2022 (12) TMI 788 - AT - Income Tax

Addition u/s 68 - unexplained cash credit (security premium) - HELD THAT - AO asked the assessee to explain the said credit on multiple occasions which the assessee was duty bound to explain so as to avoid the invocation of the provisions of Section 68 which relates to unexplained cash credit. It is not in dispute that the assessee received the alleged sum during the year towards security premium. AO was justified in asking the assessee to prove the identity and creditworthiness of the shareholders/share applicants and the genuineness of the transaction. All the efforts of ld. AO went in vain as the assessee did not comply to any of the notices and even before the ld. CIT(A) the assessee did not appear on any occasion and similar lethargic approach of the assessee stands continued before this Tribunal. Also, the assessee has not filed any application stating any reasonable cause for not appearing on the given dates of hearing. Except filing the appeal, there is no other effort from the side of the assessee to pursue its appeal. Unless and until the documents and the other materials are filed to explain the alleged cash credit it is not possible to accept the grounds raised by the assessee and thus, it is presumed that the assessee is unable to explain the source of alleged security premium. No infirmity in the detailed finding of ld. AO as well as CIT(A) duly supported by judicial pronouncements and therefore, the addition for unexplained security premium u/s 68 of the Act is confirmed. Thus, all the grounds raised by the assessee are dismissed.

Summary

Issues:
Appeal against order u/s 250 of the Income Tax Act, 1961 - Delay in filing appeal - Addition of share premium as unexplained cash credit - Disallowance of expenses - Failure to comply with notices and summons - Confirmation of additions by lower authorities - Challenge before Appellate Tribunal.

Analysis:
1. Delay in Filing Appeal:
The appeal filed by the assessee was time-barred by 122 days, and a condonation application was submitted. The tribunal, after reviewing the reasons for the delay, accepted the application, condoned the delay, and admitted the appeal for adjudication.

2. Grounds Raised by Assessee:
The assessee raised multiple grounds in the appeal, including the violation of natural justice, illegality of the order, and errors in confirming the addition of share premium and disallowance of expenses. The appellant also sought permission to add or alter any grounds of appeal during the hearing.

3. Factual Background:
The assessee, a private limited company engaged in share trading, declared NIL income for AY 2013-14. The case was selected for scrutiny due to non-compliance with notices and summons. The assessing officer (AO) made additions for unexplained cash credit and disallowed expenses, citing lack of compliance and failure to prove the genuineness of transactions.

4. Proceedings Before Lower Authorities:
The assessee failed to appear before the CIT(A) on multiple occasions, leading to the confirmation of additions by the lower authorities. The conduct of the assessee in avoiding hearings and lack of material to counter the AO's findings resulted in the confirmation of the AO's decision.

5. Appellate Tribunal's Decision:
The Appellate Tribunal heard the arguments and reviewed the records. It noted that the assessee failed to explain the source of the alleged security premium, despite being duty-bound to do so. The tribunal found no merit in the grounds raised by the assessee and confirmed the addition for unexplained security premium under section 68 of the Act. Consequently, all grounds raised by the assessee were dismissed, and the appeal was rejected.

In conclusion, the tribunal upheld the additions made by the lower authorities, emphasizing the assessee's lack of compliance and failure to provide necessary explanations. The decision highlights the importance of substantiating financial transactions and complying with statutory requirements to avoid adverse consequences under the Income Tax Act.