DCIT Vs Jayesh R. Thakkar (ITAT Ahmedabad)
ITAT Ahmedabad held that addition towards unexplained cash credit under section 68 of the Income Tax Act rightly deleted by CIT(A) as documentary evidences proving identity, creditworthiness of the parties and genuineness of the transaction were not proved to be defective by revenue.
Facts- The assessee is an individual and engaged in 3 separate business activities namely Share Trading business, Construction business, and Transportation business under different names and styles. The assessee in the business of share trading has shown the receipt of interest-free unsecured loans from different entities.
AO disagreed with the contention of the assessee and held that the assessee failed to explain the source of the sum credited in his books and accordingly treated the entire sum of Rs. 7,80,19,000/- as unexplained cash credit under section 68 of the Act.
CIT(A) deleted the addition made by AO in part for Rs. 6,73,19,000/-. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that in our considered view the identity, creditworthiness of the parties and genuineness of the transaction were established by the assessee based on the documentary evidence but the revenue without pointing out any defect in such documents has decided the issue against the assessee based on the commission report. As such it is the onus upon the revenue to disprove the materials/documents submitted by the assessee in support of the transactions in dispute based on cogent reasons. But the same has not been done by the revenue in the objective manner. Likewise, it is also a fact on records that the revenue has taken some statements from the 3rd party which were not provided to the assessee for the rebuttal. It is the settled law that the third-party statement cannot be used against the assessee until and unless the opportunity of cross-examination is afforded to the assessee. In view of the above facts and after considering the necessary details discussed above, we do not find any reason to interfere in the finding of the learned CIT-A.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This is an appeal filed by the Revenue against the order of the ld. Commissioner of Income Tax, CIT(A)-4, Vadodara, in the proceeding u/s 250 vide dated 03/09/2015 passed for the assessment year 2011-12.
2. The Revenue has raised the following grounds of appeal:
“l. On the facts and in the circumstances of the case and in law, the Ld.CIT(Appeals) erred in deleting the additions of Rs.67319000/-out of total additions of Rs.78019000/- made u/s. 68 of the Income tax Act, 1961 without appreciating the findings of AO and not considering the fact that the assessee has failed to establish the identity and creditworthiness of the cash creditors as well as the genuineness of transactions during the assessment proceedings.”
2. The appellant craves leave to add to, amend or alter the above grounds as may be deemed necessary.
Relief claimed in appeal
It is prayed that the order of the CIT (Appeals) be set aside and that of the Assessing Officer be restored.”
3. The only issue raised by the revenue is that the learned CIT(A) erred in deleting the addition of unexplained cash credit in the form of unsecured loans for Rs. 6,73,19,000/- under section 68 of the Act.
4. The facts in brief are that the assessee is an individual and engaged in 3 separate business activities namely Share Trading business, Construction business and Transportation business under different name and style. The assessee, for each business activity, is also maintaining separate books of accounts. The assessee in the business of share trading has shown receipt of interest free unsecured loans from different entities detailed as under:
