Gujarat High Court: Once Assessee Shows Genuineness Of Transactions, No Additions Can Be Made

The Gujarat High Court in the case PCIT Versus M/s. Neotech Education Foundation observed and has held that the assessee has discharged the primary onus to prove the creditworthiness of the transaction. The division bench headed by Justice Sonia Gokani and Justice Sandeep N. Bhatt in the case observed that the initial burden, even if not discharged at the level of the assessing officer and can be discharged by the production of documents before the CIT (Appeals), where it has called for two remand reports. Therefore, every transaction has been made up through a banking channel and there being no such reason to also question the creditworthiness. In the present case, the appellant/assessee company is operating as an educational institution. Therefore, a survey operation was being carried out on the premises of the assessee, and the incriminating materials which reflects the payments of unaccounted cash which are being made for the land as well as unaccounted expenses incurred which were being found. However, It has been observed by the court that the entries are compared by the assessing officer with the payment details as per the books of accounts and found that the payment schedules to have been followed on the page which have been found. In the absence of any signature against the payment, thus, it the assessing officer concluded that since before the date, the cheque payments were being made, even the cash payments must have been made as per the schedule and the Assessing Officer assessed Rs. 5.68 crores as being an unexplained investment as it is stated under Section 69B and Rs. 1.35 crores has been added. It has closely been examined by the CIT (Appeals) and has also admitted the additional evidence furnished by the assessee. It has been held by the Assessing Officer after calling for the remand reports that there was no such evidence found during the survey in the case of the appellant and, during the course of the said search and in the case of the directors of the company. Further, it has been contended by the assessee that the monies were being received and subsequently been repaid through the bank transfers or account payee cheques, and they had also been recorded of in the books of accounts. It has also been confirmed by the lenders the transactions, and thus, the onus is of the said deposit has been discharged by the company Accordingly, the court held that no additions can be made, once the identity, genuineness of transactions, and creditworthiness have been established.