2024 (2) TMI 986 - AT - Income Tax

Assessee fails to prove identity and creditworthiness of creditor, section 68 addition upheld for unexplained cash credits

Deputy Commissioner of Income Tax, Versus Bhilai Jaypee Cement

ITAT Raipur set aside CIT(A)'s order deleting addition under section 68 for unexplained cash credits. The assessee failed to discharge the onus of proving ... Addition u/s 68 - unexplained cash credits - Onus to prove - CIT(A) deleted addition - CIT(A) recorded his satisfaction regarding the discharge of onus by the assessee w.r.t. substantiating the main ingredients as mandated under the provisions of section 68 i.e. identity and creditworthiness of the creditor and genuineness of the transaction - HELD THAT:- Such view of CIT(A) found to be against the facts of the case since the requisite documents to establish the prerequisite elements of section 68 like confirmation, ITR, bank statement, financials, complete address of the creditor are not made available by the assessee either to the AO or before the Ld. CIT(A). In view of such facts and circumstances, it is incomprehensible to concur with the decision of the CIT(A). In view of such facts the observations of Ld. AO cannot be rejected at threshold, in absence of submission of requisite documents pertaining to the alleged creditor by the assessee having primary onus to satisfy the AO according to the provisions of section 68, who is supporting its contentions only by producing certain internal documents and bank statements. While deciding this issue, we rely upon the judgment of Raja Kaimoor Breweries Private Limited [2024 (2) TMI 455 - ITAT RAIPUR] wherein the assessee was failed in producing necessary details before the Ld. AO, therefore, in absence of such details / evidence the addition made u/s 68 was sustained. Substance in the observations and findings of CIT(A) to be concurred with, specifically in a situation wherein the assessee company had squarely failed in discharging the onus cast upon it to provide essential information/ documents and evidence in the form of confirmation, ITR, bank statement & financials of the creditor and to produce the creditor before the AO for witness if so required, which is the prime responsibility of the assessee to establish the identity and creditworthiness of the creditor, consequently, the genuineness of transaction. Accordingly, the order of CIT(A) is set aside, and the addition made by the Ld. AO u/s 68 is upheld. Decided against assessee. Issues Involved:1. Deletion of addition of Rs. 2,16,33,868/- under Section 68 of the Income Tax Act, 1961 on the issue of unexplained cash credits.Summary:Issue 1: Deletion of Addition under Section 68 of the Income Tax Act, 1961The Revenue appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) dated 08.06.2023, which deleted the addition of Rs. 2,16,33,868/- made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961 for the Assessment Year (AY) 2011-12. The AO had reopened the case based on credible information that the assessee company had introduced unaccounted money into its books through a multi-layering of funds involving entities like M/s. Jagdamba Traders and M/s. Surya International. The AO observed cash deposits totaling Rs. 6.74 crores and Rs. 6.35 crores in the accounts of these entities, which were transferred to M/s. Dreamland Barter Pvt. Ltd. and subsequently to the assessee's account. The AO added Rs. 2,16,33,868/- as unexplained cash credit under Section 68 due to the assessee's failure to provide satisfactory explanations and relevant documents.The CIT(A) vacated the addition, finding the assessee's contentions satisfactory, which led to the Revenue's present appeal. The Revenue argued that the CIT(A)'s order was erroneous and that the assessee failed to substantiate the identity, creditworthiness, and genuineness of the transactions involving M/s. Vinayak Cement Udyog, from whom the assessee claimed to have received the amount as an advance against the sale of Clinker. The Revenue highlighted that the assessee did not provide confirmation, financials, or the complete address of Vinayak Cement Udyog, and the AO's inquiries were not satisfactorily addressed.The Tribunal noted that the CIT(A) has powers coterminous with the AO and is obliged to conduct necessary inquiries or direct the AO to do so. The Tribunal found that the CIT(A) failed to exercise these powers adequately and relied on internal documents and bank statements provided by the assessee without sufficient external verification. The Tribunal emphasized the necessity for the assessee to provide essential information and documents to establish the identity, creditworthiness, and genuineness of the creditor.Citing the case of Raja Kaimoor Breweries Private Limited and other relevant judgments, the Tribunal concluded that the assessee failed to discharge the onus cast upon it under Section 68. Therefore, the Tribunal set aside the order of the CIT(A) and upheld the addition made by the AO.Conclusion:The appeal of the department was allowed, and the addition of Rs. 2,16,33,868/- under Section 68 of the Income Tax Act, 1961 was upheld.