2022 (10) TMI 1253 - AT - Income Tax

Assessee loses on unexplained cash credit under Section 68 and Section 54F deduction claims

The ITAT Kolkata ruled against the assessee on two issues. First, regarding unexplained cash credit under section 68, the tribunal upheld the disallowance ... Unexplained cash credit u/s 68 - unsecured loan taken by the appellant alleging the appellant’s failure to prove the identity and creditworthiness of the creditors - HELD THAT:- Details of income tax return clearly shows that the cash creditors did not have sufficient source of income to give the loan of the size of 42,10,000/- to the assessee. CIT(A) has also given finding that Mr. Arun Kumar Bhowmik deposited the cash amount of Rs. 10,10,000/- immediately before issuing the cheque of Rs. 12,10,000/- to the assessee which certainly create suspicion and before ld. AO, he could not explain the source of the said cash deposit in his bank account. Therefore, assessee failed to prove the creditworthiness of the cash creditors advancing loan to the assessee. Decided against assessee. Disallowance of deduction u/s 54F - expenditure incurred on construction of residential building - HELD THAT:- Finding of ld. CIT(A) which remained uncontroverted from the assessee’s side by placing any material on record and also under the given facts and circumstances of the case where two of the parties from whom the assessee purchased the material have denied to have made any such transaction with the assessee and the inspector deputed by ld. AO on enquiry found that the bills drawn were not genuine, therefore, we fail to find any merit in the grounds raised by the assessee and the same deserves to be dismissed - Decided against assessee. Issues:1. Addition for unexplained cash credit u/s 68 of the Act at Rs. 42,10,000/-2. Disallowance of deduction u/s 54F of the Act at Rs. 43,36,221/-Analysis:Issue 1 - Addition for unexplained cash credit u/s 68 of the Act at Rs. 42,10,000/-:The appeal pertains to the Assessment Year 2014-15 against an order under section 250 of the Income Tax Act, 1961. The assessee contested the addition of Rs. 42,10,000 as unexplained cash credit under section 68 of the Act. The appellant failed to prove the identity and creditworthiness of the creditors, despite evidence suggesting otherwise. The Tribunal found that while the identity of the cash creditors was acknowledged, doubts remained regarding the genuineness and creditworthiness of the transaction. The cash creditors had inconsistent tax filing history, indicating insufficient income to provide the loan. The Tribunal upheld the decision, stating the appellant failed to establish the creditworthiness of the cash creditors, leading to the dismissal of the appeal grounds.Issue 2 - Disallowance of deduction u/s 54F of the Act at Rs. 43,36,221/-:Regarding the disallowance of deduction under section 54F for construction expenditure, the Tribunal noted the appellant's failure to prove the genuineness of expenses incurred for building construction. Two material suppliers denied transactions with the appellant, and bills were found to be non-genuine upon inspection. The appellant could not provide sufficient evidence to support the claimed expenses for residential building construction. The Tribunal agreed with the lower authorities' decision to disallow the deduction under section 54F, as the appellant did not meet the burden of proof. Consequently, the grounds raised by the assessee were dismissed, and no interference was warranted in the decision of the lower authorities.General Note:The Tribunal dismissed the appeal filed by the assessee, upholding the decisions on both issues. The judgment was delivered on October 31, 2022, in Kolkata.