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2019 (3) TMI 1540 - AT - Income TaxAddition u/s 68 - refund of advance against property - onus to substantiate the identity, creditworthiness and genuineness of the transaction - HELD THAT - It is not a case where there was no entry in the books of accounts of the assessee and an arbitrary addition was made. There was very much a credit entry in the books of accounts of the appellant, for which the AO asked the assessee to prove the identity, creditworthiness and genuineness of the transaction. Thus, in terms of the provisions of the Act where the duty is cast upon the assessee to discharge the onus of proving the identity, creditworthiness and genuineness, the ground of the assessee that the AO failed to bring any evidence on record is totally baseless and against the principles of law. It is noted that the assessee has not furnished any confirmation, any document to suggest any such transaction. The assessee has also not submitted the details of the property for which the advance was given. Even if as per the submission of the assessee, the assessee returned the original receipt to Mr. Niraj Jain, the assessee must have kept a photocopy of the same for records, further the assessee must be aware of the property for which such advance was given, furthermore, there should have been some MOU and Agreement to Sale disclosing the total consideration of the property at that time and other terms and conditions. However, nothing was placed on record by the assessee and he has failed to furnish even a single document on record to substantiate its stand. CIT(A) has rightly confirmed the addition - CIT(A) has rightly rejected the request of the assessee for cross examination of Sh. Niraj Jain. Therefore, no interference is required on my part in the well reasoned order of the Ld. CIT(A) on this issue, hence, I uphold the action of the Ld. CIT(A) on this issue and dismiss the ground raised by the Assessee. Reopning of assessment u/s 147 - issue of notice u/s. 148 of the Act after the period of four years without mentioning in the recorded reason that the escapement of chargeable income from tax was due to omission or failure on the part of the assessee to disclose fully and truly all material facts necessarily for assessment - HELD THAT - The said ground was not argued by the Ld. Counsel for the assessee, hence, the same is dismissed as such. However, CIT(A) has rightly adjudicated the legal ground against the assessee of the impugned order which does not require any interference on my part. Addition as commission paid - HELD THAT - Rate of commission has reasonably been estimated by the AO at the rate of 5% on the amount of accommodation entry and therefore, CIT(A) has rightly confirmed the addition in dispute, which does not need any interference on my part, hence, uphold the action of the CIT(A) on the issue in dispute and reject the ground raised by the Assessee.
Issues Involved:
1. Addition of ?2,50,000 as unexplained cash credit under Section 68. 2. Addition made without cross-examination of Niraj Jain. 3. Validity of addition under Section 68. 4. Validity of notice under Section 148 issued after four years. 5. Confirmation of addition of ?12,500 as commission paid. Issue-wise Detailed Analysis: 1. Addition of ?2,50,000 as Unexplained Cash Credit under Section 68: The Assessee argued that the amount of ?2,50,000 received from Niraj Jain/Pooja Expo Inc. was a refund from an advance payment of ?3,00,000 for a property deal that did not materialize. The AO treated this amount as unaccounted income, leading to an addition under Section 68. The Tribunal upheld the AO's decision, emphasizing that the initial onus was on the Assessee to substantiate the identity, creditworthiness, and genuineness of the transaction. The Assessee failed to provide any confirmation or documentation to support the claim, such as details of the property, MOU, or Agreement to Sale. The Tribunal found the Assessee's arguments baseless and sustained the addition of ?2,50,000. 2. Addition Made Without Cross-examination of Niraj Jain: The Assessee contended that the addition was made without the opportunity to cross-examine Niraj Jain, which was against the principles of natural justice. The Tribunal noted that the Assessee did not raise this specific ground before the CIT(A). The Tribunal held that the right to cross-examine is not absolute and depends on the circumstances and the statute concerned. In this case, the Tribunal found no violation of natural justice and upheld the CIT(A)'s decision to reject the request for cross-examination. 3. Validity of Addition under Section 68: The Tribunal reiterated that the burden of proof under Section 68 lies with the Assessee to prove the identity, creditworthiness, and genuineness of the transaction. The Assessee failed to discharge this burden, providing no evidence to substantiate the claim. The Tribunal emphasized that the Assessee's failure to produce any supporting documents or evidence justified the addition made by the AO. Therefore, the Tribunal upheld the CIT(A)'s decision to confirm the addition of ?2,50,000. 4. Validity of Notice under Section 148 Issued After Four Years: The Assessee argued that the notice issued under Section 148 was invalid as it was issued after four years without mentioning that the escapement of income was due to the Assessee's failure to disclose all material facts. The Tribunal noted that this ground was not argued by the Assessee's counsel and dismissed it. The Tribunal found that the CIT(A) had rightly adjudicated the legal ground against the Assessee, confirming the validity of the notice issued under Section 148. 5. Confirmation of Addition of ?12,500 as Commission Paid: The AO estimated a commission of 5% on the accommodation entry amounting to ?12,500. The Assessee argued against this addition, but the Tribunal found that the rate of commission was reasonably estimated by the AO. The Tribunal upheld the CIT(A)'s decision to confirm the addition, finding no need for interference. Conclusion: The Tribunal dismissed the Assessee's appeal, upholding the CIT(A)'s decisions on all grounds. The Tribunal emphasized the Assessee's failure to provide sufficient evidence to substantiate the claims and confirmed the additions made by the AO. The order was pronounced on 25-03-2019.
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