2023 (10) TMI 388 - AT - Income Tax

Addition u/s 68 - unexplained cash credit - onus to prove - HELD THAT - The assessee has not submitted any evidences/explanation to discharge its onus u/s 68 even before us. The assessee chose not to appear before us when this appeal was fixed for hearing nor adjournment application was filed. The assessee has not submitted any explanation/evidences to satisfy the mandate of Section 68. Thus, we adverse view is to be taken as despite several stages of litigation, and despite being given adequate and sufficient opportunities by us, the assessee failed to satisfy the mandate of Section 68 with respect to loan raised by assessee during the year under consideration from M/S Newwave commercial Pvt. Ltd.. The onus u/s 68 was on the assessee as the said sum stood credited in its books of accounts, which the assessee failed to discharge the identity, creditworthiness of the creditor and genuineness of the transaction - we hold that the order passed by the ld. CIT(A) did not properly dealt with the issues involved in the appeal and accordingly, we set aside the order passed by the ld. CIT(A) and sustain the order passed by the AO. In terms of the above, we allow the appeal filed by the revenue.

Issues involved:
The issues involved in the judgment are the deletion of addition by CIT(A) and the genuineness of the loan transaction.

Deletion of Addition by CIT(A):
The revenue filed an appeal against the order of CIT(A) which deleted the addition of Rs. 3,98,98,500. The AO had added this amount as unexplained cash credit in the hands of the assessee. The AO viewed the entire loan amount as not genuine, based on entries made in the books of the assessee and another company. The CIT(A) allowed the appeal of the assessee, leading to the revenue's grievance that the addition was wrongly deleted. The Tribunal, after considering the submissions, found that the assessee failed to provide any material evidence or documents to support its contention. Despite multiple opportunities, the assessee did not satisfy the requirements of Section 68 of the Income Tax Act, regarding the loan amount. As the assessee failed to discharge the onus of proving the genuineness of the transaction, the Tribunal set aside the CIT(A) order and upheld the AO's decision, allowing the revenue's appeal.

Genuineness of Loan Transaction:
The Assessing Officer conducted a detailed investigation into the loan transaction, including examining bank statements and statements of involved companies. It was found that the company providing the loan had low financial standing, with insignificant balances and immediate fund transfers. The revenue contended that the CIT(A)'s decision to delete the addition was based solely on the submissions of the assessee, without considering the findings of the AO. The Tribunal noted that the assessee did not provide any evidence to refute the AO's findings or satisfy the requirements of Section 68 of the Act. Despite ample opportunities, the assessee failed to establish the identity, creditworthiness of the creditor, and genuineness of the transaction. Therefore, the Tribunal set aside the CIT(A) order and upheld the addition made by the AO, allowing the revenue's appeal.

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