Tribunal decides foreign remittance as loan, not income; unexplained cash credit added to total income.

The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 3,52,33,234/- made on foreign remittance from LTC College London, confirming it as a loan, not income. The remaining unexplained cash credit of Rs. 66,12,213/- was added to the total income. Additionally, the CIT(A) deleted the addition of Rs. 1,34,19,000/- made on unexplained cash credit, as the sources were explained, and only added Rs. 8,81,000/- for lack of explanation. The Tribunal found no reason to interfere and dismissed the Revenue's appeal.

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Issues Involved:
1. Deletion of addition of Rs. 3,52,33,234/- made on Foreign Remittance from LTC College London.
2. Deletion of addition of Rs. 1,34,19,000/- made on unexplained cash credit.

Issue-wise Detailed Analysis:

1. Deletion of Addition of Rs. 3,52,33,234/- Made on Foreign Remittance from LTC College London:

The Revenue challenged the deletion of an addition of Rs. 3,52,33,234/- made by the Assessing Officer (AO) on account of foreign remittance from LTC College London (LTCC), which the AO initially treated as income. The AO believed that the remittance was commission income, not a loan, based on the bank's account statements. However, upon further verification, it was revealed that the actual amount received was Rs. 4,18,45,447/-, not Rs. 4,65,53,146/-. The difference of Rs. 47,07,699/- was stated to be a liability, not an unsecured loan.

The CIT(A) observed that the AO should verify whether the amount of Rs. 47,07,699/- was indeed a liability. If confirmed, it should be deleted. The CIT(A) noted that the AO, in his remand reports dated 26.3.2015 and 11.6.2015, confirmed that LTCC was the remitter of Rs. 3,52,33,234/- through banking channels, and no services were rendered by the assessee to LTCC. Thus, the amount of Rs. 3,52,33,234/- was confirmed as a loan, not income.

The CIT(A) concluded that the remaining amount of Rs. 66,12,213/- was unexplained and should be added to the total income as unexplained cash credit under Section 68 of the Income Tax Act. The addition of Rs. 3,52,33,234/- was deleted based on the remand reports confirming the identity and genuineness of the transaction.

2. Deletion of Addition of Rs. 1,34,19,000/- Made on Unexplained Cash Credit:

The AO observed cash deposits of Rs. 1.43 crores in the assessee's bank accounts and questioned the source. The assessee contended that these deposits were made from cash withdrawals and provided a reconciliation statement. The CIT(A) analyzed the reconciliation and called for remand reports from the AO, which did not provide any adverse findings against the reconciliation.

The CIT(A) noted that the assessee had filed a reconciliation of cash entries with the cash book, explaining each deposit. The AO, in his remand reports dated 26.3.2015 and 11.6.2015, did not dispute the sources of the cash deposits. Consequently, the CIT(A) deleted the addition of Rs. 1,34,19,000/- as explained and confirmed the remaining addition of Rs. 8,81,000/- for want of explanation.

Conclusion:

The Tribunal upheld the CIT(A)'s order, finding no reason to interfere. The CIT(A)'s decisions were based on remand reports that confirmed the genuineness of the transactions and the explanations provided by the assessee. The appeal of the Revenue was dismissed.

Pronounced in the Open Court on 29th January, 2019.

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