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2019 (6) TMI 85 - AT - Income Tax


Issues Involved:
1. Addition of ?86,87,139/- under section 69 of the Income Tax Act, 1961.
2. Validity of the assessee's explanation regarding the source of funds for the loan given to M/s. Winner Garments Pvt. Limited.
3. Creditworthiness and genuineness of advances claimed to be received by the assessee from seven parties.

Issue-wise Detailed Analysis:

1. Addition of ?86,87,139/- under section 69 of the Income Tax Act, 1961:
The primary issue in this case revolves around the addition of ?86,87,139/- made by the Assessing Officer (AO) and confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)] under section 69 of the Income Tax Act, 1961. This addition pertains to a loan amount found in the balance-sheet of M/s. Winner Garments Pvt. Limited during a survey conducted under section 133A of the Act. The AO treated the loan as an unexplained investment since it was not reflected in the personal file of the assessee, and the assessee failed to offer any satisfactory explanation regarding the source of funds utilized for giving the loan.

2. Validity of the assessee's explanation regarding the source of funds for the loan given to M/s. Winner Garments Pvt. Limited:
During the appellate proceedings, the assessee claimed that the funds were sourced from advances received against the sale of a proposed developed property from seven parties. The assessee provided documentary evidence in the form of sale agreements to support this claim. However, the AO, during remand proceedings, found discrepancies and anomalies in the assessee's explanation. Only four out of the seven parties appeared before the AO, and their statements and financial capacities raised doubts about their ability to provide such advances. The CIT(A) agreed with the AO's findings and confirmed the addition, emphasizing that the assessee failed to prove the genuineness and creditworthiness of the creditors.

3. Creditworthiness and genuineness of advances claimed to be received by the assessee from seven parties:
The AO issued summons under section 131 to the seven parties, but only four appeared and provided statements. The AO found inconsistencies in their statements and noted that none of the parties had the financial capacity to provide the advances as claimed. For instance, Sk. Sultan, who allegedly provided ?7,00,000/-, had an income of ?21,000/- and no bank account. Similarly, other parties like Sk. Aminul Haque, Sk. Intiaz, and Smt. Sova Mukherjee also failed to substantiate their claims with credible evidence. The AO and CIT(A) concluded that the agreements were fabricated and the advances were not genuine. The Tribunal upheld these findings, stating that the assessee failed to rebut or controvert the adverse findings and that the documentary evidence provided was unreliable.

Conclusion:
The Tribunal dismissed the appeal of the assessee, upholding the addition of ?86,87,139/- made under section 69. The Tribunal found that the assessee failed to satisfactorily explain the source of funds for the loan given to M/s. Winner Garments Pvt. Limited and that the claimed advances from seven parties were not genuine. The Tribunal emphasized that the assessee did not provide credible evidence to prove the creditworthiness and genuineness of the creditors, and the discrepancies in the documentary evidence further supported the AO's and CIT(A)'s conclusions.

 

 

 

 

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