2019 (6) TMI 1285 - AT - Income Tax

Addition u/s 68 - unexplained cash credit on the basis of information received from the office of Additional Directors of Income Tax - notices issued u/s. 133(6) to the parties were returned unserved - HELD THAT - The assessee has received unsecured loan from different parties in both the assessment years. Due information has been received and the enquiry by the Assessing Officer duly proved that these are accommodation entries. AO duly issued notices and assessee has not at all been able to prove the identity of the parties. Elaborate enquiry by the AO duly proved that assessee is recipient of bogus accommodation entry in the garb of unsecured loan. The view of the authorities below is duly supported by the decision in the case of Pr.CIT Vs. NRA Iron and Steel Pvt. Ltd. 2019 (3) TMI 323 - SUPREME COURT wherein it was duly expounded that by merely producing documentary evidence assessee is not relieved of its onus to prove that it is not a party to the receipt of accommodation entries, if Assessing Officer's enquiry duly prove the bogus nature of transaction. Accordingly, we don't find any infirmity in the well reasoned orders of the authorities below. Accordingly, we confirm the same. - Appeals filed by the assessee is dismissed.

Summary

Issues:
1. Addition of unexplained cash credit under section 68 of the Income Tax Act, 1961 for A.Y. 2009-10 and 2011-12.

Analysis:
1. The case involved appeals by the assessee against the orders of the CIT(A) for A.Y. 2009-10 and 2011-12, challenging the addition of ?35,00,000 under section 68 of the Income Tax Act, 1961. The assessee contended that the loans received from certain parties were genuine and not unexplained cash credits.

2. The Assessing Officer (AO) reopened the case under section 147 based on information received regarding unsecured loans from alleged bogus parties. Despite the assessee's submissions of loan confirmations and other documents, the AO found discrepancies, including returned unserved notices to the loan parties and inconsistencies in the loan amounts claimed by the assessee and shown in the balance sheets of the lending parties.

3. The CIT(A) upheld the addition, emphasizing the failure of the assessee to provide satisfactory explanations and evidence to prove the genuineness of the loans. The CIT(A) highlighted discrepancies in the documents submitted, such as photocopies of computer-generated documents and inconsistencies in loan amounts shown in balance sheets.

4. The ITAT Mumbai, in its decision, noted that the assessee failed to establish the identity of the loan parties and prove that the loans were not accommodation entries. Citing the decision of the Hon'ble Apex Court in a similar case, the ITAT upheld the orders of the lower authorities, emphasizing that mere production of documentary evidence was insufficient to discharge the onus of proving the legitimacy of the transactions.

5. The ITAT dismissed the appeals, confirming the addition of the unexplained cash credits under section 68 of the Income Tax Act, 1961 for both A.Y. 2009-10 and 2011-12. The decision was based on the failure of the assessee to provide credible evidence and explanations, leading to the conclusion that the loans were indeed bogus accommodation entries.

This detailed analysis covers the issues involved in the legal judgment, outlining the arguments presented by the parties, the findings of the authorities, and the final decision of the ITAT Mumbai.