2022 (7) TMI 21 - AT - Income Tax

Addition u/s 68 - unexplained cash credit - HELD THAT - As in the instant case the assessee has failed to meet the three ingredients of section 68 of the I.T. Act, 1961 i.e., identity of Investor/Creditor, creditworthiness and genuineness of the transaction in the matter. Therefore, clearly proved that assessee has not discharged its initial onus to prove the identity of the Investors, their creditworthiness and genuineness of the transaction in the matter. CIT(A), therefore, rightly confirmed the order of the A.O. Even before the Tribunal the assessee did not take any steps to furnish any documentary evidences in respect of the amount received by it towards the alleged accommodation entry sum of Rs.25 lakhs during the F.Y. 2009-10 and the other addition made by AO. Since the assessee has not placed any material to controvert the findings of lower authorities nor has pointed out any fallacy in the findings of the lower authorities we dismiss the appeal of the assessee.

Issues:
1. Addition of Rs.25,00,000/- u/s.68 on account of share capital.
2. Addition of Rs.50,000/- u/s 69C as alleged commission paid for obtaining accommodation entries.
3. Collection of information without providing an opportunity for cross-examination.
4. Upholding of addition despite the assessee discharging the onus u/s 68.
5. Legality of initiation u/s 148 & consequential proceedings.
6. Adjudication of penalty proceedings u/s 271(l)(c) without material on record.

Analysis:

Issue 1:
The assessee received Rs.25 lakhs as share capital from a company, treated as unexplained credit under section 68. The CIT(A) upheld the AO's decision as the assessee failed to prove the identity of the Investor, creditworthiness, and genuineness of the transaction. The Tribunal confirmed the orders as the assessee did not provide any documentary evidence to counter the findings.

Issue 2:
An addition of Rs.50,000/- was made u/s 69C for alleged commission paid for obtaining accommodation entries. The CIT(A) and Tribunal confirmed this addition as the assessee did not present any evidence to challenge the lower authorities' findings.

Issue 3:
The assessee raised concerns about the information collected without providing an opportunity for cross-examination. However, the Tribunal did not find merit in this argument as the assessee failed to present any material to dispute the lower authorities' conclusions.

Issue 4:
Despite the assessee claiming to have discharged the onus u/s 68, the Tribunal found that the assessee did not meet the requirements of proving the identity of the Investors, their creditworthiness, and the transaction's genuineness. As a result, the Tribunal upheld the CIT(A) and AO's decision.

Issue 5:
The legality of the initiation under section 148 and subsequent proceedings was challenged. However, the Tribunal found no reason to interfere with the lower authorities' orders, as the assessee did not provide any material to contest the findings.

Issue 6:
The Tribunal did not find any material on record to support the initiation of penalty proceedings u/s 271(l)(c). The lack of evidence presented by the assessee led to the dismissal of this ground without further adjudication.

In conclusion, the Tribunal dismissed the appeal of the assessee, upholding the additions made by the lower authorities due to the failure of the assessee to provide substantial evidence to counter the findings related to unexplained credits and commission payments. The Tribunal found no reason to interfere with the lower authorities' decisions, emphasizing the importance of meeting the requirements under section 68 of the Income Tax Act, 1961.

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