2015 (2) TMI 1171 - AT - Income Tax

Addition u/s 68 - proof of genuineness of the transaction - Held that - Hon ble Calcutta High Court in the cases Bharati Private Limited, 1977 (7) TMI 49 - CALCUTTA High Court and United Commercial & Industrial Company Pvt. Ltd., 1989 (5) TMI 18 - CALCUTTA High Court , in which the Hon ble High Court held that for proving the ingredients under section 68 of the Act, the assessee shall have to prove the identity of the creditors, their capacity and genuineness of the transaction in the matter. Mere filing of the confirmation is not enough to prove the genuineness of the credits in the matter. In view of the above, we are of the view that the learned CIT (Appeals) was justified in refusing to admit the additional evidence because mere confirmation could not establish anything in favour of the assessee. Further no reason has been explained as to why the confirmation of the donors were not filed before the Assessing Officer. The Hon ble Supreme Court in the case of Durga Prasad More 1971 (8) TMI 17 - SUPREME Court and in the case of Sumati Dayal 1995 (3) TMI 3 - SUPREME Court held that Courts of Tribunals have to judge the evidence before them by applying the test of human probabilities . If the said test is applied in this matter, it is clearly established that the assessee has failed to prove genuine gifts in the matter - Decided against assessee

Issues Involved:
1. Condonation of delay in filing appeals.
2. Non-admission of additional evidence under Rule 46A.
3. Addition under Section 68 of the Income Tax Act for unexplained gifts.
4. Addition under Section 68 for sundry creditors and unexplained credits.

Detailed Analysis:

1. Condonation of Delay in Filing Appeals:
The appeals were time-barred by 17 days. The assessee explained the delay due to the Chartered Accountant being busy and the assessee's health issues. The Tribunal considered the explanation reasonable and condoned the delay, allowing the appeals to proceed.

2. Non-Admission of Additional Evidence under Rule 46A:
The assessee sought to introduce additional evidence before the Commissioner of Income Tax (Appeals) [CIT(A)], which was not presented during the assessment stage. The CIT(A) refused to admit this evidence, citing that no exceptional reasons were provided for the delay. The Tribunal upheld this decision, emphasizing that the conditions of Rule 46A were not satisfied, and mere filing of confirmations was insufficient to prove genuineness.

3. Addition under Section 68 of the Income Tax Act for Unexplained Gifts:
The assessee received cash gifts totaling Rs. 5,25,000 from three individuals. The Assessing Officer (AO) required confirmations, bank statements, and other documents to verify the genuineness of these gifts. The assessee failed to provide sufficient evidence or produce the donors for verification. The CIT(A) and the Tribunal found that the assessee could not establish the identity, capacity, and genuineness of the donors. The Tribunal cited several case laws, including CIT Vs Anil Kumar and CIT Vs P. Mohankala, to support the decision that the gifts were not genuine and were arranged affairs. Consequently, the addition of Rs. 5,25,000 was upheld.

4. Addition under Section 68 for Sundry Creditors and Unexplained Credits:
The AO noted sundry creditors amounting to Rs. 7,97,600 in the assessee's books, out of which Rs. 5,80,000 lacked confirmation or documentary evidence. The AO also found an unexplained credit of Rs. 2,50,000 from Shri Guljari Lal. The assessee failed to provide purchase vouchers or sufficient evidence to support these credits. The CIT(A) and the Tribunal upheld the additions, noting that the assessee booked bogus purchases and failed to prove the genuineness of the credits. The Tribunal emphasized that mere filing of confirmations was not enough, and the assessee did not satisfy the conditions of Rule 46A for additional evidence.

Separate Judgments:
- ITA No.743/Chd/2014: The Tribunal upheld the addition of Rs. 5,80,000 for sundry creditors and Rs. 2,50,000 for unexplained credits, citing lack of sufficient evidence and non-compliance with Rule 46A.
- ITA No.744/Chd/2014: The Tribunal upheld the addition of Rs. 1,00,000 for credit in the name of Shri K.C.Bansal, noting that the loan was given through a cheque after depositing cash on the same day, which did not prove the genuineness of the transaction.

Conclusion:
The Tribunal dismissed all three appeals, emphasizing the importance of providing sufficient evidence to prove the genuineness of transactions and the necessity of complying with procedural rules for admitting additional evidence. The decisions were based on established legal principles and case laws, ensuring that the assessee failed to discharge the onus of proof required under Section 68 of the Income Tax Act.

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