2022 (1) TMI 408 - AT - Income Tax

Addition u/s. 68 - unexplained cash credit - assessee has failed to prove identity and creditworthiness of the alleged lenders, as well as genuineness of the transaction - HELD THAT - As stated by the Ld. CIT(A) that the assessee has submitted all documents, all the notices issued u/s. 133(6) of the Act were duly served and replied were also filed. Further, it is stated that the correct address of M/s. Rose Mary Commercial Pvt. Ltd. was supplied and the enquiry was made at the old address. It is stated by the Ld. CIT(A) that the loan amount was taken from this party through bank route of ₹ 43,50,000/-. The turnover of these company and net worth in the opinion of the Ld. CIT(A) this party has credit worthiness for giving such loan. CIT(A) has observed that the AO failed to make any independent enquiry regarding these parties. Ld. Counsel for the assessee during the course of hearing placed reliance in the case of Kamlesh Gupta 2021 (8) TMI 1268 - DELHI HIGH COURT - We are in agreement with finding of the CIT(A) as the assessee has provided evidences in support of its claim but no independent enquiry was made by the Assessing Officer to verify the veracity of the same. A.O. ought to have caused necessary investigation before drawing adverse inference against the assessee. Therefore, in our considered view, the Ld. CIT(A) was justified in deleting the addition. The ground by the Revenue is dismissed.

Summary

Issues:
Appeal against deletion of addition under Section 68 of the Income Tax Act for Assessment Year 2012-13.

Analysis:
The Appellate Tribunal ITAT Delhi heard an appeal and Cross Objection against the order of Ld. CIT(A)-4, New Delhi dated 29/4/2016 for the Assessment Year 2012-13. The Revenue's appeal challenged the deletion of an addition of ?3,03,90,000 under Section 68 of the Income Tax Act. The facts revealed that the assessee company, engaged in building development, faced scrutiny assessment resulting in the addition of the aforementioned amount by the Assessing Officer. However, the Ld. CIT(A) later deleted these additions, leading to the Revenue's appeal.

During the proceedings, the Revenue argued that the Assessing Officer was justified in making the addition due to the lack of proof of transaction genuineness. On the contrary, the assessee's counsel contended that relevant documents, including lender details and confirmations, were provided to support the claim. The counsel highlighted the business downturn faced by the assessee due to industry challenges. The Tribunal noted that the Assessing Officer did not provide adverse findings for one party and failed to discuss the relevant transaction, resulting in deletion of the addition by Ld. CIT(A).

Regarding another party, the Tribunal found that the assessee had submitted all necessary documents and responses to notices under Section 133(6) of the Act. The Ld. CIT(A) observed that the Assessing Officer did not conduct independent inquiries into the parties involved. The Tribunal agreed with the Ld. CIT(A) that the assessee had provided evidence but the Assessing Officer failed to verify independently, leading to the deletion of the addition. The Tribunal dismissed the Revenue's appeal and the Cross Objection of the assessee as the appeal was already rejected.

In conclusion, the Tribunal upheld the Ld. CIT(A)'s decision to delete the addition under Section 68 of the Income Tax Act for the Assessment Year 2012-13. The judgment was delivered on 31st December, 2021, after a Virtual Hearing in the presence of both parties.