2023 (8) TMI 510 - AT - Income Tax

Unexplained cash credit u/s 68 - non discharge of onus to prove by assessee - HELD THAT - As during the assessment proceeding, AO required the assessee to file necessary details to discharge initial onus caused u/s 68 with regard to cash transactions of unsecured loans and regarding shared applications money the assessee has not discharge the initial onus u/s 68 of the Act either before the A.O. or before the CIT(A). Thus, in the absence of any documentary evidence to establish identity of cash creditor, creditworthiness and proof of genuineness of the transaction, A.O. rightly made the addition which has been confirmed by the CIT(A). In so far as, loan from Kanta Rani Gulati is concerned also the assessee has not furnished any details to explain the nature and source of the credit before the A.O. or before the CIT(A). Appeal of the assessee dismissed.

Summary

Issues Involved:
The judgment involves appeals filed by the Assessee against the order passed by the Commissioner of Income Tax (Appeals) for Assessment Years 2009-10 and 2010-11.

Issue 1: Addition of Cash Credit u/s 68 of the IT Act for AY 2009-10
The Assessee raised various grounds challenging the addition of Rs. 4,78,00,000 as cash credit u/s 68 of the IT Act. The Commissioner of Income Tax (Appeals) confirmed the addition despite the creditor confirming the credit and the funds being transferred from a foreign account. The Assessee failed to establish the creditworthiness of the creditor and genuineness of the transaction, leading to the dismissal of the appeal.

Issue 2: Unexplained Cash Credit u/s 68 of the Income Tax Act for AY 2010-11
In the appeal for AY 2010-11, the Assessee contested the addition of Rs. 5,02,04,930 as unexplained cash credit u/s 68 of the Income Tax Act. The Commissioner of Income Tax (Appeals) upheld the addition as the Assessee failed to provide necessary details to establish the identity and creditworthiness of the creditors, resulting in the dismissal of the appeal.

Separate Judgment for AY 2010-11:
The Assessing Officer made similar additions for unexplained cash credit for AY 2010-11, which the Commissioner of Income Tax (Appeals) upheld. The Assessee's failure to discharge the initial onus u/s 68 of the Act regarding cash transactions led to the dismissal of the appeal.

The judgment emphasizes the importance of providing documentary evidence to establish the identity of creditors, creditworthiness, and genuineness of transactions to avoid additions of unexplained cash credits u/s 68 of the IT Act.