2019 (4) TMI 1368 - AT - Income Tax

Addition u/s 68 - assessee failed to establish the claim of loan for introducing the capital - HELD THAT - Assessee has not filed any material to establish the identity of the creditors, creditworthiness of the creditors and genuineness of transaction. When the assessee claims that he borrowed unsecured loan for introducing the capital, it is the obligation of the assessee to establish the identity of the creditors, creditworthiness of the creditors and genuineness of the transaction. Since the assessee failed to establish the above requirements, the CIT(Appeals) has rightly confirmed the addition made by the Assessing Officer. Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Disallowance of expenses for non-production of bills / vouchers - HELD THAT - Assessee has not discharged the primary obligation / onus by supporting necessary material. With regard to payment of interest and depreciation, CIT(Appeals) directed the AO to verify and if it is actually found correct, it may be allowed. This Tribunal is of the considered opinion that payment of interest and depreciation on written down value of the machinery can be very well ascertained by the assessee from the respective banks. CIT(Appeals) has rightly directed the AO to verify and if it is found correct, it has to be allowed. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Disallowance of current liabilities - HELD THAT - Assessee has not filed any evidence before the Assessing Officer as well as the CIT(Appeals) to establish that the liabilities were discharged during the year under consideration. In the absence of any material, the CIT(Appeals) has rightly confirmed the addition made by the Assessing Officer. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. - Decided against assessee.

Summary

Issues:
1. Addition on account of increase in capital account
2. Disallowance of expenses for non-production of bills/vouchers
3. Disallowance of current liabilities

Analysis:
1. Addition on account of increase in capital account:
The appeal was against the Commissioner of Income Tax (Appeals) order for the assessment year 2013-14. The Assessing Officer added &8377;1,45,26,000 under Section 68 of the Income-tax Act, 1961, as the assessee failed to prove the claim of loan for introducing capital. The assessee did not provide evidence regarding the identity, creditworthiness of creditors, and genuineness of the transaction. The Tribunal upheld the addition, emphasizing the assessee's obligation to establish these requirements. The CIT(Appeals) decision was confirmed as the assessee failed to meet the burden of proof.

2. Disallowance of expenses for non-production of bills/vouchers:
The assessee claimed expenses of &8377;12,30,48,321 but could not produce bills/vouchers for verification. The Assessing Officer disallowed expenses at 30% amounting to &8377;3,69,14,496 due to lack of supporting documents. The CIT(Appeals) upheld this disallowance as the assessee failed to provide necessary evidence. However, with respect to interest, financial charges, and depreciation, the CIT(Appeals directed the Assessing Officer to verify and allow if found correct. The Tribunal agreed with this approach, emphasizing the importance of supporting material to substantiate claims.

3. Disallowance of current liabilities:
The assessee did not file returns for subsequent assessment years and claimed that the business was closed down. However, no evidence was presented to show whether current liabilities and provisions were paid during the relevant assessment year. The Assessing Officer disallowed current liabilities and provisions, a decision upheld by the CIT(Appeals) due to lack of proof. The Tribunal concurred with the lower authorities, stating that without supporting evidence, the disallowance was justified.

In conclusion, the Tribunal dismissed the appeal as the assessee failed to substantiate claims and provide necessary evidence, leading to the confirmation of the lower authorities' decisions on all issues.