- made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961, for unexplained cash credit in the form of unsecured loans. The AO had treated the loans from Mahendra Dairy Pvt. Ltd. and Sunder Singh HUF as unexplained. During appellate proceedings, the assessee provided evidence to establish the identity, genuineness, and creditworthiness of the lenders, including copies of bank statements, income tax returns, and balance sheets. The CIT(A) accepted these documents and sought a remand report from the AO, who did not raise any adverse comments. The Tribunal noted that the assessee had discharged its onus by providing sufficient evidence, shifting the burden to the AO to prove otherwise. The Tribunal referenced multiple judicial precedents, including decisions from the High Courts and the Supreme Court, which supported the view that once the assessee provides credible evidence, the onus shifts to the Revenue to disprove the claims. The Tribunal upheld the CIT(A)'s decision, finding no merit in the Revenue's arguments.

2. Deletion of Addition under Section 56(2)(vi)(b)(ii):

The second issue involved the deletion of an addition of Rs. 43,73,000/- under Section 56(2)(vi)(b)(ii) concerning the sale of agricultural land. The AO had questioned the nature of the land, suggesting it was not agricultural and thus subject to tax. However, the CIT(A) found no evidence in the AO's remand reports to classify the land as a "capital asset" under the relevant section. The Tribunal agreed with the CIT(A), noting that the legislative definition of "property" under the section requires it to be a capital asset, which was not established in this case. Consequently, the Tribunal upheld the deletion of the addition.

3. Consideration of Judicial Precedents and Onus of Proof:

The Tribunal addressed the Revenue's argument that the CIT(A) ignored Supreme Court precedents, such as Kale Khan Mohammad Hanif v. CIT and Som Nath Maini v. CIT, which emphasize the assessee's burden to prove the genuineness of transactions. The Tribunal found that the assessee had indeed met this burden by providing comprehensive documentation, and the AO failed to counter this evidence effectively. The Tribunal reiterated the principle that once the assessee provides sufficient evidence, the onus shifts to the Revenue to disprove the claims, aligning with the cited precedents.

Conclusion:

The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s findings and emphasizing the importance of the assessee's ability to discharge its initial burden of proof, after which the onus shifts to the Revenue. The Tribunal's decision was pronounced in open court on December 6, 2024.