2022 (11) TMI 608 - AT - Income Tax

Addition u/s 68 - unexplained cash credits of share capital and security premium received during the year - HELD THAT - The assessee failed to file necessary details to explain the source of alleged cash credit and also unable to prove identity, creditworthiness of the shareholders as well as genuineness of the transaction. The 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(ld.CIT-A) indicates that the assessee has no plausible explanation to explain the source of alleged sum of share capital and security premium totalling to Rs.107.43 cr. The provisions of section 68 of the Act has rightly been invoked by ld. AO on the alleged transaction and it can be safely concluded that the assessee had unaccounted income, which has been routed in the books of account through bogus/accommodation entry in the form of share capital and security premium. No infirmity in the finding of the ld. CIT(A) confirming the addition made u/s. 68 of the Act. Thus, all the grounds of appeal raised by the assessee are dismissed.

Summary

Issues:
1. Ex-parte order passed by the Ld. CIT(A)
2. Addition of Rs. 5,46,00,000 under sec. 68 of the Income Tax Act, 1961
3. Failure of the assessee to provide explanations and evidence

Ex-parte Order by Ld. CIT(A):
The appeal was against the order passed by the Ld. CIT(A) for the assessment year 2012-13. The appellant did not appear during the proceedings despite multiple notices. The Tribunal decided to adjudicate the appeal ex parte as the appellant showed no interest in pursuing it. The grounds raised by the assessee challenging the ex parte order were dismissed due to lack of participation.

Addition under sec. 68 of the Income Tax Act:
The case involved the addition of Rs. 5,46,00,000 under sec. 68 of the Income Tax Act, 1961 for unexplained share capital and security premium received during the year. The AO had raised concerns about the genuineness of the share capital and premium received by the assessee company. The AO proceeded with a best judgment assessment under section 144 of the Act, making the total addition Rs. 107,43,00,000. The Ld. CIT(A) confirmed this addition as the assessee failed to provide any further evidence or submissions to support its case.

Failure of the Assessee to Provide Explanations:
The assessee, a private limited company, failed to comply with statutory notices and did not provide explanations or evidence regarding the source of alleged cash credits amounting to Rs. 107.43 crores. Despite opportunities given by the authorities, the assessee did not submit any details to prove the genuineness of the transactions. The Tribunal observed that the company had unaccounted income routed through share capital and security premium. The failure to explain the source of funds led to the confirmation of the addition under sec. 68 of the Act.

The Tribunal found no merit in the grounds raised by the assessee and dismissed the appeal. The decision was based on the failure of the assessee to provide adequate explanations and evidence regarding the substantial amounts of share capital and security premium received. The Tribunal upheld the addition made under sec. 68 of the Income Tax Act, 1961, emphasizing the lack of cooperation and plausible explanations from the assessee throughout the proceedings.