2008 (4) TMI 1 - HC - Income Tax

Share application money treated as unsecured loan and the amount treated in the hands of assessee as unexplained investment - assessee failed to prove the source of deposit - in the absence of adequate proof, it was held that the contention of department is right in making addition

Summary

Issues involved:
Appeal under Section 260A of the Income Tax Act against Tribunal's order for assessment year 1998-99.

Analysis:
1. Unsecured amount treatment: The Assessing Officer noted an increase in share application money without actual share allotment, treating it as unsecured amount under Section 68 of the Act. The Assessee's explanation lacked direct nexus between facts and conclusions, leading to addition of Rs.11.82 lacs.

2. Additions in company's books: Deposits made against flat/plot bookings, later canceled, led to Assessing Officer adding Rs.5 lacs. CIT(A) and Tribunal upheld these additions despite Assessee's contentions.

3. Challenges and contentions: Assessee challenged CIT(A) order before Tribunal, arguing source of funds from Sanjay Gupta's account and canceled bookings. Tribunal dismissed the appeal, emphasizing lack of creditworthiness proof for cash deposits.

4. Legal scrutiny and reasoning: Tribunal's decision upheld tax authorities' actions, denying any infirmity in taxing Rs.11.82 lacs. Lack of creditworthiness proof for deposits by Rima Sood, Rajiv Aggarwal, and Mayank Jain resulted in confirming additions.

5. Burden of proof and tax evasion: Assessee failed to establish creditors' identity and source of cash deposits, leading to Tribunal's decision based on relevant material. Overall situation indicated attempts to evade tax, justifying Tribunal's findings and dismissal of Assessee's appeal.

6. Final ruling: The appeal of the Assessee was dismissed, affirming tax authorities' actions and Tribunal's decision based on lack of creditworthiness proof for cash deposits and attempts to evade tax obligations.