2012 (9) TMI 792 - AT - Income Tax

Addition on account of unexplained cash credit - deposit in bank - search and seizure operation conducted u/s 132(1) in the case of S.K.S. Ispat Group including the directors of different associates and sister concern as well as in assessee s own case - assessee being supporting staff of one of the company was also registered as director in few concerns of the group - assessee contended that said amount was received on behalf of Samardhan Securities and the same has been given back to them - Held that - It is observed that assessee has established the identity of the party by submitting the PAN, Election Card, I Card, etc. Bank statement, confirmation of account and confirmation regarding receipt and payment of the aforesaid amount. Since said sum was given back also; and that too through banking channels, hence, the assessee has proved the genuineness of the transaction also. CIT(A) rightly deleted the addition on observation that genuineness of the transaction cannot be doubted as the amount has been re paid on the same day or within a fortnight of receiving the same - Decided against Revenue.

Summary

Issues:
Appeal against deletion of addition of unexplained cash credit of Rs. 38,60,698 for assessment year 2007-08.

Analysis:
The appeal before the Appellate Tribunal ITAT Mumbai involved a dispute regarding the deletion of an addition of Rs. 38,60,698 made by the Assessing Officer on account of unexplained cash credit for the assessment year 2007-08. The case proceeded in the absence of the assessee, and the Tribunal relied on the material available on record and submissions of the Departmental Representative. The Assessing Officer had raised concerns about the unexplained cash credit based on bank entries found in the assessee's account. The assessee claimed that the amount was received on behalf of a specific entity and provided various supporting documents to establish the transaction's genuineness.

The Tribunal noted that a search and seizure operation had been conducted in the case of S.K.S. Ispat Group, including the assessee, in the assessment year under consideration. The assessee's total income comprised salary income, capital gains, bank interest, and miscellaneous income. The Assessing Officer had treated the amount of Rs. 38,60,698 as unexplained cash credit under section 68 of the Income Tax Act due to the lack of satisfactory explanation and clarification regarding its nature and source. However, the assessee submitted detailed information, including PAN card, bank statements, and confirmations, to support the legitimacy of the transactions.

Upon considering the evidence produced by the assessee and the remand report of the Assessing Officer, the Commissioner (Appeals) admitted the additional evidence in the interest of justice. The Commissioner found that the assessee had provided enough evidence to establish the identity and creditworthiness of the entity involved in the transaction. The genuineness of the transaction was supported by the repayment made through banking channels shortly after receiving the amount. Consequently, the Commissioner deleted the addition of Rs. 38,60,698, stating that it could not be charged to tax.

During the Tribunal hearing, the Departmental Representative did not dispute the evidence provided by the assessee, acknowledging that the identity of the party and the genuineness of the transaction had been adequately proven. As a result, the Tribunal confirmed the order of the Commissioner (Appeals) and dismissed the Revenue's appeal, upholding the deletion of the addition of Rs. 38,60,698.