2022 (11) TMI 231 - AT - Income Tax

Addition u/s 68 - unexplained cash credits of share capital and security premium received during the year - HELD THAT - Statutory notice u/s. 143(2) of the Act duly served upon the assessee and when the case of the assessee was selected for scrutiny the assessee company having such huge Capital and Security Premium Reserve failed to make any representation before the ld.AO. Even after providing sufficient opportunity by ld.AO no submission was made either before the ld.AO nor before ld. CIT(A) and nor before us. The assessee was asked to explain the cash credits received by it during the year. The assessee failed to file necessary details to explain the source of alleged cash credit and also unable to prove identity, creditworthiness of the shareholders as well as genuineness of the transaction. The assessee company has miserably failed to explain the source of alleged cash credit. If the assessee had sufficient details to explain the alleged sum, it could have certainly filed those details. Consistently escaping from appearing before the ld. AO and the appellate authority (ld.CIT-A) indicates that the assessee has no plausible explanation to explain the source of alleged sum of share capital and security premium. Therefore, the provisions of section 68 of the Act are squarely applicable on the alleged transaction and it can be safely concluded that the assessee had unaccounted income, which has been routed in the books through bogus/accommodation entry in the form of share capital and security premium - Decided against assessee.

Summary

Issues:
1. Condonation of delay in filing the appeal.
2. Adjudication of appeal ex parte due to non-appearance of the assessee.
3. Confirmation of addition under section 68 of the Income Tax Act, 1961.

Condonation of Delay:
The appeal was found to be time-barred by 17 days, with the assessee attributing the delay to an office assistant's failure to bring the order to management's attention. The Tribunal, after perusing the application for condonation, accepted the reason provided by the assessee and condoned the delay of 17 days, allowing the appeal to proceed for adjudication on merits.

Adjudication Ex Parte:
Despite multiple notices and opportunities for the assessee to appear, no representation was made on their behalf. As a result, the Tribunal decided to proceed ex parte and adjudicate the appeal based on available material and the assistance of the ld. DR. The lack of interest and non-compliance by the assessee led to the decision to hear the case ex parte.

Confirmation of Addition under Section 68:
The assessee, a private limited company, challenged the addition of Rs. 23,49,50,000 made by the AO under section 68 of the Act for unexplained cash credits of share capital and security premium. The Tribunal noted the substantial capital raised by the company despite offering minimal income. The assessee failed to provide explanations or evidence regarding the source of the cash credits, identity of shareholders, or genuineness of transactions. The Tribunal concluded that the unexplained sum was routed through bogus entries, leading to the confirmation of the addition under section 68. The Tribunal dismissed all grounds of appeal raised by the assessee, upholding the addition.

In conclusion, the Tribunal dismissed the appeal of the assessee after considering the issues of delay, non-appearance leading to an ex parte adjudication, and the confirmation of the addition under section 68 of the Income Tax Act, 1961. The decision was based on the lack of satisfactory explanations and evidence provided by the assessee regarding the substantial cash credits, leading to the dismissal of the appeal.