2022 (8) TMI 199 - AT - Income Tax

Unexplained cash credit u/s 68 - Disallowance of interest being non-genuine - main contention before us advanced by the ld. AR is about nongranting opportunity of cross-examination of Mr. Rangnath Dattatraya Gadekar - HELD THAT - As in the present case we held the loan itself is not genuine as the loan creditor himself stated in the cross-examination and through affidavit he did not give any loan to assessee - we find no infirmity in the order of CIT(A) in holding that there is no loan advanced by Mr. Rangnath Dattatraya Gadekar to assessee and consequently, disallowance of interest is not justified. We concur with the findings of CIT(A) in toto. Addition on account of claim of excess payment - HELD THAT - We find the cross-examination which was reproduced by the CIT(A) of the impugned order and on perusal of the cross-examination of the above said three persons, we note that they clearly stated that they wanted to receive entire amount of money which was deposited in their account against the acquisition of their land. They also stated they did not receive any amount from the assessee as claimed by him except Rs.20 lakhs, Rs.14 lakhs and Rs.20 lakhs, respectively. On perusal of the impugned order and also written submissions as filed by the ld. AR vide letter dated 30-05-2022 before us, we note that admittedly there is no proof to show that the assessee paid Rs.92,00,000/- except, payment to the above said three persons. Therefore, we find no infirmity in the order of CIT(A) in confirming addition. Addition on account of payable to three parties - addition made as liability is not crystallized - HELD THAT - There is no proof to show that the liability is crystallized before us, therefore, we find no infirmity in the order of CIT(A) and it is justified. Thus, ground raised by the assessee is dismissed.

Issues Involved:
1. Addition of Rs. 2,77,50,000/- as unexplained cash credit under Section 68 of the Income Tax Act.
2. Disallowance of interest of Rs. 3,42,022/- paid to Mr. Rangnath Dattatraya Gadekar.
3. Addition of Rs. 38,00,000/- on account of claim of excess payment.
4. Addition of Rs. 1,37,00,000/- on account of non-genuine liability.

Detailed Analysis:

1. Addition of Rs. 2,77,50,000/- as Unexplained Cash Credit:
The assessee, engaged in land trading, declared a total income of Rs. 4,71,14,700/- for the assessment year 2010-11. The Assessing Officer (AO) scrutinized the return and determined the total income at Rs. 9,27,06,722/-, including an addition of Rs. 2,77,50,000/- as unexplained cash credit under Section 68 of the Income Tax Act. The AO's investigation revealed that the assessee received Rs. 2,77,50,000/- from Mr. Rangnath Dattatraya Gadekar, who later stated that he did not provide any loan to the assessee. The AO recorded Mr. Gadekar's statement, where he claimed that blank cheques were used by the assessee to transfer funds without his knowledge. Despite an affidavit from Mr. Gadekar claiming the loan, he later retracted it, affirming his initial statement that no loan was given. The CIT(A) confirmed the AO's findings, stating there was no genuine loan, and the Tribunal upheld this decision, noting that the assessee failed to provide credible evidence to rebut Mr. Gadekar's statements.

2. Disallowance of Interest of Rs. 3,42,022/-:
The disallowance of interest paid to Mr. Rangnath Dattatraya Gadekar was a consequence of the finding that the loan itself was not genuine. The AO disallowed the interest claim of Rs. 3,42,022/- on the alleged loan, which was upheld by the CIT(A) and the Tribunal. The Tribunal noted that the assessee's contention about the non-granting of cross-examination was not tenable, as the AO had provided opportunities for cross-examination, and Mr. Gadekar's statements consistently denied the loan.

3. Addition of Rs. 38,00,000/- on Account of Claim of Excess Payment:
The assessee claimed to have paid Rs. 92,00,000/- to three individuals (Smt. Shaila D. Jadhav, Shri Padmakar D. Jadhav, and Shri Shivaji D. Jadhav) but could only substantiate payments totaling Rs. 54,00,000/-. The AO issued summons to these individuals, who confirmed receiving only Rs. 20 lakhs, Rs. 14 lakhs, and Rs. 20 lakhs respectively, and denied receiving the claimed Rs. 92,00,000/-. The CIT(A) confirmed the AO's findings, and the Tribunal upheld this decision, noting the lack of evidence to support the assessee's claim of excess payment.

4. Addition of Rs. 1,37,00,000/- on Account of Non-Genuine Liability:
The assessee showed Rs. 1,37,00,000/- as payable to the three individuals mentioned above. During cross-examination, these individuals denied any such liability, stating they only received the amounts previously mentioned. The CIT(A) found no evidence of this liability being crystallized and confirmed the AO's addition. The Tribunal upheld this decision, noting that the assessee failed to provide proof of the liability being genuine or crystallized.

Conclusion:
The Tribunal dismissed the appeal of the assessee, confirming the additions and disallowances made by the AO and upheld by the CIT(A). The Tribunal found no merit in the assessee's contentions and affirmed the findings that the transactions and liabilities claimed by the assessee were not genuine. The order was pronounced in the open court on 01st August 2022.

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