2017 (6) TMI 77 - AT - Income Tax

Additions u/s 68 - genuineness of the transaction not proved - Held that - Sh. Inderjeet Kumar had no satisfactory explanation or evidence regarding the cash deposited in his bank account. However, Ld. CIT(A) noticed that Sh. Inderjeet Kumar deposited ₹ 4,90,000/- in cash in his bank account on 08.02.2008 and gave a cheque of ₹ 5 lacs to the assessee on 11.02.2008. Similarly, Sh. Mahavir Singh, S/o. Sh. Dilip Singh deposited cash amounting to ₹ 9,50,000/- in his bank account on 13.02.2008 and gave a cheque of ₹ 8 lacs to the assessee on 14.02.2008. Since, the genuineness of the transaction and the creditworthiness of the loan creditors has not been conclusively established before the lower authorities, hence, the Ld. CIT(A) has rightly confirmed the addition of ₹ 13,00,000/- i.e. (Rs. 5 lacs from Sh. Inderjeet Kumar and ₹ 8 lacs from Sh. Mahavir Singh) and held that these loans are not genuine and treated the same as unexplained cash credit u/s. 68 As regards the addition/confirmation of ₹ 10 lacs is concerned, which was also an unsecured loan from Sh. Kumudani Jhangu, for the assessment year 2008-09, we find that the assessee has filed the copy of Income Tax Return filed on 30.9.2008 of Sh. Kumudani Jhangu, for the assessment year 2008-09 and also his Income Tax Return for the AY 2008-09 reflecting the amount of ₹ 10 under the head Deductions under Chapter-VIA alongwith the statement of assessable income and also copy of Statement of Affairs as on 31.3.2007 and 31.3.2008. In our considered opinion, these documents are enough to establish the genuineness of the transaction and the creditworthiness of the loan creditors, hence, the addition of ₹ 10 lacs being unsecured loan from Kumudani Janghu is hereby deleted and as a result, the assessee gets part relief of ₹ 10 lacs only. - Decided partly in favour of assessee.

Summary

Issues:
1. Addition of unexplained cash credit under section 68 of the Income Tax Act, 1961.

Analysis:
The appeal was filed by the Assessee against an order confirming additions totaling ?23,00,000 under section 68 of the Income Tax Act, 1961. The Assessee declared a net income of ?2,48,000 and was selected for scrutiny. The Assessing Officer (AO) passed an ex-parte order estimating the business income at ?4,00,000 due to lack of attendance and information. The AO noted investments in properties and unsecured loans totaling ?23,00,000, which were treated as unexplained investment and cash credit. The Assessee's appeal before the Ld. CIT(A) was partly allowed, leading to the Assessee appealing to the Tribunal.

The Assessee submitted additional evidence, including bank statements and income tax returns of loan creditors, to establish the genuineness of the transactions. The Ld. CIT(A) considered the submissions and found discrepancies in the cash deposits made by the loan creditors before providing loans to the Assessee. One creditor failed to provide satisfactory explanations for cash deposits, leading to the confirmation of ?13,00,000 as unexplained cash credit. However, for another loan of ?10,00,000, documentation provided by the Assessee was deemed sufficient to prove the genuineness of the transaction, resulting in the deletion of this amount from the additions.

The Tribunal upheld the addition of ?13,00,000 as unexplained cash credit based on insufficient evidence provided by the Assessee regarding cash deposits by loan creditors. However, the Tribunal deleted the addition of ?10,00,000 after finding the documentation submitted by the Assessee to be satisfactory in proving the genuineness of the transaction. Consequently, the Assessee received partial relief, with the appeal being partly allowed.