2023 (1) TMI 160 - AT - Income Tax

Addition u/s 68 - Unexplained cash credits - AO was not satisfied with the genuineness of share capital and share premium security premium received by the assessee company - HELD THAT - Assessee failed to produce the alleged parties who had subscribed to the equity shares of the assessee company. The 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. 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 at any stage. Consistently escaping from appearing/producing the alleged parties before the ld. 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 and, therefore, the provisions of section 68 have rightly been invoked by ld. AO and alleged sum is rightly treated as the unaccounted income of assessee, which has been routed in the books through bogus/accommodation entry in the form of share capital and security premium. Therefore, we find no infirmity in the finding of the CIT(A) confirming the addition u/s. 68 of the Act. Thus, all the grounds of appeal raised by the assessee are dismissed.

Summary

Issues:
1. Condonation of delay in filing the appeal.
2. Adjudication of appeal ex parte due to non-appearance of the assessee.
3. Addition of unexplained cash credit u/s 68 of the Income Tax Act, 1961.

Condonation of Delay:
The appeal by the assessee for the assessment year 2012-13 was found to be time-barred by 2 days. Despite the absence of a condonation petition, the delay was condoned by the Appellate Tribunal due to the specific circumstances of the case. The appeal was then admitted for adjudication on its merits.

Adjudication Ex Parte:
Upon the case being called, no one appeared on behalf of the assessee, indicating a lack of interest in prosecuting the appeal. Consequently, the Tribunal decided to adjudicate the appeal ex parte, relying on the available material and the assistance of the Departmental Representative.

Addition of Unexplained Cash Credit:
The case involved a private limited company that declared zero income for the relevant assessment year. The Assessing Officer (AO) observed credits totaling Rs. 1,10,21,100 in the company's books, which raised concerns about the genuineness of the transactions. The AO initiated proceedings under section 68 of the Income Tax Act, 1961, for unexplained share capital and security premium amounting to Rs. 1,10,20,000. Despite notices and opportunities provided, the assessee failed to substantiate the source of the cash credits or prove the genuineness of the transactions.

The Commissioner of Income-tax (Appeals) confirmed the addition under section 68, as the assessee did not attend the hearings or provide any supporting evidence. The Tribunal, after considering the facts and circumstances, upheld the CIT(A)'s decision, noting the lack of plausible explanations or evidence from the assessee regarding the source of the share capital and security premium. Consequently, the Tribunal dismissed all grounds of appeal raised by the assessee and upheld the addition of Rs. 1,10,20,000 under section 68 of the Act.

In conclusion, the Tribunal dismissed the appeal of the assessee, affirming the addition of unexplained cash credit made by the Assessing Officer under section 68 of the Income Tax Act, 1961.