Appellate tribunal affirms Rs. 45 lakh unexplained cash credit addition under Income Tax Act

The appellate tribunal upheld the lower authorities' decision to add Rs. 45,00,000 as unexplained cash credit under section 68 of the Income Tax Act, due to the lack of creditworthiness of the lender company. The transaction was deemed a circuitous rotation of unaccounted money, with the company's non-existence, minimal income, and suspicious transactions supporting the addition. The rejection of documentary evidences by the Commissioner of Income Tax (Appeals) was upheld, as the transaction was considered bogus and an accommodation entry, leading to the dismissal of the appeal.

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Issues:
Validity of the assessment order, Addition of Rs. 45,00,000 under section 68 of the Income Tax Act, Rejection of documentary evidences by the Commissioner of Income Tax (Appeals)

Validity of the assessment order:
The appeal challenged the order of the Ld. CIT(A) regarding Assessment Year 2014-15. The Assessing Officer questioned the creditworthiness of the assessee company due to loans received from M/s Satya Lakshmi Trade Link Pvt. Ltd. The company's return and bank account raised suspicions. Despite summons and enquiries, the company's existence was questioned. The Assessing Officer concluded the company was non-existent and added Rs. 45,00,000 as unexplained cash credit under section 68 of the Act. The Commissioner of Income Tax (Appeals) upheld this decision, citing the company's lack of address, minimal income, and suspicious transactions. The appellate tribunal found the transaction to be a circuitous rotation of unaccounted money, upholding the lower authorities' orders due to the lack of creditworthiness of the lender company.

Addition of Rs. 45,00,000 under section 68 of the Income Tax Act:
The Assessing Officer added Rs. 45,00,000 as unexplained cash credit under section 68 of the Income Tax Act, citing the non-existence of the lending company and lack of cooperation in enquiries. The company's directors did not respond to summons, raising doubts about their credibility. The Assessing Officer initiated penalty proceedings under section 271(1)(c) for furnishing inaccurate particulars of income. The Commissioner of Income Tax (Appeals) upheld this addition, considering the lender company's questionable nature and suspicious transactions. The appellate tribunal concurred, deeming the transaction a circuitous rotation of unaccounted money, leading to the dismissal of the assessee's appeal.

Rejection of documentary evidences by the Commissioner of Income Tax (Appeals):
The assessee submitted documentary evidences to support the unsecured loan, which were rejected by the Assessing Officer. The Commissioner of Income Tax (Appeals) found the transaction to be bogus and an accommodation entry, given the lender company's non-existence and questionable financial activities. The appellate tribunal upheld this decision, emphasizing the lack of creditworthiness in the transaction and the suspicious nature of the loan, ultimately dismissing the appeal.

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