2019 (2) TMI 1970 - AT - Income Tax

High Court Upholds Lower Court Decision on Assessee's Appeal, Emphasizes Burden of Proof

Shri Ankit Kapoor, Versus The Income Tax Officer, Ward-63 (4), Delhi

The appeal of the assessee was dismissed by the Hon'ble Calcutta High Court, upholding the decision of the Lower Court. The Court emphasized the failure ... Addition on account of sundry creditors and on account of expenses of the creditors - No proof to genuineness of the credit - HELD THAT:- In the present case, the A.O. issued notice u/s 133(6) as well as summons u/s 131 to the below mentioned creditors for verifying the genuineness of the transaction.None of the above creditors have complied with the notice and summons of the A.O. The assessee did not file any confirmation or any other document from these creditors to verify the genuineness of the transactions. The assessee has been given sufficient opportunity to prove his case that he has received genuine credits in the matter. Assessee despite giving sufficient opportunity did not produce any confirmation or the documentary evidence to prove the genuineness of the credits. One creditor Mr. Jameel Ahmad appeared before A.O. but he has not confirmed the transaction with the assessee. These facts clearly show that assessee failed to adduce any sufficient evidences on record to prove genuineness of the credits in the matter. Tribunal has also remanded back the matter to the Ld. CIT(A) but despite giving fresh opportunity, the assessee did not do anything in the matter. Even before the Tribunal, the assessee did not make any attempt to adduce any additional evidence with prayer, which would, therefore, show that assessee has no evidence to prove genuineness of these credits. It is well settled Law that burden is upon the assessee to prove the identity of the creditors, their creditworthiness and genuineness of the transaction in the matter - assessee failed to produce any documentary evidence and confirmations from the creditors. Therefore, there is no reason to restore the matter back to the file of Ld. CIT(A) for issuing of fresh summons. No interference is called for in the matter. This ground of appeal of assessee is accordingly dismissed. Issues:1. Addition of &8377; 1,27,93,835/- on account of sundry creditors and expenses of the creditors.2. Disallowance of expenses on creditors.Analysis:Issue 1: Addition of &8377; 1,27,93,835/- on account of sundry creditors and expenses of the creditors:The Assessing Officer (A.O.) noted that out of 11 creditors, confirmations from only 3 were received, and the remaining 8 did not respond to notices or summons. The A.O. made an addition of &8377; 5,14,40,739/- as income from other sources due to unexplained credits. Regarding expenses of certain creditors, the assessee failed to produce any details, resulting in a disallowance of &8377; 11,18,170/-. The Ld. CIT(A) deleted the addition of &8377; 3,86,46,884/- but upheld the addition of &8377; 1,27,93,855/- for the remaining 8 creditors. The Ld. CIT(A) emphasized that the onus was on the assessee to prove the genuineness of the credit amounts, which the assessee failed to do by not providing any documentary evidence or confirmation. The Ld. CIT(A) dismissed the appeal, citing the lack of evidence from the assessee and the failure to prove the genuineness of the credits.Issue 2: Disallowance of expenses on creditors:The Ld. CIT(A) noted that the assessee did not submit any supporting evidence for the expenses incurred on certain creditors. Despite being given ample opportunities, the assessee failed to produce bills/vouchers or any evidence, leading to the confirmation of the addition of &8377; 11,18,170/-. The appeal on this ground was dismissed by the Ld. CIT(A), emphasizing the lack of evidence from the assessee.The Hon'ble Calcutta High Court precedent highlighted that mere filing of confirmations is insufficient to prove the genuineness of credits. The Tribunal upheld the decision of the Ld. CIT(A), emphasizing the failure of the assessee to provide any substantial evidence to substantiate the genuineness of the transactions. The burden of proof rested on the assessee to establish the legitimacy of the credits, which was not fulfilled due to the absence of documentary evidence or confirmations. Consequently, the appeal of the assessee was dismissed, and no interference was deemed necessary in the matter.In conclusion, the appeal of the assessee was dismissed, and the orders of the authorities below were upheld due to the lack of evidence provided by the assessee to substantiate the genuineness of the credits and expenses incurred on creditors.