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2017 (1) TMI 1332 - AT - Income TaxUnexplained cash credits u/s.68 - amount collected on behalf of its sister concern - Held that - The assessee has failed to file even details of the cheques bounced in order to discharge its primary onus much less than the substantive burden. Shri Talati at this stage refers to assessee s huge losses to the tune of ₹ 7,81,61,822/- to plead that there was no need on its part to adopt such a tax evasion method. We find no merit in this plea as this alone cannot form a valid reason to delete the impugned addition wherein the assessee has failed in proving its above stated explanation to have collected consideration in lieu of sale of goods from the payee entity at its sister concern s behest. We accordingly conclude that all three relevant parameters of identity, genuineness and creditworthiness have not been discharged at assessee s behest in its endeavor to delete the impugned addition as in Sumati Dayal vs. CIT 1995 (3) TMI 3 - SUPREME Court holding that such an explanation must satisfy the test of human probabilities. We thus find no reason to interfere in the CIT(A) s order affirming Assessing Officer s action making the impugned unexplained cash credits addition - Decided against assessee.
Issues Involved:
1. Addition of ?1,34,70,822 as unexplained cash credits under Section 68 of the Income Tax Act. 2. Addition of ?6,00,000 as unexplained cash deposits under Section 68 of the Income Tax Act. Detailed Analysis: Issue 1: Addition of ?1,34,70,822 as Unexplained Cash Credits The assessee, a company trading in ferrous and non-ferrous metals, challenged the addition of ?1,34,70,822 as unexplained cash credits under Section 68 of the Income Tax Act. The Assessing Officer (AO) had treated these cash deposits in the assessee’s bank account as unexplained cash receipts, questioning the genuineness of the transactions, and noting the absence of confirmation from the payee entity, M/s. Accost Impex. The AO issued a Section 133(6) notice to the payee entity, which was returned undelivered, and the assessee failed to provide further explanations. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO’s decision, stating that the assessee could not satisfactorily explain why M/s. Accost Impex paid the amount to the assessee instead of directly to its sister concern, M/s. Metal Enterprises Pvt. Ltd. The CIT(A) noted that the transactions were conducted in cash, which raised further doubts, especially since corporate transactions typically occur through cheques. The CIT(A) cited the judgment in T. P. Abdulla V/s. ACIT, emphasizing that the burden of proof lies with the assessee to provide a satisfactory explanation for the cash receipts. The assessee argued that it acted as a mediator due to disputes between M/s. Metal Enterprises and M/s. Accost Impex, leading to the cash payments. However, the tribunal found no evidence of such disputes or bounced cheques. The tribunal concluded that the assessee failed to prove the identity, genuineness, and creditworthiness of the transactions, as required under Section 68, and upheld the addition of ?1,34,70,822 as unexplained cash credits. Issue 2: Addition of ?6,00,000 as Unexplained Cash Deposits The assessee also contested the addition of ?6,00,000 as unexplained cash deposits under Section 68. The assessee claimed these were advances from customers for material supply, which were later returned. However, the AO rejected this explanation due to the lack of evidence and details of the customers. The CIT(A) upheld the AO’s decision, noting the absence of customer details and supporting documentation. The tribunal, after hearing both sides, agreed with the lower authorities that the assessee failed to provide necessary evidence to substantiate the claim of receiving advances from customers. Consequently, the tribunal confirmed the addition of ?6,00,000 as unexplained cash deposits under Section 68. Conclusion: The tribunal dismissed the assessee’s appeal, affirming the additions of ?1,34,70,822 and ?6,00,000 as unexplained cash credits and deposits, respectively, under Section 68 of the Income Tax Act. The tribunal emphasized the importance of providing satisfactory explanations and evidence to substantiate cash receipts and deposits to avoid such additions.
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