2022 (9) TMI 456 - AT - Income Tax

Addition u/s 68 - assessee said to have repaid the amount in subsequent years and no details is being produced - HELD THAT - There is a Paper Book filed by the assessee which is running wherein copies of the Ledger Account, Purchase Bills, Purchase Register and Sales Register were being filed. But no details about copy of the bank statements on the Repayment of the above amount to ACE Enterprises by the assessee during the Financial Year 2014-15 2015-16. A.O. during the remand proceedings confirmed that mere filing of purchase bill, purchase register alongwith sales register does not serve the purpose of confirming the outstanding liability in the name of ACE Enterprise. Further verification by the Department it was found that no such person in the above address and it was only a residential complex.The assessee failed to provide necessary details before any of the Authorities. We have no hesitation in upholding the order passed by the Ld. CIT(A) and confirming the addition. Decided against assessee.

Summary

Issues:
1. Appeal against assessment order under section 143(3) of the Income Tax Act, 1961 for Assessment Year 2014-15.
2. Addition of cash credit under section 68 of the Act due to unproved identity, creditworthiness, and genuineness of transactions with certain creditors.
3. Failure to provide necessary details and evidence regarding outstanding liabilities to ACE Enterprises.

Analysis:
1. The appellant, an individual and Proprietrix of S.K. Associates, filed an appeal against the assessment order for the Assessment Year 2014-15. The total turnover declared was Rs. 8,03,03,626 with a Gross Profit of Rs. 7,74,484, resulting in a Gross Profit ratio of 0.96%. The net profit shown was Rs. 3,96,134, at 0.49% of the turnover. The Assessing Officer found discrepancies in the balance sheet related to sundry creditors, specifically ACE Enterprises and Rudra Enterprises. Despite multiple requests and notices, the appellant failed to prove the identity, creditworthiness, and genuineness of transactions with these creditors, leading to the addition of Rs. 81,07,642 as cash credit under section 68 of the Act.

2. During the appellate proceedings before the ld. CIT(A), the appellant submitted additional documents, including ledger accounts and purchase bills, related to the outstanding liabilities to ACE Enterprises. However, the AO and the ld. CIT(A) found these submissions insufficient to confirm the outstanding liability. The appellant's claims of making payments to ACE Enterprises in subsequent years were deemed unverifiable, as the existence of ACE Enterprises itself was doubtful. The primary onus to prove the identity, creditworthiness, and genuineness of transactions was not fulfilled by the appellant. Consequently, the addition of Rs. 53,64,621 in respect of the outstanding liability to ACE Enterprises was confirmed.

3. Subsequently, the appellant appealed to the ITAT, but failed to appear at the hearings. The ITAT, after considering the available materials on record, upheld the decision of the ld. CIT(A) and confirmed the addition made by the Assessing Officer. The ITAT emphasized the appellant's failure to provide necessary details, such as bank statements on repayment, to substantiate the transactions with ACE Enterprises. As a result, the grounds raised by the appellant were rejected, and the appeal was dismissed.

In conclusion, the ITAT upheld the decision to add the cash credit under section 68 due to unproved transactions with specific creditors, emphasizing the appellant's failure to provide essential details and evidence, ultimately leading to the dismissal of the appeal.