1993 (10) TMI 129 - AT - Income Tax

Tribunal rules in favor of assessees in cash credit dispute, dismissing Department's objections

The Tribunal ruled in favor of the assessees in a case involving disputes over cash credits introduced under an amnesty scheme. The assessees successfully ... - Issues involved:The judgment involves appeals and cross objections arising from orders of the CIT(A) for different assessees of the same group for the assessment year 1988-89.Issue 1 - Amnesty Scheme Cash Credits Dispute:The assessees, registered firms based at Ujjain, faced additions to their income due to cash credits introduced under the amnesty scheme. The Department disallowed these credits, leading to disputes. The assessees argued that the cash credits were legitimate, supported by the creditors' amnesty returns and other evidence. The Department contended that the credits lacked creditworthiness and genuineness. The Tribunal analyzed the provisions of section 68 of the IT Act, emphasizing the need for the assessee to explain the sources of cash credits, genuineness of transactions, and creditor identities. The Tribunal found that the assessees had met these requirements, and the Department failed to provide evidence of unaccounted money introduction. Relying on case law and the amnesty circular, the Tribunal ruled in favor of the assessees, allowing their appeals and dismissing the Department's objections.Issue 2 - Addition on Account of Low GP:In appeals ITA No. 516 & 517/Ind/91, the sole issue was the addition due to low gross profit (GP). The AO did not identify any defects in the books of accounts to justify rejecting the disclosed books. After deliberation, the Tribunal found no merit in the Department's case and deleted the addition, ruling in favor of the assessees.Conclusion:The Tribunal allowed all the assessees' appeals except ITA No. 515/Ind/91, where the appeals were dismissed along with the cross objections filed by both the Department and the assessees.