2022 (7) TMI 795 - AT - Income Tax

Addition u/s 68 - None appeared on behalf of the assessee - HELD THAT - None has been appearing also for the past six posting for hearing. In this view of the matter, we are disposing of the appeal by hearing the Ld. DR and perusing the records. We find that the facts and circumstances narrate in the order of the authorities below clearly indicate that it is classic case of circuitatious rotation of unaccounted money. The lender has no identity in as much it is nonexistent its sources of credits itself is share premium. So there is no creditworthiness of the lender company. It is a clear cut case of circuitatious rotation of unaccounted money and being such rotation of unaccounted money is absolutely not a genuine loan transaction. The authorities have duly dealt with the issues. In this view of the matter, we do not find any infirmity in the orders of the Revenue authorities below - Decided against assessee.

Summary

Issues:
Validity of the assessment order, Addition of Rs. 45,00,000 under section 68 of the Income Tax Act, Rejection of documentary evidences by the Commissioner of Income Tax (Appeals)

Validity of the assessment order:
The appeal challenged the order of the Ld. CIT(A) regarding Assessment Year 2014-15. The Assessing Officer questioned the creditworthiness of the assessee company due to loans received from M/s Satya Lakshmi Trade Link Pvt. Ltd. The company's return and bank account raised suspicions. Despite summons and enquiries, the company's existence was questioned. The Assessing Officer concluded the company was non-existent and added Rs. 45,00,000 as unexplained cash credit under section 68 of the Act. The Commissioner of Income Tax (Appeals) upheld this decision, citing the company's lack of address, minimal income, and suspicious transactions. The appellate tribunal found the transaction to be a circuitous rotation of unaccounted money, upholding the lower authorities' orders due to the lack of creditworthiness of the lender company.

Addition of Rs. 45,00,000 under section 68 of the Income Tax Act:
The Assessing Officer added Rs. 45,00,000 as unexplained cash credit under section 68 of the Income Tax Act, citing the non-existence of the lending company and lack of cooperation in enquiries. The company's directors did not respond to summons, raising doubts about their credibility. The Assessing Officer initiated penalty proceedings under section 271(1)(c) for furnishing inaccurate particulars of income. The Commissioner of Income Tax (Appeals) upheld this addition, considering the lender company's questionable nature and suspicious transactions. The appellate tribunal concurred, deeming the transaction a circuitous rotation of unaccounted money, leading to the dismissal of the assessee's appeal.

Rejection of documentary evidences by the Commissioner of Income Tax (Appeals):
The assessee submitted documentary evidences to support the unsecured loan, which were rejected by the Assessing Officer. The Commissioner of Income Tax (Appeals) found the transaction to be bogus and an accommodation entry, given the lender company's non-existence and questionable financial activities. The appellate tribunal upheld this decision, emphasizing the lack of creditworthiness in the transaction and the suspicious nature of the loan, ultimately dismissing the appeal.

---