2019 (10) TMI 658 - AT - Income Tax

Reopening of assessment u/s 147 - addition u/s 68 - unexplained cash credit - HELD THAT - Since the assessee had not shown the relevant transaction in the return of income therefore the AO has initiated proceedings u/s. 147 of the Act by issuing of notice u/s. 148 of the Act. In spite of giving number of opportunity the assessee has failed to make full compliance before in the assessment proceedings. Assessee has submitted only partial information before the AO which was considered and placed on the record. On account of not furnishing complete information and not making compliance to the notices issued the AO has completed assessment u/s. 144 r.w.s. 147 of the Act. Considering all we do not find any force in the ground of appeal of the assessee against confirming the assessment proceeding u/s. 144 r.w.s. 147 of the Act by the Ld. CIT(A) and the same is dismissed. - decided against assessee Addition u/s 68 - merely furnishing of a Xerox copy of common affidavit in respect of 58 cash creditors would not by itself prove that the cash credit have been actually obtained from such person and they had creditworthiness to lend this amount. As during the course of assessment proceedings the assessee has furnished incomplete information in respect of his claim of obtaining cash loan obtained from 58 persons. In spite of giving sufficient opportunity the assessee has failed to satisfy the creditworthiness of the creditors and genuineness of the transactions. We also consider that in the case of Pavankumar M. Sanghvi vs. ITO 2018 (2) TMI 1161 - GUJARAT HIGH COURT sustaining the addition u/s 68 on account of the assessee s inability to prove the genuineness of the credit transactions. We do not find any substance in the plea of the assessee and consider that it was the bounden duty of the assessee to explain the nature and source of cash deposits found in his bank account as elaborated above - assessee has failed to explain the cash deposit made in his bank account with relevant supporting evidences to proof the genuineness and creditworthiness of his claim that impugned cash loan was received from 58 different persons. - Decided against assessee.

Summary

Issues:
1. Confirmation of assessment proceedings under section 144 r.w.s. 147 of the Income Tax Act, 1961.
2. Addition of ?10,84,100/- made under section 68 of the Act.

Issue 1: Confirmation of assessment proceedings under section 144 r.w.s. 147 of the Income Tax Act, 1961:
The appellant contested the decision of the Ld. CIT(A) confirming the assessment proceedings under section 144 r.w.s. 147 of the Act. The appellant had failed to disclose cash deposits of ?10,84,100/- in the return of income for A.Y. 2008-09. Despite multiple opportunities, the appellant did not provide complete information or comply with the notices issued by the AO. The AO finalized the assessment under section 144 due to the lack of response from the appellant. The ITAT upheld the decision, stating that the appellant's failure to furnish complete information and comply with notices justified the assessment under section 144 r.w.s. 147.

Issue 2: Addition of ?10,84,100/- made under section 68 of the Act:
The second ground of appeal was related to the addition of ?10,84,100/- under section 68 of the Act, concerning cash loans obtained by the appellant from 58 individuals. The appellant failed to prove the creditworthiness and genuineness of the transactions. The appellant only provided a common affidavit from the 58 persons without supporting evidence of their capacity to lend. The ITAT agreed with the AO that the appellant did not substantiate the cash deposits' genuineness. The ITAT cited the appellant's failure to provide details of the creditors' bank accounts, PAN, income sources, or relationships with the appellant. The ITAT also referenced a judicial precedent upholding the addition under section 68 due to the inability to prove the genuineness of credit transactions. The ITAT dismissed the appeal, emphasizing the appellant's failure to explain the cash deposits adequately.

In conclusion, the ITAT upheld the decisions of the Ld. CIT(A) regarding both issues, confirming the assessment proceedings under section 144 r.w.s. 147 and sustaining the addition under section 68 of the Act. The appeal of the assessee was dismissed.