2019 (3) TMI 1540 - AT - Income Tax

Tribunal confirms unexplained cash credit & commission addition under Section 68, emphasizes lack of substantiation

RAMESH CHANDRA GARG Versus ITO, WARD 41 (5), NEW DELHI

RAMESH CHANDRA GARG Versus ITO, WARD 41 (5), NEW DELHI - TMI Issues Involved:1. Addition of Rs. 2,50,000 as unexplained cash credit under Section 68.2. Addition made without cross-examination of Niraj Jain.3. Validity of addition under Section 68.4. Validity of notice under Section 148 issued after four years.5. Confirmation of addition of Rs. 12,500 as commission paid.Issue-wise Detailed Analysis:1. Addition of Rs. 2,50,000 as Unexplained Cash Credit under Section 68:The Assessee argued that the amount of Rs. 2,50,000 received from Niraj Jain/Pooja Expo Inc. was a refund from an advance payment of Rs. 3,00,000 for a property deal that did not materialize. The AO treated this amount as unaccounted income, leading to an addition under Section 68. The Tribunal upheld the AO's decision, emphasizing that the initial onus was on the Assessee to substantiate the identity, creditworthiness, and genuineness of the transaction. The Assessee failed to provide any confirmation or documentation to support the claim, such as details of the property, MOU, or Agreement to Sale. The Tribunal found the Assessee's arguments baseless and sustained the addition of Rs. 2,50,000.2. Addition Made Without Cross-examination of Niraj Jain:The Assessee contended that the addition was made without the opportunity to cross-examine Niraj Jain, which was against the principles of natural justice. The Tribunal noted that the Assessee did not raise this specific ground before the CIT(A). The Tribunal held that the right to cross-examine is not absolute and depends on the circumstances and the statute concerned. In this case, the Tribunal found no violation of natural justice and upheld the CIT(A)'s decision to reject the request for cross-examination.3. Validity of Addition under Section 68:The Tribunal reiterated that the burden of proof under Section 68 lies with the Assessee to prove the identity, creditworthiness, and genuineness of the transaction. The Assessee failed to discharge this burden, providing no evidence to substantiate the claim. The Tribunal emphasized that the Assessee's failure to produce any supporting documents or evidence justified the addition made by the AO. Therefore, the Tribunal upheld the CIT(A)'s decision to confirm the addition of Rs. 2,50,000.4. Validity of Notice under Section 148 Issued After Four Years:The Assessee argued that the notice issued under Section 148 was invalid as it was issued after four years without mentioning that the escapement of income was due to the Assessee's failure to disclose all material facts. The Tribunal noted that this ground was not argued by the Assessee's counsel and dismissed it. The Tribunal found that the CIT(A) had rightly adjudicated the legal ground against the Assessee, confirming the validity of the notice issued under Section 148.5. Confirmation of Addition of Rs. 12,500 as Commission Paid:The AO estimated a commission of 5% on the accommodation entry amounting to Rs. 12,500. The Assessee argued against this addition, but the Tribunal found that the rate of commission was reasonably estimated by the AO. The Tribunal upheld the CIT(A)'s decision to confirm the addition, finding no need for interference.Conclusion:The Tribunal dismissed the Assessee's appeal, upholding the CIT(A)'s decisions on all grounds. The Tribunal emphasized the Assessee's failure to provide sufficient evidence to substantiate the claims and confirmed the additions made by the AO. The order was pronounced on 25-03-2019.