2013 (1) TMI 87 - HC - Income Tax

Unexplained cash credit - ITAT deleted the addition - Held that - CIT(A) as well as the Tribunal have arrived at concurrent finding of fact that the credit aggregating to Rs.43.75 has been explained by the assessee and the same cannot be added to the income of the assessee. This finding was reached after detailed examination of each of the cash credits. The revenue has not been able to show that a concurrent finding of fact arrived by the authorities below is either perverse or arbitrary. The CIT(A) has made a distinction between monies advanced by a creditor all by himself and monies advanced by him after collecting funds from his close relatives - in favour of assessee.

Issues:
1. Interpretation of Section 68 of the Income Tax Act, 1961 regarding unexplained cash credit.
2. Assessment of advances received in cash by a partnership firm engaged in construction and development of properties.
3. Evaluation of evidence and explanations provided by the respondent-assessee regarding cash credits in their books of accounts.
4. Appeal against the order of the Assessing Officer and the Commissioner of Income Tax (Appeals) regarding additions made to the income of the respondent-assessee.
5. Tribunal's decision on the genuineness of the advances received in cash and taxability under Section 68 of the Act.
6. Confirmation of findings by the Commissioner of Income Tax (Appeals) and the Tribunal regarding the explanation of cash credits.

Analysis:

1. The appeal by the revenue under Section 260A of the Income Tax Act, 1961 challenges the Tribunal's order related to the assessment year 2005-06 concerning unexplained cash credits under Section 68 of the Act. The main issue is whether the advances received by the respondent-assessee in cash were genuine and not chargeable to tax.

2. The respondent-assessee, a partnership firm in construction and property development, declared Nil income for the assessment year 2005-06. The Assessing Officer found cash credits in the respondent's books of accounts from 15 parties. The respondent explained that these credits were genuine payments made while booking flats. However, the Assessing Officer added a specific amount to the respondent's income, which led to an appeal.

3. The Commissioner of Income Tax (Appeals) examined the evidence and found that out of the total advances received, a portion was in cash. While some amounts were deemed genuine, others were not accepted, resulting in additions to the income of the respondent-assessee. The Tribunal, on appeal, upheld the Commissioner's findings after detailed scrutiny of each credit item.

4. Both the revenue and the respondent-assessee filed appeals before the Tribunal. The Tribunal, after considering the evidence and explanations provided, confirmed the Commissioner's decision. The Tribunal highlighted the examination of each credit item and the lack of serious infirmity in the evidence appraisal. Consequently, the appeals were dismissed.

5. The Tribunal and the Commissioner of Income Tax (Appeals) arrived at a concurrent finding that certain cash credits were explained by the respondent-assessee, leading to the conclusion that these amounts should not be added to the respondent's income. The Tribunal found no perversity or arbitrariness in the lower authorities' decisions, resulting in the dismissal of the appeal.

6. Ultimately, the Tribunal's decision was upheld, and no substantial question of law was found to arise in the appeal. Therefore, the appeal by the revenue was dismissed with no order as to costs.

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