2023 (1) TMI 1172 - AT - Income Tax

Tribunal upholds deletion of income under IT Act, finding transactions with specific companies legitimate.

DCIT, Central Circle : 19, New Delhi Versus M/s. Ramji Lal Investments Pvt. Ltd.

The Tribunal dismissed the Revenue's appeal against the deletion of Rs.5,00,00,000 added as income from undisclosed sources under section 68 of the IT Act ... Income from undisclosed source u/s 68 - creditworthiness & genuineness of the transactions remain unproved as the two companies from whom advances have shown to received had meager income not capable to advance such huge amount - AO while making the addition has mentioned that the ‘assessee has not furnished the necessary detail for ascertaining identity of the person and genuineness of advance received,’ accordingly, made addition u/s 68 - CIT(A) has deleted the addition made by the A.O - HELD THAT:- As found that the assessee had filed loan confirmations with address, bank statement of the two parties i.e Vedanga Vinimoy Pvt. Ltd. and M/s R. R. Dealers Pvt. Ltd. showing the payment to the assessee and the photo copies of the income tax return of the said two parties. During the course of assessment proceedings vide letter dated 16/11/2015. However no enquiries were made by the A.O. during the course of the assessment proceedings. As found that the Ld. A.O. has made necessary enquires during the remand proceedings to verify the genuineness of the advance of 5,00,00,000/- received by the assessee from the above said two parties. The Ld. A.O. has also issued notice u/s 133(6) of the act to the aforesaid creditors. The above said parties have duly acknowledged the notice issued u/s 133(6) of the Act and thereafter they have sent their confirmation, final account and ITR for the Assessment Year 2013-14. There were no adverse comment or finding has been made by the A.O. on the above said parties. Besides the same, the assessee had proved the identity, creditworthiness and genuineness of the two parties in relation to the advance in question. We are of the opinion that there is no error or legal infirmity in the order of the Ld.CIT(A) in deleting the addition made by the A.O - Decided against revenue. Issues:Appeal against deletion of addition of Rs.5,00,00,000 as income from undisclosed sources u/s 68 of the IT Act - Creditworthiness & genuineness of transactions questioned - Assessment year 2013-14.Analysis:1. The appeal was filed by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals) for assessment year 2013-14. The Revenue challenged the deletion of the addition of Rs.5,00,00,000 made under section 68 of the IT Act, citing lack of proof regarding creditworthiness and genuineness of transactions with two companies. 2. The case originated from a search and seizure action under section 132 of the Income Tax Act, 1961, conducted on the business premises of Sharp Group cases. The assessment order u/s 153A/143(3) was completed, adding Rs.5,00,00,000 as the assessee's income from undisclosed sources. The CIT (A) later deleted this addition, leading to the Revenue's appeal.3. The Revenue contended that the two companies involved had meager income, raising doubts on their capability to provide the substantial advances. However, the assessee argued that it had proven the identity, creditworthiness, and genuineness of the parties, M/s Vedanga Vinimoy Pvt. Ltd. and M/s R P Dealers Pvt. Ltd., urging for the appeal's dismissal. 4. During the proceedings, the Assessing Officer (A.O.) had raised concerns about the lack of details to ascertain the identity and genuineness of the advances received. The assessee provided necessary details during assessment, asserting that the initial onus under section 68 of the Act was discharged. The A.O. did not further investigate to disprove this.5. The CIT (A) called for a remand report to verify the details submitted by the assessee. The A.O. conducted inquiries and issued notices under section 133(6) to the creditors, who responded with relevant documents. The A.O. did not make adverse findings on the parties' identity, creditworthiness, and genuineness.6. After reviewing the remand report, the CIT (A) deleted the addition, noting that the assessee had provided loan confirmations, bank statements, and income tax returns of the parties involved. The A.O. had made necessary inquiries during the remand proceedings, and the creditors' responses further supported the genuineness of the transactions.7. The Tribunal found no error or legal infirmity in the CIT (A)'s decision to delete the addition, as the assessee had sufficiently proved the identity, creditworthiness, and genuineness of the transactions. Therefore, the appeal filed by the Revenue was dismissed.