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of <h1>Tribunal confirms unexplained cash credits and deposits under Income Tax Act Section 68</h1> <h3>Associated Tradecon (P) Ltd. Versus The Deputy Commissioner of Income Tax, Circle-1, Ahmedabad</h3> Associated Tradecon (P) Ltd. Versus The Deputy Commissioner of Income Tax, Circle-1, Ahmedabad - TMI Issues Involved:1. Addition of Rs. 1,34,70,822 as unexplained cash credits under Section 68 of the Income Tax Act.2. Addition of Rs. 6,00,000 as unexplained cash deposits under Section 68 of the Income Tax Act.Detailed Analysis:Issue 1: Addition of Rs. 1,34,70,822 as Unexplained Cash CreditsThe assessee, a company trading in ferrous and non-ferrous metals, challenged the addition of Rs. 1,34,70,822 as unexplained cash credits under Section 68 of the Income Tax Act. The Assessing Officer (AO) had treated these cash deposits in the assessee’s bank account as unexplained cash receipts, questioning the genuineness of the transactions, and noting the absence of confirmation from the payee entity, M/s. Accost Impex. The AO issued a Section 133(6) notice to the payee entity, which was returned undelivered, and the assessee failed to provide further explanations.The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO’s decision, stating that the assessee could not satisfactorily explain why M/s. Accost Impex paid the amount to the assessee instead of directly to its sister concern, M/s. Metal Enterprises Pvt. Ltd. The CIT(A) noted that the transactions were conducted in cash, which raised further doubts, especially since corporate transactions typically occur through cheques. The CIT(A) cited the judgment in T. P. Abdulla V/s. ACIT, emphasizing that the burden of proof lies with the assessee to provide a satisfactory explanation for the cash receipts.The assessee argued that it acted as a mediator due to disputes between M/s. Metal Enterprises and M/s. Accost Impex, leading to the cash payments. However, the tribunal found no evidence of such disputes or bounced cheques. The tribunal concluded that the assessee failed to prove the identity, genuineness, and creditworthiness of the transactions, as required under Section 68, and upheld the addition of Rs. 1,34,70,822 as unexplained cash credits.Issue 2: Addition of Rs. 6,00,000 as Unexplained Cash DepositsThe assessee also contested the addition of Rs. 6,00,000 as unexplained cash deposits under Section 68. The assessee claimed these were advances from customers for material supply, which were later returned. However, the AO rejected this explanation due to the lack of evidence and details of the customers. The CIT(A) upheld the AO’s decision, noting the absence of customer details and supporting documentation.The tribunal, after hearing both sides, agreed with the lower authorities that the assessee failed to provide necessary evidence to substantiate the claim of receiving advances from customers. Consequently, the tribunal confirmed the addition of Rs. 6,00,000 as unexplained cash deposits under Section 68.Conclusion:The tribunal dismissed the assessee’s appeal, affirming the additions of Rs. 1,34,70,822 and Rs. 6,00,000 as unexplained cash credits and deposits, respectively, under Section 68 of the Income Tax Act. The tribunal emphasized the importance of providing satisfactory explanations and evidence to substantiate cash receipts and deposits to avoid such additions.
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