2015 (5) TMI 778 - AT - Income Tax

Unaccounted cash credit - as per assessee the amount reflects advances received from the customers in respect of supply made to them - CIT(A) confirmed addition - Held that - Assessee could not place any evidence on record to justify the sales after three years from the receipt of advances. No one can give advance against purchases to be effected after three years. If that be the case, there would have been certain correspondence between the assessee and the purchaser. But neither confirmation nor any evidence was filed to prove the genuineness of the claim. In the absence of any confirmation and other relevant evidence, we find no infirmity in the order of the ld. CIT(A) on this issue and we accordingly confirm the same. - Decided against assessee. Unexplained investments - CIT(A) confirmed addition - Held that - Since the assessee has not placed any evidence on record to explain the source of these assets, we find no infirmity in the order of the ld. CIT(A). Copy of the surrender statement of Shri Kailash Nath Singh Patel is also available on record, wherefrom it is observed that he has made a surrender item-wise under different heads for different assessment years. Since there is no reference with regard to the investment in the assessee s proprietary concern, no benefit can be given. Accordingly, we find no merit in the assessee s contentions. - Decided against assessee. Unexplained investment in stock of goods - CIT(A) confirmed the addition - Held that - Similar is the position before us, as no confirmation was filed to establish that the stock was purchased on credit basis. Therefore, we find no infirmity in the order of the ld. CIT(A), who has rightly confirmed the addition.- Decided against assessee.

Summary

Issues Involved:
1. Validity of assumption of jurisdiction under section 153A of the Income-tax Act, 1961.
2. Addition of Rs. 1,89,250/- as cash credit under section 68 of the Act.
3. Addition of Rs. 10 lakhs as unexplained investment under section 69 of the Act.
4. Addition of Rs. 1.50 lakhs as unexplained investment in stock under section 69 of the Act.

Detailed Analysis:

1. Validity of Assumption of Jurisdiction under Section 153A:
The assessee challenged the jurisdiction under section 153A of the Income-tax Act, 1961, arguing that they should not have been treated as a person in whose case a search under section 132(1) was initiated. However, during the hearing, the counsel for the assessee opted not to press these grounds. Consequently, these grounds were dismissed as not pressed.

2. Addition of Rs. 1,89,250/- as Cash Credit under Section 68:
The Assessing Officer (AO) noted a credit entry of Rs. 1,89,250/- in the assessee's books and treated it as cash credit under section 68 of the Act. The assessee contended before the Commissioner of Income Tax (Appeals) [CIT(A)] that this amount was an advance received from customers for supplies made in the assessment year 2007-08. However, no confirmation or evidence was provided to substantiate the claim. The CIT(A) confirmed the addition, observing that the explanation of receiving advances three years prior to sales was unacceptable without evidence. The Tribunal upheld the CIT(A)'s order, noting the absence of any confirmation or relevant evidence to prove the genuineness of the claim.

3. Addition of Rs. 10 Lakhs as Unexplained Investment under Section 69:
During the search proceedings, several documents and assets were found, and the AO asked the assessee to provide the value and source of these assets. The assessee claimed that the assets were either old or purchased on credit, with some investment covered by a loan from M/s Sanatan Cold Storage. The AO found the explanations unsatisfactory, particularly regarding the use of machinery from a different business (M/s Govind Menthol) and the absence of purchase bills. Consequently, the AO added Rs. 10 lakhs as unexplained investment. The CIT(A) upheld this addition, noting the lack of specific bifurcation in the surrender statement of Shri Kailash Nath Singh Patel and the absence of any business connection between him and the assessee. The Tribunal confirmed the CIT(A)'s order, emphasizing the lack of evidence and the irrelevance of Shri Kailash Nath Singh Patel's statement.

4. Addition of Rs. 1.50 Lakhs as Unexplained Investment in Stock under Section 69:
The AO added Rs. 1.50 lakhs as unexplained investment in stock found during the search, valuing the stock at Rs. 2,98,657/-. The assessee claimed that the stock was purchased on credit, but no evidence was provided. The CIT(A) confirmed the addition due to the lack of supporting evidence. The Tribunal upheld the CIT(A)'s decision, noting the absence of any confirmation to establish that the stock was purchased on credit.

Conclusion:
All appeals by the assessee were dismissed. The Tribunal confirmed the orders of the lower authorities, finding no infirmity in their decisions due to the lack of evidence and substantiation provided by the assessee. The judgment emphasized the importance of providing concrete evidence to support claims regarding cash credits, unexplained investments, and stock valuations under the relevant sections of the Income-tax Act, 1961.