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2016 (4) TMI 251 - AT - Income TaxUnexplained cash credit - Held that - There is no doubt about the identity, genuineness and creditworthiness of loan taken from M/s Pappillion Exports Ltd. of ₹ 60,85,000/-. From going through the paper book at pages 83 to 85 wherein bank statement of Sarvodaya Co-op. Bank Ltd. in the name of M/s Pappillion Exports Ltd. a/c no.4479 as well as bank statement of M/s Hiral Pharma Ltd. are placed, we observe that in January, 1997 a cheque No.133279 has been issued by M/s Pappillion Exports Ltd. and on the very same day this amount has been transferred to the account of assessee and the entry of the same is reflected in the bank statement of assessee. This clearly shows that there was bank transaction through cheque no.133279 for ₹ 60,85,000/- between M/s Pappillion Exports Ltd. and the assessee. Further as regards non-availability of other details from Sarvodaya Co-op. Bank Ltd. due to it being in liquidation we find that records have been placed by assessee showing extract of financial statement of Sarvodaya Co-op. Bank Ltd. which is having a schedule of a/c wherein name of M/s Pappillion Exports Ltd. is appearing which shows that M/s Pappillion Exports Ltd. was having its banking transactions through Sarvodaya Co-op. Bank Ltd. Thus there occurred a bank transaction between the assessee and M/s Pappillion Exports Ltd. and assessee has duly received loan of ₹ 60,85,000/- from M/s Pappillion Exports Ltd. through bank transfer. Therefore, ld. CIT(A) has made no error in deleting the addition made by the Assessing Officer. - Decided in favour of assessee.
Issues Involved:
1. Deletion of addition made on account of cash credit in the name of M/s. Pappillion Export Ltd. 2. Whether the CIT(A) was correct in deleting the addition made by the Assessing Officer. Issue-wise Detailed Analysis: 1. Deletion of Addition Made on Account of Cash Credit in the Name of M/s. Pappillion Export Ltd.: The Revenue's main contention was that the CIT(A) erred in law and on facts by deleting the addition of Rs. 60,85,000/- as unexplained cash credit from M/s. Pappillion Export Ltd. The Assessing Officer (AO) had established that the cash credit appearing in the books of the assessee was not genuine. The AO added the amount back to the total income of the assessee after finding that the bank, Sarvodaya Co-op. Bank Ltd., was in liquidation and no further information was available. The CIT(A) allowed the appeal of the assessee, observing that the AO did not follow the specific directions of the ITAT to verify the bank account of M/s. Pappillion Export Ltd. The CIT(A) concluded that the appellant had prima facie proved the creditworthiness of the creditors and the genuineness of the transaction through banking channels. The CIT(A) also noted that the AO failed to provide any relevant, cogent, and positive material to support the addition under Section 68 of the Income Tax Act. 2. Whether the CIT(A) was Correct in Deleting the Addition Made by the Assessing Officer: The Tribunal examined whether the assessee had actually received the loan of Rs. 60,85,000/- from M/s. Pappillion Export Ltd. through its bank account held with Sarvodaya Co-op. Bank Ltd. The Tribunal found that the identity, genuineness, and creditworthiness of the unsecured loan had been duly adjudicated in a previous order dated 29th January 2010. The Tribunal noted that the AO did not examine the bank certificate or the confirmation letter provided by the assessee, nor did he summon the banker to verify the facts. The Tribunal emphasized that the AO should have verified the bank account and allowed cross-examination of the statements made by the directors of M/s. Pappillion Export Ltd. The Tribunal upheld the CIT(A)'s decision, stating that there was no doubt about the identity, genuineness, and creditworthiness of the loan transaction. The Tribunal also noted that the bank statements clearly showed the transaction of Rs. 60,85,000/- between M/s. Pappillion Export Ltd. and the assessee. The Tribunal concluded that the CIT(A) made no error in deleting the addition made by the AO and dismissed the Revenue's appeal. Conclusion: The Tribunal dismissed the appeal of the Revenue, upholding the CIT(A)'s order to delete the addition of Rs. 60,85,000/- made by the AO on account of unexplained cash credit. The Tribunal found that the identity, genuineness, and creditworthiness of the loan transaction were satisfactorily established and that the AO failed to provide any substantial evidence to support the addition under Section 68. The Tribunal also emphasized the importance of following judicial directions and ensuring proper verification of facts in assessment proceedings.
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