2016 (4) TMI 36 - AT - Income Tax

Unsecured loan credits treated as unexplained cash credits u/s 68; addition deleted after confirmations and bank trail proved.

The dominant issue was whether unsecured loan credits could be added as unexplained cash credits. The Tribunal held that the assessee discharged the ... Addition of unsecured loans - Held that:- The appellant has filed confirmation, copy of PAN card, copy of bank statement, cheque nos., copy of passport with residence for UAE and affidavit explaining source of income and details of transactions. Identity of Shri Pankaj Kapoor is established by the name, address, PAN and confirmation. PAN is enough to prove the identity of a person. Genuineness of the transactions is also fully established by the fact that the transaction is duly confirmed by the creditor and the amount is received by Alc Payee cheques which are duly debited in the bank account of the creditor which has confirmed the same. As regards creditworthiness, it is very clear from the affidavit itself that Shri Pankaj Kapoor is deriving income from proprietorship business under the name and style Mls Oracle General Trading having its business address as - P. O. Box - 64834, Dubai, UAE. As also examined the bank account of the creditor with centurion bank of Punjab, Connaught Place, New Delhi which indicates debit of ₹ 50,00,000/- vide cheque no. 429301 in favour of Shri Vikrant Puri on 04/05/2006 in Alc no. 0011-408624-001. Similarly there are debit entries of ₹ 70,00,000/- vide cheque no. 429307 on 22/06/2006, ₹ 1,00,00,0001- vide cheque no. 429314 on 5/12/2006 and ₹ 1,00,00,000/- vide cheque no. 429315 on 12/12/2006 in the same account. Therefore, creditworthiness of the creditor is also fully established. Moreover, the AO has not brought any material on record to prove that credit is bogus which he failed to do. - Decided in favour of assessee Issues Involved:1. Admission of additional evidence under Rule 46A.2. Deletion of addition of Rs. 13,05,06,000/- of unsecured loans.Issue-wise Detailed Analysis:1. Admission of Additional Evidence under Rule 46A:The Department contended that the CIT(A) erred in admitting additional evidence under Rule 46A during the appellate proceedings, despite the assessee being given sufficient opportunity during the assessment proceedings. The Tribunal examined the process followed by the CIT(A), noting that the CIT(A) forwarded the additional evidence to the Assessing Officer (AO) for a report. The AO provided a remand report, and the assessee filed a rejoinder. The Tribunal observed that the AO did not provide further time for the assessee to submit evidence, despite having more than two weeks before passing the assessment order. The AO did not raise any further queries during the hearings and changed his mind only while passing the assessment order. The Tribunal found that the CIT(A) rightly admitted the additional evidence, as the assessee was not provided sufficient opportunity to present the relevant evidence during the assessment proceedings. The Tribunal upheld the CIT(A)’s decision to admit the additional evidence, citing the ITAT, Calcutta Bench decision in the case of ITO vs. Bajoria Foundation.2. Deletion of Addition of Rs. 13,05,06,000/- of Unsecured Loans:The Tribunal addressed the deletion of the addition of Rs. 13,05,06,000/- of unsecured loans, which the AO had added as unexplained loans from various persons. The CIT(A) had analyzed each loan in detail:a) M/s Arlington Impex Pvt. Ltd.:The AO added Rs. 6,07,00,000/- as unexplained credit. The CIT(A) found that the actual loan was Rs. 1,20,82,273/- and provided detailed documentation, including confirmations, bank statements, and audited accounts, establishing the identity, genuineness, and creditworthiness of the creditor. The Tribunal upheld the CIT(A)’s deletion of the addition.b) Mohan Exports India Pvt. Ltd.:The AO added Rs. 1,80,00,000/- due to lack of confirmation. The CIT(A) accepted additional evidence, including confirmations, bank statements, and IT returns, establishing the identity, genuineness, and creditworthiness of the creditor. The Tribunal upheld the deletion of the addition.c) Mohit Puri:The AO added Rs. 1,10,00,000/- questioning the creditworthiness and genuineness. The CIT(A) accepted additional evidence, including employment details, bank statements, and confirmations, establishing the identity, genuineness, and creditworthiness. The Tribunal upheld the deletion.d) Neelam Mohan:The AO added Rs. 80,00,000/- treating it as an unsecured loan. The CIT(A) found that the amount was related to a property transaction and not a loan. The Tribunal upheld the deletion.e) International Building & Furnishing Co.:The AO added Rs. 1,50,000/- which was already accounted for in a previous assessment year. The Tribunal upheld the deletion.f) Kush Puri:The AO added Rs. 3,50,000/- which was also accounted for in a previous assessment year. The Tribunal upheld the deletion.g) Pankaj Kapoor:The AO added Rs. 3,20,00,000/- due to lack of confirmation. The CIT(A) accepted additional evidence, including confirmations, bank statements, and affidavits, establishing the identity, genuineness, and creditworthiness. The Tribunal upheld the deletion.h) Hari Impex Pvt. Ltd.:The AO added Rs. 3,06,000/- due to lack of confirmation. The CIT(A) accepted additional evidence, including confirmations, bank statements, and IT returns, establishing the identity, genuineness, and creditworthiness. The Tribunal upheld the deletion.The Tribunal concluded that the CIT(A) had thoroughly examined the evidence and provided a detailed and reasoned order for each loan, establishing the identity, genuineness, and creditworthiness of the creditors. The Tribunal upheld the CIT(A)’s order and dismissed the Revenue’s appeal.Conclusion:The Tribunal dismissed the Revenue’s appeal, upholding the CIT(A)’s order admitting additional evidence under Rule 46A and deleting the addition of Rs. 13,05,06,000/- of unsecured loans. The Tribunal found that the CIT(A) had provided a detailed and reasoned order for each loan, establishing the identity, genuineness, and creditworthiness of the creditors.