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2019 (10) TMI 631 - AT - Income TaxAddition u/s. 68 on account of unexplained cash credit - HELD THAT - The assessee has also not produced any credible evidence so that the creditworthiness of the share applicants can be proved. In view of this, we are of the opinion, that the assessee could not satisfy the one of the ingredients as envisaged in Section 68 for discharging his liability. Even before us also the assessee could not bring any cogent material that the assessee has fulfilled the ingredients of the provisions of Section 68 of the Act. The other contention of assessee is with regard to applicability of proviso to Section 68 of the Act effective from 01.04.2013. On careful perusal of both the assessment and appellate order, we do not find that any of the authorities below have questioned about the source of source to the assessee so as to apply the proviso to Section 68 of the Act. When the assessee itself unable to produce any documents viz. balance sheets, profit and loss account, etc. during the assessment proceedings, the AO has left no option but to hold that the creditworthiness of the investing company namely M/s On Track Trading Ltd. is not proved by the assessee resulting into adding the same u/s.68 of the Act, to which the CIT(A) has upheld the same. - Decided against assessee.
Issues Involved:
Appeal against order of CIT(A) for assessment year 2009-2010 on grounds of legality, addition of share application money under section 68 of IT Act, proof of creditworthiness of foreign investing company, non-consideration of proviso to section 68, applicability of court decisions, levy of interest under sections 234B and 234D. Detailed Analysis: 1. Legality of CIT(A) Order: The appeal was filed against the order of CIT(A) for the assessment year 2009-2010, challenging its legality, arbitrariness, and sustainability in law. The appellant contested the addition of share application money under section 68 of the IT Act, arguing that the order was illegal and arbitrary. 2. Addition of Share Application Money: The main issue revolved around the addition of share application money of a foreign company under section 68 of the IT Act. The AO found the creditworthiness of the investing company questionable as the appellant failed to provide sufficient evidence. The CIT(A) upheld this decision, emphasizing the lack of proof of creditworthiness and reasons for investment by the foreign company. 3. Proof of Creditworthiness: The appellant submitted relevant evidence regarding the investment by the foreign company but failed to establish the creditworthiness of the investing company. The absence of balance sheets, profit & loss accounts, and other crucial documents led to the conclusion that the creditworthiness of the foreign investor was not proven. 4. Non-Consideration of Proviso to Section 68: The appellant argued that the proviso to section 68 of the IT Act, effective from 01.04.2013, was not considered by the CIT(A), which was inconsistent with statutory provisions. However, the authorities upheld the addition under section 68 due to the lack of creditworthiness proof. 5. Applicability of Court Decisions: The appellant contested the applicability of court decisions cited by the CIT(A), asserting that they were not relevant to the case. The decision relied upon by the CIT(A) was deemed inapplicable both factually and legally, leading to the conclusion that the impugned order was unsustainable in law. 6. Levy of Interest under Sections 234B and 234D: The appellant also challenged the levy of interest under sections 234B and 234D as illegal and arbitrary. However, the decision on this matter was not explicitly detailed in the judgment. Conclusion: Ultimately, the ITAT upheld the decision of the CIT(A) and dismissed the appeal of the assessee. The tribunal found that the appellant failed to provide sufficient evidence to establish the creditworthiness of the foreign investing company, leading to the addition of the share application money under section 68 of the IT Act. The judgment highlighted the importance of substantiating creditworthiness and the reasons behind investments to avoid unexplained cash credit implications.
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