2019 (11) TMI 815 - HC - Income Tax

Unexplained cash credits u/s 68 - HELD THAT - As extracted the findings returned by the Assessing Officer as well as by the ITAT, only to demonstrate that there is in-depth consideration of all the facts circumstances as emerging from the record, and it is absolutely clear and evident that the appellant assessee failed to discharge the onus placed upon it u/s 68 to establish the genuineness of the transaction and the creditworthiness of the investors/ creditors. The assessee had only disclosed the identity of the investors, who too remained faceless despite notices to them. No question of law

Summary

Issues:
Assessment of unexplained cash credits under Section 68 of the Income Tax Act for the Assessment Year 2004-05.

Analysis:
1. The appellant challenged the order of the Income Tax Appellate Tribunal, Delhi Bench, which allowed the Revenue's appeal against the order of the CIT (Appeals) deleting the addition of ?1.17 Crore made by the Assessing Officer on account of unexplained cash credits under Section 68 of the Income Tax Act for the Assessment Year 2004-05.
2. The appellant company received share application money from 16 entities, and the Assessing Officer made the addition as the explanation provided by the appellant was unsatisfactory. The Tribunal noted discrepancies in the transactions, such as cash deposits before investments, lack of share allotment despite payments, and incomplete documentation from investors.
3. The Tribunal emphasized that the burden to prove the identity, creditworthiness, and genuineness of transactions lies with the assessee. Despite notices and summons, the appellant failed to provide adequate evidence to substantiate the transactions, leading to doubts and suspicions.
4. The Tribunal highlighted inconsistencies in the financial details of the investors and the appellant, questioning the rationale behind investments without verifying financials. The Tribunal also noted discrepancies in addresses and lack of compliance with notices, further casting doubt on the transactions.
5. Citing legal precedents, the Tribunal emphasized the importance of proving transactions' genuineness and creditworthiness. It concluded that the appellant failed to meet the burden of proof required under Section 68 of the Act, leading to the addition of the cash credits.
6. The Tribunal dismissed the appeal, stating that the order was based on a thorough examination of facts and evidence. It affirmed that the appellant did not discharge the onus placed on them to establish the legitimacy of the transactions and the credibility of the investors.

This comprehensive analysis of the judgment highlights the issues involved, the arguments presented, and the Tribunal's decision based on the evidence and legal principles.