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2023 (11) TMI 1144 - AT - Income TaxAddition on account of Share Application Money u/s 68 - burden of proving the creditworthiness of creditors and the genuineness of the transaction - HELD THAT - CIT(A) found that the assessee failed to prove the genuineness of the transaction and the creditworthiness of the creditors. The initial burden of proving the creditworthiness of creditors and the genuineness of the transaction is cast upon the Assessee as per Section 68. In the present case, as the Assessee has not proved the burden cast upon it u/s 68 of the Act by providing requisite evidence before the Authorities, therefore, in our considered opinion, the Ld. CIT(A) has rightly confirmed the addition on the basis of remand report. Disallowance of addition in the fixed asset, addition on account of sundry creditors and the disallowance expenses were also remained unexplained by the Assessee before the AO or before the CIT(A). Therefore, we find no reason to interfere with the above disallowances made by the AO which has been confirmed by the CIT(A). Accordingly, we find no merit in the grounds of appeal of the assessee.
Issues involved:
The judgment involves the following Issues: 1. Addition of Share Application Money under section 68 of the Income Tax Act 1961. 2. Addition of capital expenses on Fixed Assets. 3. Addition of sundry creditors. 4. Addition of expenses incurred for the business of the company. Issue 1: Share Application Money under section 68: The appeal was filed against the addition of Rs. 8,51,90,000 as Share Application Money under section 68 of the Income Tax Act. The Assessee failed to prove the creditworthiness of the creditors and the genuineness of the transaction. The appellant did not comply with notices issued, and the documents submitted during the appellate proceedings were deemed insufficient to verify the legitimacy of the transaction. The Tribunal upheld the addition as the Assessee did not discharge the burden of proof under section 68. Issue 2: Capital Expenses on Fixed Assets: An addition of Rs. 85,35,082 for capital expenses on Fixed Assets was made. The Assessee failed to provide adequate documentation to support the claimed depreciation. Without proper evidence, the depreciation was disallowed in full, as the proof of genuine business activity was lacking. The Tribunal found the disallowance justified due to the absence of necessary documentation. Issue 3: Sundry Creditors: The addition of Rs. 89,17,078 on account of unconfirmed sundry creditors was challenged. The Assessee did not furnish details or supporting documents to justify the claimed liability. The lack of evidence regarding the creditors' creditworthiness and the transaction's genuineness led to the confirmation of the addition by the Tribunal. Issue 4: Business Expenses: An addition of Rs. 2,64,41,830 for expenses claimed in the Profit & Loss account was disputed. The Assessee failed to provide vouchers or bills to substantiate the expenses. Without proper documentation or Income Declaration Scheme (IDS) returns, the AO's addition was upheld by the Tribunal. The Tribunal found the AO's decision correct and sustainable based on the lack of supporting evidence. In conclusion, the Tribunal dismissed the appeal filed by the Assessee as the burden of proof was not discharged for any of the issues raised. The Tribunal upheld the additions made by the Assessing Officer and confirmed by the CIT(A) due to the lack of sufficient evidence provided by the Assessee.
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