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2014 (4) TMI 751 - AT - Income TaxAddition u/s 68 of the Act Unexplained cash credits and expenses Onus to prove the genuineness - Held that - The onus is upon the assessee to prove the identity and creditworthiness of the lenders as well as the genuineness of loans - the assessee has not been able to prove the proper identity and creditworthiness of the lenders except in the case of Ms. Jalpa K. Shah - CIT(A) rightly observed that the assessee has shown loans to the extent of Rs.57 lakhs out of which only the loan of Jalpa K. Shah was proved with the help of confirmation letter and the for balance amount provisions of section 68 are attracted - the assessee has not raised any specific ground with regard to the validity of enhancement of income except merely contesting on merits that the CIT(A) is not justified in holding that the balance amount is assessable to tax u/s 68 of the Act - no material was placed to contradict the findings of the CIT(A) and also no material was filed to prove the genuineness and creditworthiness of the creditors thus, there is no infirmity in the order of the CIT(A) Decided against Assessee.
Issues:
1. Delay in filing the appeal 2. Addition made under section 68 of the Act Issue 1: Delay in filing the appeal The appeal was initially filed beyond the prescribed period, with Form No. 36 indicating a delay of 363 days due to an incorrect date of communication of the CIT(A)'s order. However, upon clarification, it was revealed that the order was actually passed on a different date, and the appeal was filed within the correct timeframe. The Tribunal, considering the circumstances, concluded that there was no delay in filing the appeal and proceeded accordingly. Issue 2: Addition made under section 68 of the Act The essential issue in this case revolved around the addition made by the Assessing Officer (AO) and enhanced by the CIT(A) under section 68 of the Act. The assessee, a trader in shares and securities, declared a substantial loss for the year. During the assessment proceedings, it was noted that the assessee had unexplained cash credit, unexplained investment, and unexplained expenditure. The AO made significant additions based on these findings. The CIT(A) observed that the initial burden of proof lies with the assessee to establish the identity and creditworthiness of lenders, as well as the genuineness of loans. In this case, the assessee failed to provide sufficient evidence regarding the unsecured loans received, except for one loan. Despite opportunities, the assessee did not produce PAN or confirmation letters from the lenders, leading to the unexplained nature of a substantial portion of the loans and liabilities. Upon appeal, the Tribunal noted that the assessee did not contest the findings effectively, failing to provide any material to counter the CIT(A)'s conclusions. The Tribunal upheld the CIT(A)'s decision to treat the unexplained portions of loans and liabilities as additions to the assessee's income under section 68 of the Act. In conclusion, due to the lack of evidence and failure to challenge the CIT(A)'s findings effectively, the Tribunal dismissed the appeal filed by the assessee, affirming the additions made under section 68 of the Act. This judgment highlights the importance of substantiating financial transactions and liabilities to avoid adverse consequences under tax laws, emphasizing the burden of proof on the taxpayer in such matters.
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