Addition of Unexplained Cash Credit not sustained when Creditworthiness and genuineness of Transaction proven: ITAT [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) ruled that the addition of unexplained cash credit does not sustain when the creditworthiness and genuineness of the transaction are proven.

The Assessee was represented by Shri C.S. Anand and the Revenue was represented by Shri Abhishek Kumar.

The assessee appealed against the order dated 04.05.2017 of the CIT(A), Meerut, relating to Assessment Year 2012-13.

The assessee stated that the AO has pressurized the depositors for not recording the statements and warned of dire consequences if done so in their income tax returns where all depositors, in their statements, accepted to have given loans to the assessee. 

Further contended by the assessee that he had furnished addresses of all individual creditors and it would be clear that the identity of the lenders, credit worthiness of the lenders and the genuineness of the transaction have been established as per the requirement of section 68 of the Act. 

The CIT(A) has allowed the part claim of the assessee about four creditors and granted relief to the assessee amounting to Rs.11,10,000/.

It was observed that the authorities below have disputed credit entries of Rs.14,25,000/- from eight creditors with amounts between Rs.65,000/- to Rs.2,10,000/- and all creditors were relatives/friends of the assessee. Without bringing out any adverse or cogent material to dispute the credit worthiness of the creditors and genuineness of the transactions, no addition could have been made in the hands of the assessee treating the same as unexplained cash credit u/s 68 of the Act. 

Shri Shamim Yahya, accountant member and Shri C M Garg, judicial member declined to accept the reasoning recorded by the CIT(A and allowed the appeal of the assessee by deleting the entire addition confirmed by the CIT(A).

To Read the full text of the Order CLICK HERE

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