9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (11) TMI 555 - AT - Income TaxUnexplained credit u/s 68 - amount transferred through bank transactions - Held that - As the amount of ₹ 1,86,30,000/- was advanced by BMPL to the assessee company through bank transactions, thus the genuineness of the loan transaction under consideration also stands proved. We are persuaded to subscribe to the view taken by the CIT(A) that as the nature and source of the credit of ₹ 1,86,30,000/- appearing in the books of accounts of the assessee company had been established by the assessee beyond doubt, thus the same could not have been held as an unexplained cash credit under Sec. 68. We thus finding no infirmity in the view taken by the CIT(A) that the loan of ₹ 1,86,30,000/- received by the assessee company from BMPL could not be held as an unexplained cash credit under Sec. 68 of the Act, uphold the same. - Decided against revenue.
Issues Involved:
1. Deletion of addition made under Section 68 of the Income Tax Act, 1961. 2. Creditworthiness and genuineness of the transactions with M/s Basant Marketing Pvt. Ltd. (BMPL). 3. Assessment of the source of funds and the identity of the lender. Issue-wise Detailed Analysis: 1. Deletion of Addition Made Under Section 68 of the Income Tax Act, 1961: The revenue challenged the order of the CIT(A) which deleted the addition of ?1,86,30,000/- made under Section 68 of the Income Tax Act, 1961. The Assessing Officer (A.O) had added this amount as an unexplained credit, suspecting the transactions with BMPL to be bogus. However, the CIT(A) observed that the assessee had provided sufficient documentary evidence, including proof of identity, confirmation of BMPL, audited annual accounts, acknowledgment of the return of income, ledger account, and bank account details. These documents were not adequately disputed by the A.O. The CIT(A) concluded that the assessee had discharged its onus of proving the identity and creditworthiness of BMPL and the genuineness of the transactions. 2. Creditworthiness and Genuineness of the Transactions with BMPL: The A.O had serious doubts regarding the authenticity of the transactions with BMPL, suspecting it to be involved in providing bogus/accommodation entries. However, the CIT(A) noted that BMPL had been exonerated by the CIT(A)-20, Kolkata, from the charge of providing bogus entries, and this decision was accepted by the revenue. The CIT(A) found that the transactions were recorded in the audited books of accounts of both the assessee and BMPL, and the funds were transferred through banking channels. It was also noted that BMPL regularly filed its returns of income. Thus, the CIT(A) held that the creditworthiness of BMPL and the genuineness of the transactions were established beyond doubt. 3. Assessment of the Source of Funds and the Identity of the Lender: The A.O questioned the source of funds of BMPL and its financial stability, pointing out that BMPL had substantial unsecured loans and advances without any interest income or expenditure, raising suspicions of money laundering and hawala transactions. However, the CIT(A) and subsequently the Tribunal observed that the identity of BMPL was established, and the funds were transferred through legitimate banking channels. The Tribunal emphasized that prior to the insertion of the first proviso to Section 68 by the Finance Act, 2012, it was not obligatory for the assessee to explain the source of the source of the credit. The Tribunal cited the judgment of the Hon’ble High Court of Bombay in CIT Vs. Gagandeep Infrastructure Pvt. Ltd., which held that the obligation to explain the source of the source applies only post the amendment effective from April 1, 2013. Conclusion: The Tribunal upheld the CIT(A)'s order, concluding that the nature and source of the credit of ?1,86,30,000/- were satisfactorily explained by the assessee. The identity, creditworthiness, and genuineness of the transactions with BMPL were established, and the addition made by the A.O under Section 68 was rightly deleted. The revenue's appeal was dismissed, and the order pronounced in the open court on November 9, 2018, affirmed the CIT(A)'s decision.
|
