2022 (8) TMI 792 - AT - Income Tax

Unexplained cash deposits - CIT(A) was of the considered opinion that assessee failed to discharge its onus - HELD THAT - When the case of assessee is of a prejudice being caused due to not being provided opportunity of cross examination of witnesses then there should at least be some matter on record to suggest that accepting the evidences as un-rebutted, has caused prejudice to the assessee. The right of cross examination is certainly a sacrosanct right but on questions of facts, there has to be a plausible defence or a case to be put up to the witnesses to rebut their evidences or to question their veracity. Bald averments of prejudice are not sufficient that the denial of right of cross examination has resulted into prejudice. Rather when Revenue Authorities are recording evidences during assessment proceedings they are discharging duty imposed under law and the presumption is attached that the records are correct. The statement of concerned Patwari could have been very well rebutted by merely production of Revenue records before CIT(A) or even this Tribunal. As a matter of fact, it appears from record that the agreements themselves were not produced disclosing as to what were the survey numbers of the land which were proposed to be sold to five different persons. Thus, there is no substance in the grounds raised and the same are decided against the assessee.

Issues Involved:
1. Validity of addition under Section 68 of the Income Tax Act, 1961.
2. Adequacy of opportunity provided to the assessee for cross-examination.
3. Legitimacy of interest levied under Sections 234B and 234D.
4. Initiation of penalty proceedings under Section 271(1)(c).

Issue-wise Detailed Analysis:

1. Validity of Addition under Section 68 of the Income Tax Act, 1961:
The primary issue revolves around the addition of Rs. 60,00,000/- made by the AO under Section 68 due to unexplained cash credits. The assessee claimed that these were advances received against the proposed sale of agricultural land. However, the AO noted that the assessee failed to produce the parties involved or submit sufficient documents regarding their identity, creditworthiness, and the genuineness of the transactions. Notices issued under Section 133(6) were largely non-complied with, and some were returned undelivered. The CIT(A) upheld the AO's decision, noting that inquiries made during the remand proceedings substantiated the AO's findings. Statements from some creditors revealed that they did not recognize the assessee or acknowledge any transactions, further supporting the AO's conclusion. The Tribunal found no error in the findings and dismissed the grounds raised by the assessee.

2. Adequacy of Opportunity Provided to the Assessee for Cross-examination:
The assessee argued that the evidence was collected behind his back and that he was not given an opportunity to cross-examine the witnesses. The CIT(A) and the Tribunal observed that the assessee was given ample opportunities to substantiate his claims during both assessment and remand proceedings. The Tribunal noted that the right to cross-examine is crucial but must be supported by a plausible defense. The assessee failed to produce any substantial evidence or rebut the statements made by the witnesses. Thus, the Tribunal dismissed the ground, stating that the assessee did not suffer any prejudice due to the alleged denial of cross-examination.

3. Legitimacy of Interest Levied under Sections 234B and 234D:
The assessee contested the interest levied under Sections 234B and 234D. However, the Tribunal did not find any merit in this ground, as it is a consequential issue arising from the primary addition under Section 68. Since the primary addition was upheld, the interest levied was also deemed appropriate.

4. Initiation of Penalty Proceedings under Section 271(1)(c):
The assessee challenged the initiation of penalty proceedings under Section 271(1)(c). The Tribunal did not delve into this issue in detail, as it is a separate proceeding that follows the outcome of the assessment. The initiation of penalty proceedings was deemed to be in accordance with the law, given the upholding of the addition under Section 68.

Conclusion:
The Tribunal dismissed the appeal, upholding the addition of Rs. 60,00,000/- under Section 68, confirming that the assessee failed to discharge the onus of proving the identity, creditworthiness, and genuineness of the transactions. The arguments regarding the denial of cross-examination and the levy of interest were also found to be without merit. The initiation of penalty proceedings under Section 271(1)(c) was considered appropriate. The order was pronounced on 16th August 2022.

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