2014 (11) TMI 560 - HC - Income Tax

Unexplained cash credits u/s 68 Onus discharged by assessee - Facts properly appreciated or not - Held that - The Tribunal rightly observed that if the AO has failed to notice the credits in the preceding year, perhaps because the assessment was made u/s 143(1) that does not preclude the Officer from scrutinising the accounts in the subsequent AY - the addition had been made by the AO on the basis of the credits appearing in the books of accounts of the assessee - no credence can be given to the statement filed before the revenue authorities regarding payments having been made to the labourers during the year under appeal relating to the earlier s outstandings - only peak entry of the payment made to the labourers till the last date of accounting year is made and actual dates of payments are not known. Relying upon Murlidhar Lahorimal Versus Commissioner of Income-Tax 2005 (11) TMI 32 - GUJARAT High Court - The primary onus which rested with the assessee stood discharged - if the revenue was not satisfied with the source of the funds in the hands of the donor, it was upto the revenue to take appropriate action - the assessee produces relevant documents as evidence to establish genuineness of the credits, much needed relief is required to be given to the assessee - the Tribunal has observed that only one labourer was produced before the AO and the Tribunal discharged the onus on the assessee so far as this labourer was concerned - since no other labourer was produced before the officer, the credits for those entries could not be given the order of the Tribunal is upheld Decided against assessee.

Summary

Issues:
Challenge to addition of Rs. 3,00,000 under section 68 of the Income Tax Act for assessment year 1993-94.

Analysis:
1. The appellant contested the addition of Rs. 3,00,000 under section 68 of the Act for the assessment year 1993-94. The Assessing Officer initially assessed the total income at Rs. 4,53,580, which was challenged by the appellant before CIT(A)-II. The CIT(A) allowed the appeal and deleted the addition made under section 68. However, the Tribunal partly allowed the appeal filed by the respondent and restored the order passed by the Assessing Officer, leading to the current appeal by the assessee.

2. The appellant argued that the Tribunal erred in upholding the addition without properly appreciating facts and the applicability of section 68. The appellant emphasized that no money was received from the concerned parties, and all outstanding liabilities were cleared by payments to the labourers by March 1994. Reference was made to a previous court decision to support this argument.

3. On the contrary, the revenue's advocate contended that the appeal lacked merit and should be dismissed. It was highlighted that the onus was on the assessee to provide documents and prove that the transaction was not bogus. A court precedent was cited to support this stance.

4. The Tribunal observed that the Assessing Officer could scrutinize accounts in subsequent assessment years even if credits were not noticed in previous assessments. The addition was based on credits in the assessee's books for the relevant year. After reviewing the records, the Tribunal upheld the addition, noting that only peak entries of payments to labourers were recorded, and actual payment dates were unknown.

5. The court referred to previous judgments to emphasize the importance of establishing the genuineness of credits. It was noted that the Tribunal discharged the onus regarding one labourer produced before the Assessing Officer but could not verify credits for other entries due to lack of evidence. Consequently, the Tribunal upheld Rs. 89,000 as the correct credit, ruling in favor of the revenue and against the assessee.

6. In conclusion, the appeal was dismissed with no costs, affirming the Tribunal's decision on the addition under section 68 of the Income Tax Act for the assessment year 1993-94.