2023 (2) TMI 148 - AT - Income Tax

Unexplained cash credit u/s 68 - CIT(A) confirmed this addition observing that the assessee is unable to explain the source of the said sum - HELD THAT - Undisputed fact is that the alleged sum received during the year and to explain the source thereof neither during the course of assessment proceedings nor during the appellate proceedings before CIT(A) and even during the proceedings before us, no details whatsoever has been filed by the assessee to explain the alleged sum of share application money. The assessee miserably failed to discharge the primary onus casted upon it as per the provisions of Section 68 of the Act. Identity and creditworthiness of the share applicant and genuineness of the transaction has not been proved. Assessee is trying to take shelter on the ground that share capital against the said share application money was allowed in AY 2014-15 and the same was assessed u/s 143(3) of the Act, therefore, addition could not be made for AY 2012-13 in which the said sum is received. We, however, fail to find any merit in this plea taken by the assessee in the grounds of appeal and are of the considered view that since the alleged sum was received during the year, AO was justified in asking the assessee to explain the source of said sum and since the assessee failed to file any documentary evidences and discharge the primary onus casted upon it and could not explain the source of said sum, provisions of Section 68 of the Act are attracted. - Decided against assessee.

Summary

Issues involved:
Appeal against order passed u/s 250 of the Income Tax Act, 1961 for AY 2012-13 regarding addition of share application money.

Detailed Analysis:

1. Background:
The appeal was filed by the assessee against the order passed by the Commissioner of Income-tax (Appeals) for AY 2012-13, challenging the addition of Rs. 1.10 Cr on account of share application money received during the assessment year.

2. Non-appearance of Assessee:
Despite multiple opportunities, the assessee did not appear before the authorities, indicating a lack of seriousness in contesting the appeal. The Tribunal decided to adjudicate the appeal on merit with the assistance of the Departmental Representative (D/R).

3. Grounds of Appeal:
The assessee raised grounds challenging the order of the Income Tax Officer and the CIT(A), specifically contesting the addition of share application money and seeking leave to adduce additional grounds.

4. Assessment and Appeal:
The assessee, a private limited company, declared NIL income in the return filed for AY 2012-13. The Assessing Officer made additions for unexplained cash credit under section 68 of the Act and disallowed certain expenses, resulting in an assessed income of Rs. 14,09,72,710. The CIT(A) partly allowed the appeal, sustaining the addition of Rs. 1.10 Cr towards unexplained share application money.

5. Tribunal's Analysis:
The Tribunal heard the arguments of the D/R and reviewed the records. The contention was that the assessee failed to explain the source of the share application money, as confirmed by the CIT(A). The provisions of Section 68 of the Act were crucial in this case.

6. Section 68 of the Act:
Section 68 deals with unexplained cash credits in the books of the assessee. If the assessee fails to provide a satisfactory explanation for such credits, they may be charged to income tax. The burden of proof lies with the assessee to explain the nature and source of the credits.

7. Decision and Rationale:
The Tribunal found that the assessee did not provide any details to explain the source of the share application money. The identity and creditworthiness of the share applicant were not established, and the genuineness of the transaction was not proven. The Tribunal dismissed the plea that the share capital was allowed in a subsequent assessment year, emphasizing that the addition for AY 2012-13 was justified.

8. Conclusion:
The Tribunal dismissed the appeal filed by the assessee, upholding the addition of Rs. 1.10 Cr towards unexplained share application money for AY 2012-13. Other grounds raised by the assessee were deemed general and did not require adjudication.

In conclusion, the Tribunal upheld the addition under section 68 of the Act, emphasizing the importance of providing a satisfactory explanation for unexplained cash credits in the books of the assessee.