2023 (3) TMI 767 - AT - Income Tax

Unexplained bank deposits - undisclosed income of assessee - non discharge of onus - HELD THAT - Assessee has not proved that sum received from Shri Sunda Ram towards purchase of the property which was deposited in the bank account the source of cash deposit is not explained.CIT(A) has rightly dismissed the appeal of the assessee, that the assessee has failed to discharge the onus of proving in order to demonstrate the genuineness of the transactions As full facts and settled proposition of law, the assessee has failed to discharge the onus of cast earning with regard of creditworthiness of genuineness of transaction, hence we confirmed the order of the ld. CIT(A). Thus, the appeal of the assessee is dismissed.

Summary

Issues Involved:
1. Whether the bank deposit of Rs. 15,00,000/- should be treated as undisclosed income of the assessee.
2. Whether the assessee fulfilled the burden of proof regarding the genuineness of the transaction, identity, and creditworthiness of the creditor.

Summary:

Issue 1: Treatment of Bank Deposit as Undisclosed Income
The assessee challenged the order of the National Faceless Appeal Centre, Delhi (NFAC/CIT(A)), which sustained the Income Tax Officer's (ITO) decision treating a bank deposit of Rs. 15,00,000/- as undisclosed income. The original assessment u/s 143(3) was completed with a total income of Rs. 1,93,327/-. However, the CIT-II, Jaipur, passed an order u/s 263, directing a reassessment due to the erroneous nature of the initial order, leading to an additional income computation of Rs. 15,00,000/-. The ITO rejected the affidavit provided by the assessee's representative, considering it a self-serving document without corroborative evidence. Consequently, the amount was added to the total income, and penalty proceedings u/s 271(1)(c) were initiated.

Issue 2: Burden of Proof and Genuineness of Transaction
The CIT(A) found that the assessee failed to substantiate the cash deposit's source, despite submitting an affidavit from Shri Sunda Ram, who allegedly provided the cash. The CIT(A) emphasized that the burden of proof lies on the assessee to establish the identity, creditworthiness, and genuineness of the transaction. The assessee could only prove the identity of the creditor but failed to demonstrate the creditworthiness and genuineness of the transaction. Citing precedents from Sudhir Kumar Sharma (HUF) Vs. CIT and Arun Kumar J Muchhala Vs. CIT, the CIT(A) held that failure to explain the source of cash deposits u/s 68/69 results in the amount being considered as income of the assessee.

Tribunal's Decision:
The Tribunal upheld the CIT(A)'s decision, agreeing that the assessee did not discharge the onus of proving the creditworthiness and genuineness of the transaction. The Tribunal noted that the assessee's failure to produce Shri Sunda Ram before the Assessing Officer and the lack of satisfactory evidence led to the dismissal of the appeal. The Tribunal confirmed the CIT(A)'s order and dismissed the assessee's appeal.

Conclusion:
The appeal of the assessee was dismissed, and the addition of Rs. 15,00,000/- as undisclosed income was upheld due to the failure to prove the genuineness and creditworthiness of the transaction. The burden of proof u/s 68 lies on the assessee, and failure to satisfy this burden results in the amount being treated as income.