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2013 (9) TMI 433 - AT - Income TaxUnexplained cash credit u/s 68 of the Income Tax Act - Amount of Rs. 2,28,50,000/- was received by the assessee from its shareholder M/s Prahlad Trading Pvt. Ltd. by cheques during the year under consideration - Confirmation letter of the said creditor was filed by the assessee during the course of assessment proceeding as called for by the A.O - All the relevant details such as complete name and address of the creditor, its Permanent Account Number and the details of mode of payment including the cheque Nos. were given therein - Source of amount in question paid to the assessee was explained by the said creditor as the application money received from M/s Kenex Exports Pvt. Ltd. towards OFCD – Held that:- Documentary evidence produced by the assessee was sufficient to discharge the initial onus that lay on the assessee in terms of section 68 of the Act to prove the identity and capacity of the creditor as well as genuineness of the transaction and there was no justification in the action of the A.O. in treating the amount in question received by the assessee from the concerned creditor M/s Prahlad Trading Pvt. Ltd. as unexplained cash credit u/s 68 of the Act without bringing any adverse material on record. What is relevant in the context of unexplained cash credit u/s 68 is the explanation of the assessee in respect of the source of relevant cash credit - The funds for giving the amount in question were generated by the concerned creditor M/s Prahlad Trading Pvt. Ltd. from an independent source which was not even part of circular transactions alleged by the A.O. and this being so, the genuineness of the relevant cash credit cannot even otherwise be doubted on the basis of circular transactions as alleged by the A.O. As already observed by us, sufficient evidence was produced by the assessee to establish the identity and capacity of the concerned creditor as well as the genuineness of the relevant transactions and the onus in terms of section 68 to explain the said cash credit having been duly discharged by the assessee - Treating the said cash credit as unexplained u/s 68 of the Act is not justified - Deleted the addition and allowed the appeal of the assessee – Decided in favor of Assessee.
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