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2019 (6) TMI 85 - AT - Income TaxAddition u/s 69 - unexplained investment - investment not recorded in the books of account - Assessee had received advances from the seven parties against the sale of the proposed developed property - HELD THAT - During the course of appellate proceedings, the assessee came up with his explanation that the advances were received by him from seven parties against sale of property and the same were utilized for giving loan to M/s. Winner Garments Pvt. Limited. Although this explanation of the assessee was supported by documentary evidence in the form of sale agreement, there were various discrepancies and anomalies in the claim of the assessee as found by the Assessing Officer during the course of remand proceedings and as specifically recorded by the ld. CIT(Appeals) in his impugned order. During the course of remand proceedings, only four of the seven parties appeared before the Assessing Officer for examination/verification and as found by the Assessing Officer, they were not having capacity or creditworthiness to give the advances to the assessee in cash as claimed. It is observed that specific adverse findings/observations were recorded by the Assessing Officer in the remand report as well as by the ld. CIT(Appeals) in his impugned order to doubt or dispute the claim made by the assessee of having received the advances in question in cash from the concerned seven parties. At the time of hearing before us, the ld. Counsel for the assessee has not been able to bring anything on record to rebut or controvert these adverse findings recorded by the Assessing Officer as well as by the ld. CIT(Appeals). He has only harped on the documentary evidence filed by the assessee in the form of sale agreements and the confirmations of the four creditors as made before the Assessing Officer during the course of remand proceedings. In the present case, investment in the form of loan given to M/s. Winner Garments Pvt. Limited was found to be made by the assessee in the financial year immediately preceding the assessment year under consideration and since the said investment was not recorded in the books of account of the assessee and the explanation offered by him about the nature and source of the said investment was not found to be satisfactory, the addition made by the AO u/s 69 was fully justified and there is no infirmity in the impugned order of the CIT(Appeals) in confirming the same. - Decided against assessee.
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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