2022 (5) TMI 1130 - AT - Income Tax

Reopening of assessment u/s 147 - Eligibility of reasons to believe - addition u/s 68 - HELD THAT - We find that assessee did not contest its grounds before the Ld. CIT(A) seriously as the assessee even did not file a copy of the reasons recorded before the Ld. CIT(A). In view of the above, in our opinion the Ld. CIT(A) is justified in rejecting the contention of the assessee that the Assessing Officer did not have any tangible material to reopen the assessment. Accordingly, we uphold the finding of the CIT(A) in absence of any rebuttal by the assessee. The grounds challengingly legality of the reassessment proceeding are accordingly dismissed. Addition u/s 68 in absence of documentary evidence filed by the assessee - We find that before the Assessing Officer the assessee failed to discharge its onus in terms of section 68 of the Act of filing documentary evidence in support of identity creditworthiness of the unsecured loan parties and genuineness of the transaction, thereafter the CIT(A) provided further opportunity and called for certain documents, however assessee failed in complying the queries raised by the CIT(A). In view of above facts and circumstances, we are of the opinion that Ld. CIT(A) is justified in upholding the addition, in absence of any rebuttal filed by the assessee before us. The grounds challenging the merit of the addition are accordingly dismissed. Appeal of assessee dismissed.

Issues:
1. Legality of reassessment proceedings under section 147 of the Income Tax Act.
2. Addition of unexplained cash credit under section 68 of the Income Tax Act.
3. Charging of interest under sections 234B & 234C of the Income Tax Act.
4. Validity of the order passed by the Ld. CIT(A).

Analysis:

Issue 1: Legality of reassessment proceedings under section 147 of the Income Tax Act:
The Assessing Officer initiated reassessment proceedings under section 147 of the Act, leading to an addition of Rs. 20,00,00,000 under section 68 of the Act. The appellant challenged the legality of the reassessment, but the Ld. CIT(A) upheld the proceedings. The Ld. CIT(A) observed that the appellant failed to produce the copy of reasons recorded under section 148(2) to substantiate their contention that the Assessing Officer lacked tangible material for reopening the assessment. Consequently, the Tribunal upheld the Ld. CIT(A)'s decision, as the appellant did not contest the grounds seriously and failed to provide necessary evidence.

Issue 2: Addition of unexplained cash credit under section 68 of the Income Tax Act:
The Ld. CIT(A) upheld the addition of Rs. 20,00,00,000 as unexplained cash credit under section 68 of the Act due to the appellant's failure to produce essential documents, such as vouchers and correspondences with relevant parties. The appellant's inability to furnish ledger and bank accounts further weakened their case. The Ld. CIT(A) emphasized the appellant's failure to establish the genuineness of transactions, leading to the confirmation of the addition. Despite providing opportunities to submit required documents, the appellant's non-compliance resulted in the dismissal of their appeal challenging the addition.

Issue 3: Charging of interest under sections 234B & 234C of the Income Tax Act:
The Ld. CIT(A) confirmed the charging of interest amounting to Rs. 4,30,04,302 under sections 234B & 234C of the Income Tax Act. This decision was based on the provisions of the Act and the appellant's failure to provide substantial evidence to challenge the interest charges. The Tribunal did not delve deeply into this issue, as the appellant's lack of representation hindered a comprehensive examination.

Issue 4: Validity of the order passed by the Ld. CIT(A):
The order passed by the Ld. CIT(A) was challenged by the appellant on various grounds, including being illegal, bad in law, ultra vires, and contrary to the provisions of law. However, the Tribunal upheld the Ld. CIT(A)'s decision, emphasizing the appellant's lack of compliance, failure to produce necessary documents, and inability to establish the genuineness of transactions. The Tribunal dismissed the appeal filed by the assessee, affirming the Ld. CIT(A)'s order.

In conclusion, the Tribunal dismissed the appellant's appeal, upholding the decisions made by the Ld. CIT(A) regarding the legality of reassessment proceedings, addition of unexplained cash credit, and charging of interest under relevant sections of the Income Tax Act. The appellant's failure to provide essential documentation and establish the genuineness of transactions weakened their case, leading to the unfavorable outcome in the Tribunal's judgment.

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