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2023 (2) TMI 223 - ITAT SURATUnexplained credit entries in capital account u/s 68 - assessee failed to establish the genuineness of transaction and creditworthiness of the lender parties from whom partners of the firm have received unsecured loan - HELD THAT:- Creditworthiness or financial strength of the creditor can be proved by producing the bank statement of the creditor showing that it had sufficient balance in its accounts to enable it to advance money to the assessee. Genuineness of the transaction is to be demonstrated by showing that the assessee had, in fact, received money from the said creditor and it came from the coffers of that very creditor. The Division Bench of Delhi High Court in the case of CIT vs. Kamdhenu Steels and Alloys Ltd. [2011 (12) TMI 394 - DELHI HIGH COURT] held that when the money is received by cheque and is transmitted through banking or other indisputable channels, genuineness of transaction would be proved. Once these documents are produced, the onus cast on the assessee can be said to have been satisfactorily discharged. Thereafter, it is for the AO to scrutinize the same and in case he nurtures any doubt about the veracity of these documents, to probe the matter further. However, to discredit the documents produced by the assessee on the aforesaid aspects, there has to be some cogent reasons and materials for the assessing officer and he cannot go into the realm of suspicion. AO cannot burden the assessee with tax liability merely on the ground that summons issued to the creditors were returned back with the endorsement not traceable. CIT(A) noted that in the assessee`s case, once the assessee had produced all documents establishing the identity and capacity of creditors of creditors and genuineness of transactions, the initial onus cast upon the assessee was discharged and the onus shifted to the assessing officer to bring material on record to the effect that in spite of identity and creditworthiness of the creditor being proved, the transaction was still not genuine. However, the assessing officer has not made any further inquiries and has not brought only material on record to controvert the documentary evidence submitted by the assessee. CIT(A) noted that AO was not justified in treating as unexplained cash credit. Assessee has satisfactory explained the source of the introduction of capital - Hence, the addition made by the assessing officer was deleted by ld CIT(A). That being so, we decline to interfere with the order of CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.
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