2019 (10) TMI 1209 - AT - Income Tax

Tribunal rules in favor of appellant, directing deletion of unjustified credit additions

The Tribunal ruled in favor of the appellant in both cases involving unexplained credit additions. In the first case concerning M/s. J. J. Metals, the ... Addition as unexplained credit - HELD THAT:- Substantial amount has been explained by the assessee in the given situation and the Revenue has made addition with respect to small amount for which also, details were furnished by the assessee. DR could not controvert these facts. There is no doubt that the bona-fide intent of the assessee and genuineness of the transactions have been established by the assessee because all the transactions made by the assessee were through banking channels and evidences has also been submitted before the Revenue Authorities. In view of the matter, we set aside the order of the Ld. CIT(Appeals) and direct the Assessing Officer to delete the addition from the hands of the assessee. Income from undisclosed sources taking recourse to the provisions of Section 68/69 - Disallowance was made since there was some discrepancy regarding PAN - HELD THAT:- As per the remand report, correct PAN of the assessee is available with the file. This fact is not controverted by the Ld. DR nor any evidences were brought on record to show that the transactions done by the assessee were not genuine. In view of the contents of the remand report and the undisputed fact that correct PAN of the assessee is mentioned therein, the addition made in this count does not have legs to stand. Accordingly, we set aside the order of the Ld. CIT(Appeals) and direct the Assessing Officer to delete the addition Issues:1. Addition of Rs. 2,94,500 as unexplained credit for the year in the case of M/s. J. J. Metals.2. Addition of Rs. 3,00,000 as unexplained credit for the year in the case of M/s. Poonam Realtors.Analysis:Issue 1: Addition of Rs. 2,94,500 as unexplained credit for the year in the case of M/s. J. J. Metals:The appellant, a Private Limited Company, filed its income tax return for the relevant assessment year, declaring total income. The Assessing Officer noted a credit balance in the case of M/s. J.J. Metals, which was not proven by the appellant. Consequently, an addition was made to the income of the appellant under Section 68/69 of the Income Tax Act. The appellant contended before the Ld. CIT(Appeals) that the credit was a loan account, supported by a ledger entry, but lacked a confirmation letter from the creditor. The Ld. CIT(Appeals) allowed the addition of Rs. 2,94,500 while directing the deletion of the remaining balance. The Tribunal, after considering submissions and evidence, found that a substantial amount had been explained by the appellant through banking channels. It concluded that the transactions were genuine, and the addition of Rs. 2,94,500 was unjustified. Therefore, the Tribunal directed the Assessing Officer to delete this addition.Issue 2: Addition of Rs. 3,00,000 as unexplained credit for the year in the case of M/s. Poonam Realtors:The Assessing Officer observed a credit balance in the case of M/s. Poonam Realtors, which the appellant failed to prove, resulting in an addition to the income under Section 68/69 of the Act. During the First Appellate Proceedings, it was revealed that the credits were mistakenly recorded in the name of a different entity. Despite submitting evidence to prove the source and genuineness of the transactions, the Assessing Officer did not consider these documents. The Ld. CIT(Appeals) confirmed the addition of Rs. 3,00,000 due to lack of a confirmation letter and PAN details. However, during the Tribunal hearing, it was clarified that the correct PAN was available in the file. Considering this, along with the absence of evidence disputing the genuineness of the transactions, the Tribunal set aside the Ld. CIT(Appeals) order and directed the Assessing Officer to delete the addition of Rs. 3,00,000.In conclusion, the Tribunal allowed the appeal of the appellant in both instances, directing the Assessing Officer to delete the disputed additions from the appellant's income.