2003 (5) TMI 201 - AT - Income Tax

Summary

Issues Involved:
1. Withdrawal of the assessee's appeal.
2. Deletion of Rs. 3,15,000 added as unproved cash credits by the Revenue.
3. Reassessment proceedings under sections 147/148 of the IT Act.
4. Proof of identity, genuineness, and capacity of the creditor, Sh. Naresh Kapoor.

Detailed Analysis:

1. Withdrawal of the Assessee's Appeal:
The learned counsel for the assessee withdrew his appeal during the course of the hearing, resulting in its dismissal.

2. Deletion of Rs. 3,15,000 Added as Unproved Cash Credits:
The Revenue challenged the deletion of Rs. 3,15,000 added as unproved cash credits in the name of Sh. Naresh Kapoor, Prop. M/s City Enterprises, Jalandhar. The AO initially treated the cash credits as non-genuine and added the amount to the assessee's income from undisclosed sources. However, the CIT(A) deleted this addition, stating that the assessee had provided sufficient evidence to prove the identity, genuineness, and capacity of the creditor. The CIT(A) noted that the loan was received through drafts and repaid with interest through cheques, and the transactions were verified by the AO from bank records. The CIT(A) also mentioned that the creditor was assessed to income-tax with a substantial income, and the Department had accepted the loan transactions during tax recovery proceedings.

3. Reassessment Proceedings Under Sections 147/148 of the IT Act:
The return of income filed by the assessee was initially processed and accepted under section 143(1)(a). Subsequently, a notice under section 148 was issued based on information that the assessee had received a bogus gift of Rs. 1,15,000 from Sh. Naresh Kapoor under the guise of NRI foreign remittance. The AO believed that this amount had escaped assessment. The CIT(A) confirmed the initiation of reassessment proceedings, but the assessee withdrew the appeal challenging this portion of the order.

4. Proof of Identity, Genuineness, and Capacity of the Creditor:
The CIT(A) and the Tribunal found that the assessee had adequately proved the identity of the creditor, genuineness of the transaction, and capacity of the creditor. The creditor, Sh. Naresh Kapoor, was maintaining a bank account and was assessed to income-tax with a substantial income. The loan transactions were verified from bank records, and there was no evidence to suggest that the assessee had given unaccounted money to the creditor to obtain bank drafts. The Tribunal agreed with the CIT(A) that the Revenue's case, based on surmises and conjecture, was rightly rejected.

Conclusion:
The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 3,15,000 as unproved cash credits, confirming that the assessee had provided sufficient evidence to prove the loan transactions. Both the appeals were dismissed.