2014 (4) TMI 547 - AT - Income Tax

Deletion made u/s 68 of the Act - Opportunity of being heard Held that - The onus of proving the source of money found to be received by an assessee is on the assessee itself - Where the nature and source of a receipt cannot be satisfactorily explained by the assessee, it is open to the revenue to hold that it is income of the assessee The decision in Roshan Di Hatti vs CIT 1977 (3) TMI 3 - SUPREME Court followed - So far as contention of the assessee that the transaction by cheque is itself a proof, the transaction by cheque itself may not be sacrosanct - the onus to prove the three ingredients i.e. identity, creditworthiness and genuineness of the transaction, is on the assessee the matter is remitted back to the AO for fresh adjudication Decided in favour of Revenue.

Summary

Issues:
Cross appeals challenging order of the ld. First appellate authority for AY 2007-08. Revenue's appeal against deletion of addition u/s 68. Assessee's appeal regarding jurisdiction, opportunity of hearing, and legality of additions u/s 68.

Analysis:
- The assessee and revenue filed cross-appeals challenging the order for AY 2007-08. Revenue contested the deletion of Rs. 25,00,000 addition u/s 68 of the Income Tax Act, related to a loan claim from M/s Ramesh Bais (HUF).
- Assessee raised concerns about lack of proper hearing opportunity, jurisdiction issues, and legality of additions u/s 68 for various cash creditors.
- The assessee, engaged in trading, declared income from different sources in the return. During scrutiny, the AO found unsecured loans from multiple entities totaling Rs. 1,23,50,000. The assessee was asked to prove the creditors' identity, transaction genuineness, and creditworthiness as per section 68.
- Despite submissions and summons, the creditors did not respond satisfactorily, leading the AO to treat the loan amount as deemed income u/s 68.
- The ld. CIT(A) partially restricted the addition to Rs. 98,50,000. The assessee contested the hearing opportunity and relief granted, while the revenue defended the AO's decision.
- The Tribunal emphasized the assessee's burden to prove the source of received money. Citing legal precedents, the Tribunal highlighted the importance of explaining each entry and the insufficiency of transactions by cheque alone as proof.
- Considering the legal requirements under section 68, the Tribunal remanded the case to the AO for fresh adjudication, directing the assessee to substantiate claims and provide necessary evidence. Both appeals were allowed for statistical purposes only.

This detailed analysis covers the issues raised in the cross-appeals, the AO's findings, the parties' arguments, legal precedents cited, and the Tribunal's decision to remand the case for further review, ensuring a fair opportunity for the assessee to substantiate claims under section 68 of the Income Tax Act.