2016 (6) TMI 116 - HC - Income Tax

Addition of unexplained credits under Section 68 - Held that - Mere filing of confirmation is not enough to prove the genuine credit, would clearly prove that the assessee failed to prove the genuine credit in the matter. The assessee failed to prove the identity of the creditors, their capacity and genuineness of the transaction in the matter. Whatsoever additional evidences were produced before the learned CIT(Appeals) are not sufficient to discharge the onus upon the assessee to prove the genuine credit in the matter. Further the assessee failed to explain why the same were not filed before the Assessing Officer. Therefore, the learned CIT(Appeals) was justified in refusing to admit this additional evidence in the case Shri Guljari Lal for loan of ₹ 2,50,000/-. Even before us no confirmation or any evidence have been filed to prove the genuineness of the credit. It was observed that the additional evidence produced before CIT(A) was not sufficient to discharge the onus upon the assessee to prove the genuine credit in the matter and further that the assessee had also failed to explain as to why the additional evidence could not be produced before the Assessing Officer. It has also been recorded that no independent confirmation of the creditors had been filed by the assessee. Thus, it was concluded that the assessee had booked bogus purchase of construction material in the profit and loss account as no purchase vouchers for a sum of ₹ 5,80,100/- had been produced. Therefore, the learned CIT (Appeals) was justified in confirming additions - Decided against assessee

Summary

Issues:
Delay in refiling the appeal, Addition of unexplained credits under Section 68 of the Income Tax Act, 1961, Failure to prove identity of creditors, Capacity and genuineness of transactions, Rejection of additional evidence, Dismissal of appeal by the Tribunal.

Delay in Refiling the Appeal:
The judgment condoned the delay in refiling the appeal by the appellant-assessee under Section 260A of the Income Tax Act, 1961. The appeal was filed against the order dated 10.2.2015 passed by the Income Tax Appellate Tribunal, 'B' Bench, Chandigarh, for the assessment year 2005-06. The appellant raised substantial questions of law regarding the addition of ?5,80,100 and the alleged perversity of the Tribunal's order.

Addition of Unexplained Credits under Section 68:
The Assessing Officer made an addition of ?5,80,100 towards unexplained credits under Section 68 of the Act due to the failure of the assessee to provide confirmation or documentary evidence during the assessment proceedings. The Tribunal upheld this addition after finding that the assessee failed to prove the identity of the creditors, their capacity, and the genuineness of the transactions. The Tribunal concluded that the assessee had booked bogus purchases in the profit and loss account, as no purchase vouchers for the amount in question were produced.

Failure to Prove Identity of Creditors, Capacity, and Genuineness of Transactions:
The Tribunal noted that the assessee did not provide independent confirmation of the creditors and failed to explain why additional evidence was not produced before the Assessing Officer. The Tribunal found that the additional evidence presented before the Commissioner of Income Tax (Appeals) was insufficient to prove the genuine credit, leading to the confirmation of the additions made by the Assessing Officer.

Rejection of Additional Evidence:
The Commissioner of Income Tax (Appeals) rejected the appeal and additional evidence under Rule 46A of the Income Tax Rules, 1962. The Tribunal also dismissed the appeal filed by the assessee, stating that the evidence produced was not enough to discharge the onus upon the assessee to prove the genuine credit and that no illegality or perversity was found in the impugned order.

Dismissal of Appeal by the Tribunal:
The High Court upheld the Tribunal's decision, stating that the view adopted by the Tribunal was plausible based on the evidence on record. The Court found no substantial question of law to warrant interference and dismissed the appeal by the appellant-assessee, as the counsel failed to demonstrate any illegality or perversity in the Tribunal's order.