The Ahmedabad Bench of Income Tax Appellate Tribunal(ITAT)upheld the Commissioner of Income Tax Appeals[CIT(A)]’s ruling on unexplained cash credits, affirming the justified deletion of Rs. 2,14,53,435/- added under Section 68 of the Income Tax Act,1961.This decision relied on theAssessing Officer(AO)’s remand report, which accepted the genuineness of the transactions.
The Revenue-appellant contested an appeal against the order of the CIT(A) dated 18.05.2023, for the assessment year(AY) 2016-17. The appeal concerned the case of Minal Intermediates, the respondent-assessee, and revolved around the deletion of an addition of Rs. 2,14,53,435/- made by the AO under Section 68 of the Act, on account of unexplained cash credits.
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The AO had added the amount to the assessee’s income, asserting that it represented unsubstantiated creditors. The Revenue contended that the CIT(A) had erred in law and on facts by deleting the addition without properly considering that the assessee had failed to provide sufficient supporting evidence during the assessment proceedings.
They argued that the assessee had not furnished necessary documents before the AO, which justified the addition under Section 68.
However, the CIT(A) concluded that the assessee had submitted adequate documentation to substantiate the creditors, including copies of accounts, bills, confirmations, proof of payments, and VAT returns for the relevant period.
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Furthermore, during the remand proceedings, the AO had examined the original bills for two months, and no adverse remarks were made regarding the sundry creditors. In fact, the AO’s remand report did not dispute the authenticity of the transactions or provide any adverse findings on the outstanding balances.
The CIT(A) observed that the AO had, through the remand report, accepted the genuineness of the transactions and had not brought any adverse material to question the creditors’ legitimacy. As a result, the CIT(A) held that the addition made under Section 68 was not justified, since the AO had implicitly confirmed the validity of the creditors.
The Tribunal, after examining the records presented, noted that no adverse material had been brought to its attention. It observed that the remand report had explicitly confirmed the genuineness of the sundry creditors.
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The two member bench comprising Siddhartha Nautiyal(Judicial Member) and Dr.BRR Kumar(Accountant Member) based on this finding, concluded that no addition could be made concerning the discrepancies in the sundry creditors as alleged by the AO and upheld the order of CIT(A).
In conclusion the revenue’s appeal was dismissed.
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