2013 (10) TMI 7 - HC - Income Tax

Addition u/s 68 of the Income Tax Act Held that - The assessee on having parted with the confirmation by the creditors, the bank statements, PAN numbers as well as copy of the acknowledgment of the returns filed by those persons, had duly discharged his obligation, as the law has cast on him, and therefore, if any other further inquiry is necessary, it is for the Assessing Officer to so do and it was also so requested by the assessee while furnishing these details. On Assessing Officer having failed to exercise his discretion, in wake of overwhelming evidences in possession of the Revenue authorities, he was not right in making such additions - Both CIT A as well as the Tribunal when have concurrently held on an issue which is predominantly factual in nature, they deleted the addition Decided against the Revenue.

Summary

Issues:
1. Deletion of addition of Rs. 23,00,000 under section 68 of the Income Tax Act.
2. Deletion of addition of Rs. 13,75,874 made on account of cessation of liability.

Issue 1: Deletion of addition of Rs. 23,00,000 under section 68 of the Income Tax Act:

The Assessing Officer had added Rs. 23,00,000 as unexplained cash credit under section 68 of the Income Tax Act in the assessment for the Assessment Year 2008-09. The assessee claimed these amounts were booking deposits for flat purchases and provided details of the depositors, including PAN numbers and addresses. The CIT [A] and the Tribunal found that the assessee had discharged the onus by providing sufficient evidence and that the Assessing Officer erred in not verifying the deposits under section 133 (6) of the Act. Both authorities concluded in favor of the assessee, emphasizing that the issue was factual, and no legal question arose. The Tribunal upheld the deletion of the addition, stating that the Assessing Officer should have conducted further inquiries before making the addition.

Issue 2: Deletion of addition of Rs. 13,75,874 made on account of cessation of liability:

The Assessing Officer added Rs. 13,75,874 as unaccounted income due to the alleged cessation of liability by the creditors. The assessee provided all necessary details, including names, PAN numbers, and bank details of the creditors to the Assessing Officer. The CIT [A] found that the Assessing Officer's conclusions lacked clarity and were based on inferences rather than tangible evidence. The Tribunal agreed with the CIT [A] that the assessee had fulfilled its primary burden by providing the required details, and the Assessing Officer should have issued notices under section 133 (6) of the Act if further verification was needed. Both the CIT [A] and the Tribunal held that no addition was warranted, and the Assessing Officer's order lacked clarity and was based on assumptions. The Tribunal confirmed the deletion of the addition, emphasizing that the primary burden was discharged by the assessee.

In conclusion, both issues involved in the case were analyzed in detail by the CIT [A] and the Tribunal, leading to the deletion of the additions made by the Assessing Officer. The judgments emphasized that the assessee had provided sufficient evidence and fulfilled its obligations, while the Assessing Officer's actions lacked proper verification and clarity. The Tribunal upheld the decisions of the lower authorities, stating that no substantial legal questions arose, and dismissed the Tax Appeal.