2013 (12) TMI 1715 - AT - Income Tax

High Court Upholds Deletion of Unexplained Cash Credits: Legal Analysis & Precedent

The High Court dismissed the revenue's appeal against the CIT(A)'s deletion of the addition of unexplained cash credits worth Rs. 14.75 lakhs. The CIT(A) ... - Issues involved:The appeal by revenue against the order of CIT(A) deleting the addition of unexplained cash credits worth Rs. 14.75 lakhs.Details of the Judgment:Issue 1: Addition of unexplained cash creditsThe revenue appealed against the CIT(A)'s deletion of the addition of Rs. 14.75 lakhs as undisclosed source, citing lack of creditworthiness of loan creditors. The AO added unsecured loans as income from undisclosed sources u/s. 68 of the Act due to insufficient evidence provided by the assessee. However, the CIT(A) observed that the appellant had submitted loan confirmations, PAN cards, bank statements, and replies to notices u/s. 133(6) from the loan creditors, establishing the genuineness of the loans. The CIT(A) found that the appellant fulfilled the onus of proving the identity and creditworthiness of the loan creditors, while the AO failed to provide any material casting doubt on the transactions. The High Court precedent emphasized that when the identity and genuineness of the transaction through account payee cheques are established, the AO should verify the transactions with the creditor, especially when the creditor is an income tax assessee. As the appellant provided complete details and followed the High Court's principle, the order of the CIT(A) was upheld, and the revenue's appeal was dismissed.Conclusion:The appeal by revenue was dismissed, and the order was pronounced on 24th Dec., 2013.