2022 (11) TMI 232 - AT - Income Tax

Addition u/s. 68 - unexplained cash credits of share capital and security premium received during the year - HELD THAT - The assessee company has been able to procure share capital/share premium Statutory notice u/s. 131 duly served upon the alleged directors but none complied. Assessee failed to produce the alleged shareholders before the ld.AO for identity, creditworthiness and genuineness of the transaction. Even after providing sufficient opportunity no submission was made either before the AO and CIT(A) nor before us. Assessee was asked to explain the cash credits received by it during the year. The assessee failed to file necessary details to explain the source of alleged cash credit and also unable to prove identity, creditworthiness of the cash creditors as well as genuineness of the transaction as per section 68 - assessee company has miserably failed to explain the source of alleged cash credit. If the assessee had sufficient details to explain the alleged sum, it could have certainly filed those details. Consistently escaping from appearing before the AO and the appellate authority(CIT A) indicates that the assessee has no plausible explanation to explain the source of alleged sum of share capital and security premium. If the assessee is unable to explain the alleged cash credit and consistent escaped, the provisions of section 68 are attracted. Thus, it is held that the assessee has routed its unaccounted income in the books of account in the form of share capital and security premium by arranging bogus share capital and share premium through accommodation entry provider. Under these facts and circumstances, we find no infirmity in the finding of the CIT(A) confirming the addition made u/s. 68 of the Act and the same is confirmed. Thus, grounds of appeal raised by the assessee are dismissed.

Summary

Issues:
- Condonation of delay in filing appeal before ITAT Kolkata
- Addition made under section 68 of the Income-tax Act, 1961
- Failure of the assessee to provide necessary details and explanations

Condonation of Delay:
The appeal before the ITAT Kolkata for the assessment year 2012-13 was found to be time-barred by 18 days. The assessee filed a condonation application citing reasons for the delay. The appellant claimed that the ex-parte order by the Commissioner of Income Tax (Appeals) was received late due to reliance on erroneous advice. The ITAT Kolkata, upon perusing the application, found that the assessee had sufficient reasons for the delay and thus condoned the 18-day delay, admitting the appeal for adjudication on merits.

Addition under Section 68 of the Income-tax Act:
The case involved an assessment where the assessee, a private limited company, received an amount of Rs. 2,23,75,000 as share subscription from directors. The assessing officer was not satisfied with the identity, creditworthiness, and genuineness of the transaction. Despite notices and opportunities given, the alleged creditors did not appear, leading to the addition of Rs. 2,23,75,000 as unexplained cash credit under section 68 of the Act. The assessee's appeal before the CIT(A) was unsuccessful as no further evidence was submitted. The ITAT Kolkata upheld the addition, noting the failure of the assessee to provide necessary details to explain the source of the cash credit, leading to the conclusion that the unaccounted income was routed through bogus share capital and premium.

Failure to Provide Necessary Details:
Throughout the proceedings, the assessee failed to appear before the authorities or provide substantial evidence to support its claims. Despite multiple opportunities, the assessee did not produce the alleged shareholders or provide explanations for the cash credits received. The lack of cooperation and evidence led to the confirmation of the addition under section 68 of the Act. The ITAT Kolkata dismissed the grounds of appeal raised by the assessee, ultimately resulting in the dismissal of the appeal.

This detailed analysis of the judgment highlights the issues of condonation of delay, addition under section 68 of the Income-tax Act, and the failure of the assessee to provide necessary details and explanations throughout the proceedings.