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2015 (9) TMI 446 - AT - Income TaxUnexplained cash credits u/s.68 - Held that - CIT(A) while accepting loan to the tune of ₹ 48,40,992/- in respect of 4 persons sustained the addition of ₹ 10,08,079/- which is the difference between the figures shown by the assessee and the figures as per the loan confirmation letters filed before the AO by the above 4 parties. Therefore, the order of the CIT(A) sustaining the difference of ₹ 10,08,079/- is upheld. Now coming to the balance amount of ₹ 84,99,237/- taken from the 5 parties, it is a fact that despite letters issued by the AO, the above loan creditors did not respond to such letters during the remand proceedings. It is the settled position of law that for accepting any cash credit, the onus is always on the assessee to substantiate with evidence regarding the identify and credit worthiness of the loan creditor and the genuineness of the transaction. In the instant case, although the assessee has filed certain confirmations, however, the fact remains that the credit worthiness of those loan creditors has not yet been proved.since the Ld. Counsel for the assessee made a plea that given an opportunity the assessee is in a position to produce the loan creditors before the AO with documentary evidence to his satisfaction regarding the credit worthiness of the loan creditors, therefore, we in the interest of justice, deem it proper to restore the issue to the file of the AO with a direction to give one more opportunity to substantiate with evidence to his satisfaction regarding the credit worthiness of the loan creditors for the loan of ₹ 84,99,237/-. The assessee is directed to produce the parties before the AO for his examination. - Decided partly in favour of assessee for statistical purposes.
Issues Involved:
1. Addition of Rs. 95,07,316 as unexplained cash credits under Section 68 of the Income Tax Act for Assessment Year 2006-07. 2. Addition of Rs. 27,67,599 as unexplained cash credits under Section 68 of the Income Tax Act for Assessment Year 2009-10. Detailed Analysis: 1. Addition of Rs. 95,07,316 as unexplained cash credits under Section 68 of the Income Tax Act for Assessment Year 2006-07: The assessee, a company engaged in manufacturing and trading of compact fluorescent lamps, filed returns showing a total loss. During the assessment, the AO noted an addition of Rs. 5,78,07,869 to unsecured loans, with Rs. 1,43,48,308 being unexplained. The AO observed that the assessee failed to prove the genuineness of the loan transactions for nine creditors, leading to an addition under Section 68 of the Income Tax Act. The assessee argued before the CIT(A) that it had submitted confirmations, PAN, and bank statements for most loan accounts, but could not obtain timely information for nine creditors due to various reasons. The CIT(A) called for a remand report, and the AO confirmed only four out of nine creditors, leading to a difference of Rs. 10,01,079, and non-response from five creditors totaling Rs. 84,99,237. The CIT(A) deleted Rs. 48,40,992 but sustained the addition of Rs. 95,07,316, citing discrepancies and lack of evidence for the remaining creditors. The assessee appealed, arguing that transactions were through banking channels with confirmations and PAN details. However, the CIT(A) upheld the addition due to the inability to produce creditors for verification and lack of creditworthiness evidence. The Tribunal found that the assessee failed to substantiate loans from nine parties with documentary evidence. Despite filing certain details, the creditworthiness of the creditors was not proved. The Tribunal upheld the addition of Rs. 10,08,079 due to discrepancies but restored the issue of Rs. 84,99,237 to the AO, directing the assessee to produce creditors for examination without further notices or summons from the AO. 2. Addition of Rs. 27,67,599 as unexplained cash credits under Section 68 of the Income Tax Act for Assessment Year 2009-10: For Assessment Year 2009-10, the AO made an addition of Rs. 27,67,599 for loans obtained from nine parties. The CIT(A) upheld this addition as the assessee failed to produce evidence to rebut the presumption under Section 68 by producing the parties in whose names the amounts were credited. The assessee appealed, requesting another opportunity to produce the loan creditors. The Tribunal, considering the facts and in line with its decision for Assessment Year 2006-07, restored the issue to the AO, directing the assessee to substantiate the identity, creditworthiness, and genuineness of the transactions by producing the loan creditors without further notices or summons from the AO. Conclusion: The Tribunal partially allowed the appeals for both assessment years for statistical purposes, directing the AO to re-examine the creditworthiness and genuineness of the transactions, with the assessee responsible for producing the creditors for verification.
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