2022 (5) TMI 724 - AT - Income Tax

Unexplained cash credit u/s.68 - primary onus to substantiate the authenticity of the credits appearing in the books of accounts is cast upon the assessee, failing which the same is to be treated as an unexplained cash credit in his hands - HELD THAT - Assessee had failed to substantiate the identity and creditworthiness of the lenders, as well as prove the genuineness of the loan transactions in question, therefore, we are of the considered view that the AO had rightly held the loan transactions in question as unexplained cash credits within the meaning of section 68 of the Act. Before the CIT(Appeals), though the assessee had placed on record PAN No. of one of the lender, viz. Ms. Seema R Mutreja, however, the same in our considered view would not suffice for substantiating the nature and source of the credit appearing against her name in the books of accounts of the assessee. In so far the claim of the Ld. AR that the lower authorities had erred in law in not exercising the power vested with them u/s.131(1) of the Act i.e, by not summoning the respective lenders despite specific requests of the assessee, the same we are afraid does not find favor with us. As is discernible from the records, the assessee had failed to place on record any documentary evidences which would substantiate the veracity of the loan transactions in question and would suffice to conclude that the primary onus that was cast upon it to substantiate the authenticity of the loan transactions was duly discharged by him. As a matter of fact, the assessee had been taking shifting stands before the lower authorities and had tried to shift the burden of proving the authenticity of the loan transactions upon the department. Now when the assessee before us had failed to discharge the primary onus that was cast upon it as regards proving the nature and source of the loan transactions in question, therefore, the raising of a request by him, and that too for the very first time in the course of the proceedings before the CIT (Appeals) did not merit acceptance. If the assessee in the course of the assessment proceedings would have placed on record any material which would have evidenced the authenticity of the loan transactions in question, then, in our considered view, the lower authorities would have been obligated to exercise the power u/s. 131(1) of the Act in order to dispel doubts, if any, as regards the authenticity of the loan transactions in question. However, as the assessee had in the course of proceedings before the lower authorities adopted an evasive approach and failed to place on record any material/document substantiating the authenticity of the loan transactions in question, therefore, we are of the considered view that no infirmity arises from non-exercise the power u/s. 131(1) of the Act by the lower authorities, which as observed by us hereinabove, was sought by the assessee for the very first time in the course of the proceedings before the CIT(Appeals). We do not find any infirmity in the view taken by the lower authorities who had rightly held the loan transactions in question as unexplained cash credits within the meaning of Section 68 - Decided against assessee.

Issues Involved:
1. Legality and factual correctness of the CIT(A)'s order.
2. Sustaining the addition of Rs. 20,70,000/- under Section 68 of the Income Tax Act.
3. Remanding the issue of addition under Section 40(a)(ia) amounting to Rs. 2,20,920/-.
4. Liability to interest charged under Sections 234B and 234C.
5. Request for any other relief/deduction.
6. Right to amend, alter, or add grounds and adduce fresh evidence.

Detailed Analysis:

1. Legality and Factual Correctness of the CIT(A)'s Order:
The assessee challenged the CIT(A)'s order, claiming it was flawed both legally and factually. However, this ground was not elaborately argued or pressed, and thus, was dismissed as general in nature.

2. Sustaining the Addition of Rs. 20,70,000/- under Section 68:
The primary issue was whether the CIT(A) was correct in sustaining the addition of Rs. 20,70,000/- under Section 68 of the Income Tax Act. The Assessing Officer (AO) noted that the assessee claimed to have raised unsecured loans from two individuals but failed to substantiate the identity, creditworthiness, and genuineness of these transactions. The AO treated the loans as unexplained cash credits under Section 68.

Upon appeal, the CIT(A) upheld the AO's decision, emphasizing that the assessee did not provide sufficient evidence to prove the authenticity of the loan transactions. The CIT(A) highlighted that mere submission of PAN numbers and bank statements was insufficient without corroborative evidence like income returns and capital accounts of the lenders.

The Tribunal concurred with the CIT(A), stating that the primary onus to substantiate the authenticity of the credits lies with the assessee. The Tribunal noted that the assessee's failure to provide adequate evidence justified the AO's and CIT(A)'s conclusions. The Tribunal also dismissed the argument that the authorities should have exercised their power under Section 131(1) to summon the lenders, as the assessee had not discharged the primary onus of proof.

3. Remanding the Issue of Addition under Section 40(a)(ia):
The assessee argued that the CIT(A) erred in remanding the issue of addition under Section 40(a)(ia) amounting to Rs. 2,20,920/- to the AO instead of adjudicating it himself. This ground was not pressed during the hearing and was consequently dismissed.

4. Liability to Interest Charged under Sections 234B and 234C:
The assessee denied liability to interest charged under Sections 234B and 234C. This ground was deemed consequential and dismissed accordingly.

5. Request for Any Other Relief/Deduction:
The assessee sought any other relief or deduction deemed fit by the Tribunal. This ground was general in nature and was dismissed as not pressed.

6. Right to Amend, Alter, or Add Grounds and Adduce Fresh Evidence:
The assessee reserved the right to amend, alter, or add grounds and adduce fresh evidence. This ground was also general in nature and was dismissed as not pressed.

Conclusion:
The Tribunal upheld the CIT(A)'s order, confirming the addition of Rs. 20,70,000/- under Section 68 as unexplained cash credits. The appeal of the assessee was dismissed in its entirety. The order was pronounced in open court on 30th March 2022.

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