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2012 (10) TMI 470 - AT - Income TaxUnexplained Cash Credits - CIT(A) On remand report of the assessing officer and reply of the assessee classified the loans into two categories, viz. loans pertaining to the period prior to commencement of business, and loans pertaining to the period subsequent to the commencement of business by the assessee. As decided by Court in case of [CIT V/s. Kapur Bros 1978 (10) TMI 26 - ALLAHABAD HIGH COURT] CIT(A) held that any cash credit introduced before the commencement of business cannot be added in the hands of the firm, as the firm has not earned any income or made any sale. He accordingly directed the assessing officer to identify the cash credits which were made prior to the commencement of business and delete the additions made in that behalf. As for the other cash credits relating to the period subsequent to the commencement of business, the CIT(A) confirmed the additions made by the assessing officer in that behalf. Aggrieved by the relief granted by the CIT(A), Revenue is in appeal, whereas the assessee preferred its appeal objecting to the addition sustained by the CIT(A). Held that:- It is for the assessee to prove the genuineness of a cash credit not only by establishing the identity of the creditor, but also his creditworthiness and the genuineness of the transaction, and unless all the three ingredients are satisfied, genuineness of a cash credit cannot be accepted. In the circumstances, the order of the CIT(A) is upheld with regard to cash credit additions relating to the period subsequent to the commencement of business by the assessee - Grounds of the assessee as well as the Revenue are dismissed.
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