2019 (11) TMI 310 - HC - Income Tax

Addition u/s 68 - unexplained cash credit - HELD THAT - The plea of the Appellant that on filing of the bank statement and PAN details, the burden stood discharged or that it shifted on to the revenue is tenuous and is not correct. The credit worthiness of the transaction cannot be said to be proved merely on the strength of the bank statement or identity of the creditor. The assessee did not produce the income tax return of the lender or any confirmation. The purported confirmation has been found to be only a copy of unsigned account of the creditor. The source of funds has also not been explained. The credit worthiness and the genuineness of the transaction cannot be said to have been proved so as to shift the onus on the revenue. The stand of the Appellant that since the alleged transaction is made through normal banking channels, it is sufficient to prove the genuineness of the transaction and the credit worthiness of the creditor, cannot be accepted. The identity as well as the credit worthiness of the creditor must be proved. The credit reflected in the bank account of Ms. Jasmine Kochhar Kapoor, is not explained, as a result her credit worthiness is not proved. In view of the above facts, we do not find any infirmity in the impugned order. The findings of fact are against the Appellant, as held concurrently by all the tax authorities. The Appellant has not raised any question of law much less substantial question of law. - Decided against assessee.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Legitimacy of unsecured loans received by the appellant.
3. Compliance with procedural requirements for additional evidence.
4. Burden of proof under Section 68 of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The appellant sought condonation for a delay of 445 days in filing the appeal, attributing it to a misconceived writ petition that was dismissed. The court found the reasons provided to be meritless, noting that the writ petition itself was filed beyond the statutory period and was withdrawn on the first day of listing. The court dismissed the application for condonation of delay, stating that it did not disclose any cogent ground or reason for the delay.

2. Legitimacy of Unsecured Loans Received by the Appellant:
For AY 2013-14, the appellant received an unsecured loan of ?26 lacs through three cheques from Ms. Jasmine Kochhar Kapoor. For AY 2014-15, an unsecured loan of ?87 lacs was received through six cheques from the same individual. The Assessing Officer (AO) treated these as unexplained cash credits under Section 68 of the Income Tax Act due to insufficient evidence of the lender's creditworthiness and the genuineness of the transactions. The ITAT partially allowed the appeal for AY 2013-14, directing the AO to verify the quantum of fresh credit and make additions only for fresh credits. For AY 2014-15, the ITAT upheld the additions made by the AO.

3. Compliance with Procedural Requirements for Additional Evidence:
The appellant attempted to introduce new evidence (a sale deed) to prove the lender's creditworthiness during the appeal under Section 260A. The court emphasized Rule 46A of the Income Tax Rules, which restricts the introduction of new evidence at the appellate stage except under specific circumstances. The court found that the appellant had not provided any justification for not availing the benefit of Rule 46A at the appropriate stage and refused to consider the new evidence, citing the need to prevent setting a bad precedent.

4. Burden of Proof under Section 68 of the Income Tax Act:
The court highlighted the appellant's obligation to prove the genuineness of the transaction, the identity of the creditor, and the creditor's creditworthiness. The appellant's submission of bank statements and PAN details was deemed insufficient to discharge this burden. The court cited several precedents, including the Supreme Court's decision in Principal Commissioner of Income Tax (Central) -1 vs. NRA Iron & Steel Pvt. Ltd., which clarified that the burden of proof under Section 68 lies with the assessee. The court found that the appellant failed to provide credible evidence to substantiate the unsecured loans, and the creditworthiness of the lender was not established.

Conclusion:
The appeal was dismissed both on the grounds of limitation and merits, as no substantial question of law was raised. The court upheld the findings of the tax authorities, concluding that the appellant did not satisfactorily discharge the burden of proof under Section 68 of the Income Tax Act. The pending applications were also disposed of.