2017 (6) TMI 1210 - AT - Income Tax

Tribunal Upholds Additions for Unexplained Loans, Cash Credits; Deletes Estimates.

Mrs. Meena Kumar Mohnot, Versus The Asst. Commissioner of Income Tax, Non-Corporate Circle-3,

The Tribunal upheld additions related to unexplained loans and cash credits due to lack of evidence provided by the assessee. However, additions based on ... Unexplained credit - Held that:- The assessee has not placed any evidence regarding the identification, genuineness and creditworthiness of the creditor. Though the Tribunal remitted back the matter for furnishing the necessary evidence to establish the genuineness of the credit the assessee failed to establish the same. Therefore, there is no merit in the argument of the assessee that the loan is genuine. The assessee relied on the decision of assessee’s own case, where the addition was deleted in view of the amount involved but not because of the genuineness of the credit was established. The assessee did not even furnish the confirmation and identity of the creditor. Thus the addition made by the AO is confirmed and the order of the Ld.CIT(A) is upheld. Addition of estimated interest on the loan of Shri S.K.Bhandari - Held that:- There was no discussion regarding the payment of interest to Shri SK Bhandari. There was no evidence found during the course of search regarding the payment of interest to Shri Bhandari. AO made the addition purely on surmise without any evidence. Thus the addition made by the AO is deleted and the orders of the lower authorities are set aside. This ground of the appeal is allowed. Addition made on the basis of seized books of accounts - Held that:- In the absence of any evidence to show that there was action u/s 132 of Income tax act in the assessee case and exercise has been made by the Revenue to prove that the incriminating material was belonged to the assessee with the relevant statements recorded u/s 132(4) or u/s 131 of the IT Act, we are of the considered view that that the presumption to hold that he books of accounts belonged to the assessee u/s 132(4A) of I.T. Act cannot be made applicable to the assessee. Further the AO also caused the enquiries in respect of the loans and advances stated to have been made to the parties and received replies denying the transactions. Therefore, we hold that the addition made on the basis of presumption u/s.132(4A) in the hands of the assessee cannot be sustained and deleted. Addition u/s 69 - credit in the bank of Rajasthan and estimated interest thereon - account not disclosed to the Department - Held that:- There was a peak credit balance of ₹ 10000/- in the account and the assessee has not placed any evidence before us to establish the source of the deposits made in the Bank Account. The assessee has not denied that the bank account belonged to her. Therefore, we uphold the addition of ₹ 10,000/- and confirm the order of the Ld.CIT(A) with regard to the deposit. However we do not find any evidence in respect of interest charged by the assessee and assessed by the AO. The entire addition was made on surmises which cannot be sustained Therefore, we are unable to uphold the addition made by the AO on account of interest. Addition on account of cash credits during relevant previous years - Held that:- The argument of the assessee that identity of the creditors and their creditworthiness have already been established in the A.Y 1981- 82 and substantially higher amounts have been accepted by the ITAT is not an acceptable argument. Income Tax proceedings for each year is independent. The assessee has to prove the identity, capacity and credit worthiness of the creditor every year for the advances accepted during the year under consideration. This view is upheld in number of judgments. In the instant case, it was set aside to the A.O with a direction to furnish evidence to the A.O to establish the genuineness, identity and credit worthiness of the creditor in the re-assessment proceedings but the assessee failed to furnish any evidence to support her case. Therefore we do not find any infirmity in the orders of the CIT(A) and we uphold the same. The assessee’s appeal on this ground for the A.Y 1982-83 and 1983-84 are dismissed. Addition in respect of cash received from M/s. Balaji Plastics & Metals Enterprises - Held that:- The amount of ₹ 10,000/- stated to be received from M/s.Balaji Plastics towards re-payment of the loan. The assessee also stated that Hundi Receipt signed by the buyer was furnished. But the party has denied the transaction, hence it is obligation on the part of the assessee to prove the transaction by producing the creditors. Both the authorities have stated that the assessee has not produced any evidence to prove the genuineness of the transaction - No infirmity in the Orders of the Ld.CIT(A) and the same is upheld. Interest charged on the advances taken - Held that:- There was no evidence brought on record by the A.O regarding the payment of interest to the above parties. Even in re-assessment proceedings the A.O has not brought on record any evidence to prove that the assessee has made the payment of interest to the above creditors. In the absence of any evidence we are unable to sustain the additions made by the A.O, and accordingly the same is deleted. The orders of the lower authorities on this issue are set aside and the appeal of the assessee on this issue is allowed. Addition relating to the Repayment of Loans - Held that:- It is evident from the assessment order reproduced above that the above parties have denied the re-payment of the amounts to the assessee. Though the debts are outstanding in the names of the above persons, having denied transactions by the debtors burden is on the assessee to prove that the amounts had actually came to the account for re-payment of the above loans, failing which the cash credits appearing in the names of the debtors should be treated as unexplained and brought to tax which the A.O has exactly done in the assessment order and the CIT(A) has confirmed the order of the A.O. In the re-assessment proceedings also the assessee has not furnished any evidence to establish that the credits were actually repayment of loans. - Appeal of the assessee is partly allowed. Issues Involved: Loan from Shri S.K. Bhandari, Estimated Interest on Loan, Addition based on Seized Books of Accounts, Credit in Bank of Rajasthan, Cash Credits, Addition of Cash Received from M/s. Balaji Plastics & Metals Enterprises, Interest on Advances, Repayment of Loans.Issue-wise Detailed Analysis:1. Loan from Shri S.K. Bhandari:- Assessment Years: 1980-81, 1982-83, 1983-84.- Facts: The assessee accepted loans from Shri S.K. Bhandari but failed to provide evidence of the creditor's identity, genuineness, and creditworthiness.- Tribunal's Decision: The Tribunal upheld the addition made by the AO, confirming that the assessee failed to establish the genuineness of the loan. The appeals on this ground were dismissed for all relevant years.2. Estimated Interest on Loan:- Assessment Year: 1980-81.- Facts: The AO added Rs. 4,800 as estimated interest on the loan from Shri S.K. Bhandari.- Tribunal's Decision: The Tribunal found no evidence of interest payment during the search and deleted the addition, setting aside the orders of the lower authorities. This ground of appeal was allowed.3. Addition based on Seized Books of Accounts:- Assessment Years: 1980-81, 1982-83, 1983-84, 1984-85.- Facts: Additions were made based on note books seized during the search, which indicated unexplained advances and estimated interest.- Tribunal's Decision: The Tribunal held that the presumption under Section 132(4A) could not be applied to the assessee as the search was conducted at her son's premises. The additions were deleted, and the appeals on this ground were allowed.4. Credit in Bank of Rajasthan:- Assessment Year: 1980-81.- Facts: An undisclosed bank account with a peak credit of Rs. 10,000 was found.- Tribunal's Decision: The Tribunal upheld the addition of Rs. 10,000 but deleted the interest addition due to lack of evidence. The appeal was partly allowed.5. Cash Credits:- Assessment Years: 1982-83, 1983-84.- Facts: The AO added Rs. 1,50,000 (1982-83) and Rs. 4,58,500 (1983-84) as unexplained cash credits.- Tribunal's Decision: The Tribunal confirmed the addition due to the assessee's failure to provide evidence of the creditors' identity, genuineness, and creditworthiness. The appeals on this ground were dismissed.6. Addition of Cash Received from M/s. Balaji Plastics & Metals Enterprises:- Assessment Year: 1982-83.- Facts: The AO added Rs. 10,000 as unexplained cash credit after the said party denied any transaction with the assessee.- Tribunal's Decision: The Tribunal upheld the addition due to the assessee's failure to prove the genuineness of the transaction. The appeal on this ground was dismissed.7. Interest on Advances:- Assessment Year: 1983-84.- Facts: The AO added Rs. 15,000 as interest on advances.- Tribunal's Decision: The Tribunal deleted the addition due to lack of evidence of interest payment. The appeal on this ground was allowed.8. Repayment of Loans:- Assessment Year: 1984-85.- Facts: The AO added Rs. 1,68,400 as unexplained income, claiming the assessee introduced unaccounted money as loan repayments.- Tribunal's Decision: The Tribunal upheld the addition due to the assessee's failure to provide evidence of actual loan repayments. The appeal on this ground was dismissed.Conclusion:The Tribunal's decisions varied based on the evidence provided or lack thereof. Additions were upheld where the assessee failed to substantiate claims, while some additions were deleted due to lack of evidence or improper application of legal presumptions. The appeals were partly allowed based on the merits of each issue.