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2022 (4) TMI 112 - AT - Income TaxAddition u/s 68 - unexplained credits - CIT-A deleted the addition - HELD THAT - It is admitted position, as noted by the Assessing Officer, that the loan/liability pertaining to BMPL and SSL were brought forward from earlier years and had remained static for many years. The concern of the Assessing Officer was that the since the agewise analysis was not provided, the year in which these credits were made in the books was not clear. Therefore, it was never the case of the Revenue that the credits pertain to the previous year relevant to the Assessment Year 2005-06. The provisions of Section 68 of the Act are attracted in case of unexplained credits during the relevant previous year. Since the outstanding loan/liability pertaining to BMPL and pertaining to SSL represent credits of earlier years, provisions of Section 68 would not be attracted in the facts and circumstances of the present case. Therefore, in our view, the CIT(A) has arrive at the correct conclusion that additions made under Section 68 cannot be sustained.- Decided against revenue.
Issues Involved:
1. Addition of ?41,49,500/- under Section 68 of the Income Tax Act, 1961. 2. Deletion of the addition based on identity, creditworthiness, and genuineness of transactions. 3. Specific information received from the Investigation Wing regarding bogus transactions. 4. Reliance on the decision of the Hon'ble ITAT in the case of Harsh Dalmia. 5. Set-off of earlier years' brought forward business loss against the addition under Section 68. Detailed Analysis: Issue 1: Addition of ?41,49,500/- under Section 68 of the Income Tax Act, 1961 The Revenue challenged the order of the CIT(A) which allowed the Assessee's appeal against the addition of ?41,49,500/- made by the Assessing Officer (AO) under Section 68. The AO had added this amount to the Assessee's income, questioning the genuineness of credits from Basant Marketing Pvt. Ltd. (BMPL) and Satya Securities Ltd. (SSL). Issue 2: Deletion of the Addition Based on Identity, Creditworthiness, and Genuineness of Transactions The CIT(A) held that the Assessee had discharged the initial onus to establish the identity, creditworthiness, and genuineness of transactions with BMPL and SSL. The AO's addition was based on suspicion without faulting the confirmations filed. The CIT(A) relied on the decision of the ITAT in the case of Harsh Dalmia. Issue 3: Specific Information Received from the Investigation Wing Regarding Bogus Transactions The AO made the addition based on specific information from the CBI, ACB, Mumbai, alleging that the Assessee was involved in bogus transactions with BMPL and SSL. However, the CIT(A) found that the Assessee had provided sufficient documentation and confirmations from BMPL and SSL, which the AO did not adequately dispute. Issue 4: Reliance on the Decision of the Hon'ble ITAT in the Case of Harsh Dalmia The CIT(A) relied on the ITAT's decision in the case of Harsh Dalmia, which involved similar facts and transactions with BMPL and SSL. The Revenue contended that this decision was not accepted by them, but no appeal was filed due to low tax effect as per CBDT Instructions. Issue 5: Set-off of Earlier Years' Brought Forward Business Loss Against the Addition Under Section 68 The CIT(A) directed the AO to allow the set-off of brought forward losses against the addition under Section 68. This direction was based on the finding that the credits from BMPL and SSL were opening balances from earlier years and not new credits during the relevant assessment year. Judgment Analysis: Ground No. 1 to 4: The Tribunal upheld the CIT(A)'s deletion of the addition of ?41,49,500/-. It was noted that the Assessee had filed all relevant documents, including ledger accounts and confirmations from BMPL and SSL. The AO's addition was based on suspicion without concrete evidence. The Tribunal agreed with the CIT(A) that the credits were opening balances from earlier years, and therefore, Section 68 was not applicable. The reliance on the decision in Harsh Dalmia's case was found to be appropriate. Ground No. 5: The Tribunal found that the issue of set-off of brought forward losses had become infructuous since the addition under Section 68 was deleted. Therefore, this ground was disposed of as academic. Conclusion: The appeal filed by the Revenue was partly allowed for statistical purposes, with the Tribunal confirming the deletion of the addition under Section 68 and disposing of the set-off issue as infructuous. The order of the CIT(A) was upheld, confirming that the Assessee had satisfactorily discharged the onus of proving the genuineness of the credits.
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