2017 (7) TMI 200 - AT - Income Tax

Tribunal emphasizes verification in unsecured loans & cash credits cases under IT Act

Income-tax Officer, Ward 12 (4), New Delhi Versus Himland Real Estate Pvt. Ltd.

The Tribunal partly allowed the Revenue's appeal for statistical purposes, emphasizing the importance of thorough verification and documentation in cases ... Additions on account of unsecured loans - Held that:- CIT(A) has accepted the cash flow statement submitted by the assessee without considering the remand reports submitted by AO on this account. CIT(A) has not even referred to any of the above remand reports in the impugned order in spite of the fact the verification of the additional document, i.e., cash flow statement etc. was directed by him to be verified by the AO with reference to the books of accounts. We, therefore, find that the matter requires re-adjudication at the stage of ld. CIT(A). Accordingly, the order of the ld. CIT(A) deserves to be set aside and this issue is restored to his file for deciding the same afresh by way of speaking order as per law after considering all the facts and evidences available on record as well as reported by the AO Unexplained cash credits u/s. 68 - Held that:- CIT(A) supported by evidences on record as referred to by the first appellate authority, we find no justification to interfere with the deletion of this addition. The ld. DR could not be able to rebut the findings given by the CIT(A) on this issue nor is there any material available on record to discard the same. Issues:1. Addition of unsecured loans and unexplained cash credits under section 68 of the IT Act, 1961 for the assessment year 2008-09.Detailed Analysis:Issue 1: Addition of &8377; 1,00,58,898/- alleged to have been received from Mrs. Mamta ChoudharyThe AO added the amount as unexplained cash credit under section 68 of the Act, doubting the creditworthiness of Mrs. Mamta Choudhary. The AO raised concerns regarding the source of funds and the credibility of the transactions. The CIT(A) accepted the explanations provided by the assessee, including the cash flow availability of Mrs. Choudhary and the details of the funds received. The CIT(A) held that all conditions under section 68 were satisfied and deleted the addition. The Revenue appealed to the Tribunal, challenging the deletion. The Tribunal noted that the cash flow statement submitted by the assessee was crucial, but the AO's remand reports highlighted the failure to verify the documents and cash flow statement. The Tribunal set aside the CIT(A)'s order and restored the issue for fresh adjudication, emphasizing the need for a detailed examination of all facts and evidence.Issue 2: Deletion of addition of &8377; 1,91,17,339/- made on account of unexplained cash creditsThe AO added the amount as unexplained cash credit under section 68 of the Act, related to advances received from Mr. Kishore Kainth and M/s. Himland (U.K). The assessee provided agreements, cancellation agreements, and court orders to support the genuineness of the transactions. The CIT(A) reviewed the evidence and deleted the addition, concluding that the transactions were genuine and supported by documentation. The Tribunal upheld the CIT(A)'s decision, noting the lack of evidence to challenge the findings. The Revenue's appeal on this issue was dismissed.In conclusion, the Tribunal partly allowed the Revenue's appeal for statistical purposes, emphasizing the importance of thorough verification and documentation in cases involving unsecured loans and unexplained cash credits under section 68 of the IT Act, 1961.