2023 (6) TMI 870 - AT - Income Tax

Tribunal upholds CIT(A) decision, deletes AO's additions, finds evidence genuine.

ACIT, Central Circle-28, New Delhi. Versus Solitaire World Pvt. Ltd.

The Tribunal upheld the Ld. CIT(A)'s decision to delete all additions made by the AO, including unexplained transactions, cash credits, and cash deposits. ... Unexplained cash deposits - Unverifiable and unexplained Transactions - accommodation entries - Assessee company failed to discharge its onus - CIT-A deleted the addition - HELD THAT:- CIT(A) deleted the additions on appreciation of the evidences furnished by the assessee, considering the remand report as well as the rejoinder of the assessee and, therefore, we do not see any valid reason to interfere with the findings of the Ld.CIT(A) in deleting the above additions. Thus, we sustain the order of the Ld.CIT(A) and reject the grounds raised by the Revenue. Issues Involved:1. Deletion of addition of Rs. 5,65,88,512/- on account of unexplained transaction.2. Deletion of addition of Rs. 25,84,23,427/- u/s 68 on account of unexplained cash credits.3. Deletion of addition of Rs. 1,25,00,000/- on account of unexplained cash deposits.4. Validity of deletion of additions related to a search conducted on Shree Raj Mahal Group of jewellers.5. Validity of deletion of additions without considering the rejection of an application by SRM Group before the ITSC.Summary:1. Deletion of Addition of Rs. 5,65,88,512/- on Account of Unexplained Transaction:The Assessing Officer (AO) added Rs. 5,65,88,512/- as unexplained expenditure due to unverifiable transactions with M/s Radha Jewellery House. The Ld. CIT(A) deleted the addition, noting that the assessee provided ledger accounts, bank statements, invoices, and stock registers proving genuine transactions. The payments were made through banking channels, and VAT/sales tax documents were also submitted. The Ld. CIT(A) concluded that the AO was not justified in making the addition.2. Deletion of Addition of Rs. 25,84,23,427/- u/s 68 on Account of Unexplained Cash Credits:The AO treated trade liabilities of Rs. 25,84,23,427/- as unexplained cash credits u/s 68 due to non-furnishing of details by the assessee. The Ld. CIT(A) deleted the addition, noting that the liabilities were trade-related and payments were made in the subsequent year through banking channels. The Ld. CIT(A) cited various case laws supporting that section 68 does not apply to trade creditors and concluded that the AO was not justified in making the addition.3. Deletion of Addition of Rs. 1,25,00,000/- on Account of Unexplained Cash Deposits:The AO added Rs. 1,25,00,000/- as unexplained cash deposits due to lack of substantiation by the assessee. The Ld. CIT(A) deleted the addition, noting that the assessee provided cash book copies showing cash sales corresponding to the deposits. The Ld. CIT(A) concluded that the source of cash was substantiated with necessary documents, and the AO was directed to delete the addition.4. Validity of Deletion of Additions Related to a Search Conducted on Shree Raj Mahal Group of Jewellers:The AO made additions based on a search conducted on Shree Raj Mahal Group, alleging unexplained transactions. The Ld. CIT(A) deleted these additions, noting that the assessee provided sufficient evidence to substantiate the transactions. The Ld. CIT(A) found that the transactions were genuine and verifiable.5. Validity of Deletion of Additions Without Considering the Rejection of an Application by SRM Group Before the ITSC:The AO made additions citing the rejection of an application by SRM Group before the ITSC. The Ld. CIT(A) deleted these additions, noting that the assessee provided sufficient evidence to substantiate the transactions. The Ld. CIT(A) found that the transactions were genuine and verifiable.Conclusion:The Tribunal upheld the order of the Ld. CIT(A) in deleting all the additions made by the AO, finding no valid reason to interfere with the findings. The appeal of the Revenue was dismissed.