2022 (8) TMI 297 - AT - Income Tax

Addition u/s 68 - Unexplained cash credits - third round of litigation - HELD THAT - As in second round of litigation being differential between deposit being advance for land from members as is reflected in the Balance Sheet and the statement of deposits raised by assessee from members filed by the assessee during assessment proceedings stood deleted by CIT(A) in second round of litigation and hence this has attained finality. So far as fresh deposits being advance for land from members raised by assessee from members during the year under consideration, are in the form of cash credits which are recorded in assessee s books of accounts, and the onus is on the assessee to explain identity and creditworthiness of the creditor and genuineness of the transaction. The assessee has not not submitted any evidences/ explanation to discharge its onus u/s 68 even before us. The assessee did not entered appearance before CIT(A) in third round of litigation and also chose not to appear before us when this appeal was fixed for hearing on 12th July, 2022 as well on 22nd July, 2022 nor adjournment application was filed. The assessee has not submitted any explanation/ evidences to satisfy the mandate of Section 68 - Even, statement of fact has not been filed before the tribunal, although it is stated to have been filed in Form No. 36. - The onus u/s 68 was on the assessee as the said sum stood credited in its books of accounts, which the assessee failed to discharge. Thus, we find no merit in the appeal filed by the assessee, which stand dismissed

Issues Involved:
1. Legality of the assessment order dated 27.11.2006 under Section 143(3) read with Section 254 of the Income-tax Act, 1961.
2. Compliance with the directions of the Income Tax Appellate Tribunal (ITAT) by the Assessing Officer (AO).
3. Ex-parte order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] without providing reasonable opportunity to the assessee.
4. Jurisdiction of the CIT(A) in making additions beyond the scope of the appeal.
5. Addition of Rs. 64,62,054/- under Section 68 of the Income-tax Act, 1961.

Detailed Analysis:

1. Legality of the Assessment Order:
The assessee challenged the assessment made on an income of Rs. 5,61,060/- by the AO on 27.11.2006 under Section 143(3) read with Section 254 of the Income-tax Act, 1961, claiming it to be bad both on facts and in law. The Tribunal found that the assessment order was part of a protracted litigation process, and the assessee had not complied with procedural requirements, including the payment of the appeal fee.

2. Compliance with ITAT Directions:
The assessee argued that the AO failed to follow the ITAT's directions from the order dated 07.10.2005 and did not conduct proper verification. The AO had added Rs. 6,02,264/- under Section 68 without providing a reasonable opportunity to the assessee. The Tribunal noted that the AO had indeed made errors in the second round of litigation, but the CIT(A) had corrected these by deleting the addition of Rs. 6,02,264/- and instead, enhancing the addition to Rs. 64,62,054/- based on fresh deposits.

3. Ex-parte Order by CIT(A):
The assessee contended that the CIT(A) passed the order ex-parte without providing reasonable opportunity. The Tribunal observed that multiple notices were issued to the assessee, and despite several opportunities, the assessee did not appear or submit any written submissions. Thus, the CIT(A) proceeded to decide based on the available records.

4. Jurisdiction of CIT(A):
The assessee claimed that the CIT(A) exceeded his jurisdiction by making additions that were not the subject matter of the appeal. The Tribunal found that the CIT(A) acted within the scope of the ITAT's directions, which required verification of current deposits for the assessment year under consideration. The CIT(A) enhanced the addition to Rs. 64,62,054/- based on these directions.

5. Addition under Section 68:
The primary issue before the Tribunal was the addition of Rs. 64,62,054/- towards fresh deposits raised by the assessee during the Financial Year 2000-01, which was confirmed by the CIT(A) under Section 68. The Tribunal noted that the assessee failed to provide any evidence or explanation to discharge its onus under Section 68, which requires proving the identity, creditworthiness of the creditor, and the genuineness of the transaction. Despite multiple opportunities, the assessee did not appear or submit any supporting documents. Consequently, the Tribunal upheld the CIT(A)'s addition of Rs. 64,62,054/- under Section 68, dismissing the appeal.

Conclusion:
The Tribunal dismissed the appeal filed by the assessee, confirming the addition of Rs. 64,62,054/- under Section 68 of the Income-tax Act, 1961, due to the assessee's failure to provide necessary evidence and explanations. The order was pronounced in open court on 03/08/2022 at Allahabad.

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