2012 (7) TMI 616 - AT - Income Tax

Tribunal upholds Commissioner's deletions of unexplained cash credits under Income Tax Act Sections 68 and 69

Income Tax Officer Versus Sh. Naveen Aggarwal,

The Tribunal upheld the deletions made by the Ld. Commissioner of Income Tax (Appeals) regarding unexplained cash credits under Sections 68 and 69 of the ... Addition - unexplained cash credits under section 68 of the Income Tax Act - genuineness of the sundry creditors - Commissioner of Income Tax (Appeals) held that in his opinion addition could not have been made u/s. 68 of those amounts which appear as opening balances on 1.4.2006, which were as follows - examination of the earlier year’s accounts show regular business dealings – addition deleted Addition - unexplained cash credits under section 69 of Income Tax Act - assessee has furnished the confirmations – Held that:- Bank accounts have been produced to show that the amount have been received by cheque - considering that the amounts have been confirmed by the parties concerned, the additions deleted. Addition - unexplained cash credits under section 68 of Income Tax Act - assessee has received advances/ payments by cheque during the year - Commissioner of Income Tax (Appeals) held that the payments were received by cheque and the transactions appear to be in nature of regular business dealings – Held that:- Assessee was prevented by sufficient cause from submitting the evidences during the assessment proceedings - no infirmity in the order of the Ld. Commissioner of Income Tax (Appeals) in deleting the addition - appeal filed by the Revenue stands dismissed. Issues Involved:1. Deletion of addition of Rs. 20,06,556/- as unexplained cash credits under Section 68 of the Income Tax Act, 1961.2. Deletion of addition of Rs. 8,06,805/- as unexplained cash credits under Section 69 of the Income Tax Act, 1961.3. Deletion of addition of Rs. 1,65,968/- in the case of M/s Super Casting as unexplained cash credits under Section 68 of the Income Tax Act, 1961.Detailed Analysis:Issue 1: Deletion of Addition of Rs. 20,06,556/- as Unexplained Cash Credits under Section 68The Assessing Officer made additions of Rs. 20,06,556/- as unexplained cash credits under Section 68, questioning the genuineness of sundry creditors. The Ld. Commissioner of Income Tax (Appeals) admitted additional evidence under Rule 46A due to the assessee's financial and domestic difficulties, which prevented timely submission of evidence during assessment proceedings. The Commissioner found that these amounts were opening balances as of 1.4.2006 and could not be treated as unexplained cash credits for the assessment year 2007-08. The Commissioner noted regular business dealings and confirmed that the amounts were received by cheque in previous financial years. The Tribunal upheld the Commissioner's decision, citing relevant case laws, and found no infirmity in deleting the addition.Issue 2: Deletion of Addition of Rs. 8,06,805/- as Unexplained Cash Credits under Section 69The Assessing Officer made an addition of Rs. 8,06,805/- under Section 69, questioning the genuineness of cash credits. The Ld. Commissioner of Income Tax (Appeals) admitted additional evidence and noted that the assessee provided confirmations from the parties involved. The Commissioner observed that the bank accounts showed amounts received by cheque, confirming the transactions. The Tribunal agreed with the Commissioner's findings, noting that the confirmations and cheque payments substantiated the genuineness of the transactions, and upheld the deletion of the addition.Issue 3: Deletion of Addition of Rs. 1,65,968/- in the Case of M/s Super Casting under Section 68The Assessing Officer made an addition of Rs. 1,65,968/- under Section 68 in the case of M/s Super Casting. The Ld. Commissioner of Income Tax (Appeals) found that the assessee received advances/payments by cheque and made sales during the year. The Commissioner noted that the transactions appeared to be regular business dealings and treated the credit balance as genuine. The Tribunal upheld the Commissioner's decision, agreeing that the payments were received by cheque and the transactions were genuine.ConclusionThe Tribunal dismissed the Revenue's appeal, confirming the deletions made by the Ld. Commissioner of Income Tax (Appeals) for the following reasons:- The amounts in question were opening balances and could not be treated as unexplained cash credits for the assessment year 2007-08.- The assessee provided sufficient confirmations and evidence of cheque payments, substantiating the genuineness of the transactions.- The transactions were regular business dealings and were appropriately documented.Order pronounced in the open court on 25/5/2012.