2022 (5) TMI 597 - AT - Income Tax

Addition u/s 68 - assessee did not furnish any supporting evidence to establish the identity and creditworthiness of the parties from whom loan was availed - none of the ingredients of section 68 could be satisfactorily established by the assessee, before the learned First Appellate Authority, assessee furnished certain additional evidences and sought admission of them under Rule 46A - HELD THAT - Additional evidences sought to be furnished by the assessee are mostly its own documents and must be internally available with the assessee. The assessee has not furnished any satisfactory explanation why such documents could not be furnished in course of assessment proceedings. As rightly observed by learned Commissioner (Appeals), assessee cannot adduce any additional evidence as a matter of right. The assessee has to explain satisfactorily why such evidence could not be furnished in the earlier proceedings. In the facts of the present appeal, assessee has failed to furnish any such cogent explanation. Therefore, learned Commissioner (Appeals) was justified in rejecting the additional evidences. As regards the merits of the issue, the material available on record clearly reveal that the assessee did not furnish any evidence which can either prove the identity and creditworthiness of the creditors or the genuineness of the loan transaction. That being the factual position emerging from record, no relief can be granted to the assessee. Thus, we do not find any valid reason to interfere with the decision of learned Commissioner (Appeals) on the issue. Grounds are dismissed.

Summary

Issues:
Appeal against addition of Rs.2.2 crores under Section 68 of the Income-Tax Act, 1961.

Analysis:
The appellant, an assessee, filed an appeal against the order of the Commissioner of Income-Tax (Appeals) for the assessment year 2014-15. Despite multiple opportunities, the appellant did not appear for the hearing, indicating a lack of interest in pursuing the appeal. Consequently, the appeal was heard ex parte with the assistance of the Departmental Representative.

The core dispute revolved around the addition of Rs.2.2 crores under Section 68 of the Act, concerning unsecured loans. The assessing officer noted a significant increase in unsecured loans in the balance sheet, prompting a request for details and supporting evidence. However, the appellant failed to provide the necessary information, specifically the address of the loan providers, despite repeated requests. Consequently, the entire loan amount was treated as unexplained cash credit and added back to the appellant's income.

Upon review, it was established that the appellant did not furnish evidence to establish the identity, creditworthiness, and genuineness of the loan transactions, as required by Section 68 of the Act. The appellant attempted to introduce additional evidence before the First Appellate Authority, but failed to provide a satisfactory explanation for not presenting this evidence earlier. The authority rightly rejected the additional evidence, as the appellant could not justify its delayed submission.

Ultimately, the Tribunal upheld the decision of the Commissioner (Appeals), as the appellant failed to substantiate the essential elements of Section 68. The appellant's inability to prove the legitimacy of the loan transactions or the credibility of the creditors led to the dismissal of the appeal. The Tribunal found no grounds to interfere with the lower authority's decision and consequently dismissed the appeal.

In conclusion, the appeal against the addition of Rs.2.2 crores under Section 68 was dismissed, emphasizing the importance of providing necessary evidence to support financial transactions and comply with the requirements of the Income-Tax Act, 1961.