2021 (2) TMI 180 - AT - Income Tax

Rectification of mistake - Addition u/s 68 - ITAT Confirmed addition - HELD THAT - Huge payments of ₹ 40 lacs being fresh cash credit were received by assessee during the previous year relevant to impugned assessment year, which is without any interest liability being incurred by assessee. The peak cash credit during the year (inclusive of opening balance) was to the tune of ₹ 90 lacs from said M/s R R Steel Industries, which did not bear any interest and sale transaction made by assessee to said M/s R R Steel Industries was merely ₹ 39,399/-. In our considered view based on material on record , the tribunal has passed well reasoned order in which conscious decision is taken by tribunal in allowing Revenues appeal by holding that creditworthiness of the lender did not stood proved by the assessee and the order of the tribunal does not deserve our interference within limited scope of provisions of Section 254(2) of the 1961 Act as in our considered view, there is no mistake apparent from records in the appellate order passed by tribunal. - Decided against assessee.

Issues:
1. Correction of mistake apparent from records in appellate order dated 21.12.2017 passed by ITAT Allahabad.
2. Discrepancy in address leading to additions of ?37,60,601/- from M/s R R Steel Industries.
3. Failure to prove creditworthiness of the lender and genuineness of the transaction.
4. Interpretation of Section 68 of the Income Tax Act, 1961 regarding cash credits.
5. Scope of Section 254(2) of the Income Tax Act in correcting mistakes apparent from records in appellate orders.

Analysis:

Issue 1:
The appellant filed a miscellaneous application (M.A.) seeking correction of a mistake apparent from records in the appellate order dated 21.12.2017 passed by the ITAT Allahabad. The tribunal dismissed the M.A. on 03/02/2021, stating that no mistake apparent from records was found to justify interference.

Issue 2:
The Assessing Officer made additions of ?37,60,601/- to the appellant's income based on a discrepancy in addresses between the PAN and M/s R R Steel Industries. The CIT(A) accepted the explanation provided by the appellant regarding the address discrepancy and deleted the additions. However, the ITAT Allahabad, in its appellate order dated 21.12.2017, reversed the decision of the CIT(A) and upheld the additions made by the AO. The tribunal found that the appellant failed to prove the creditworthiness of M/s R R Steel Industries, leading to the upholding of the additions.

Issue 3:
The primary issue revolved around the failure of the appellant to prove the creditworthiness of the lender and the genuineness of the transaction. The tribunal, based on the material on record, concluded that the appellant did not comply with the requirements of Section 68 of the Income Tax Act. The tribunal's decision to uphold the additions made by the AO was based on the appellant's inability to prove the creditworthiness of M/s R R Steel Industries.

Issue 4:
The interpretation of Section 68 of the Income Tax Act was crucial in determining the onus on the taxpayer to prove the identity, creditworthiness of the person from whom cash credit was received, and the genuineness of the transaction. The tribunal found that the appellant failed to meet these requirements, leading to the upholding of the additions made by the AO.

Issue 5:
The scope of Section 254(2) of the Income Tax Act, which allows for the correction of mistakes apparent from records in appellate orders, was discussed in the context of the M.A. filed by the appellant. The tribunal found no mistake apparent from records in the appellate order dated 21.12.2017, leading to the dismissal of the M.A. on 03/02/2021.

This detailed analysis highlights the key legal issues, arguments presented, and the tribunal's decision in the judgment delivered by the ITAT Allahabad.

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