2018 (7) TMI 834 - HC - Income Tax

Addition u/s 68 - identity of the person who has put in the money - Held that - In the present case, there was no plausible explanation that was furnished by the assessee. At any rate, the identities of the alleged share applicants could not be established and the documents of the alleged share applicants carried by the assessee before the Assessing Officer did not reveal the investments that the assessee claimed such alleged applicants had made in the assessee. In the light of such findings of the Assessing Officer which withstood scrutiny before final fact-finding body that is the Appellate Tribunal, it scarcely lies in the mouth of the assessee to question the propriety of the Assessing Officer having found the explanation furnished by the assessee to be unsatisfactory. Thus particularly since the Assessing Officer found on facts that there was no plausible explanation justifying the cash credits and the Appellate Tribunal accepted the same, no substantial question of law is raised - decided against assessee

Summary

Issues: Condonation of default in representation, restoration of appeal, bogus claim of investment, genuineness of share applicants, Section 68 of the Income Tax Act, burden of proof on assessee, unsatisfactory explanation, scrutiny by Appellate Tribunal, dismissal of appeal.

Condonation of Default and Restoration of Appeal:
The High Court condoned the default of the appellant in representation and restored the appeal and application that were earlier dismissed for default. The restoration application was allowed, and the appeal was readmitted.

Bogus Claim of Investment:
The Court noted a completely bogus claim of investment in the appeal. The assessee had obtained an order for the Assessing Officer to decide on the genuineness of share applicants who had invested a total of ?18,02,000 in the assessee. The investments were made by Saroj Kumar Jhunjhunwala (HUF) and Ramsay International Limited.

Genuineness of Share Applicants and Section 68 of the Act:
The Assessing Officer had given effect to the Appellate Tribunal's previous order and provided opportunities for the assessee to explain the nature and source of the money received from the share applicants. Despite multiple opportunities, the alleged share applicants did not appear before the Assessing Officer. Section 68 of the Income Tax Act mandates that the assessee must offer a satisfactory explanation for any cash credit in its books.

Unsatisfactory Explanation and Burden of Proof:
The Court highlighted that the assessee failed to provide a plausible explanation for the investments. The burden of proof was on the assessee to establish the identities of the alleged share applicants and the genuineness of the investments. The documents presented did not support the claims made by the assessee.

Scrutiny by Appellate Tribunal and Dismissal of Appeal:
The Assessing Officer's findings, which were upheld by the Appellate Tribunal, concluded that the explanations provided by the assessee were unsatisfactory. As a result, the Court dismissed the appeal, stating that no substantial question of law was raised in the matter.

Costs and Final Decision:
The Court dismissed the appeals without any order as to costs. The judgment emphasized the importance of providing genuine explanations for cash credits and the burden of proof on the assessee to substantiate claims in accordance with the Income Tax Act.