2025 (2) TMI 1465 - AT - Income Tax

Unexplained bank credits treated as taxable income where assessee failed to prove source or genuineness, addition upheld.

Addition of unexplained bank credits was sustained because the assessee failed to prove identity, source or genuineness of receipts; consequently the ... Addition u/s 68 - abnormal increase in cash deposits during demonetization period as compared to pre-demonetization period - Onus to prove - HELD THAT:- Assessee has not furnished any evidence/documents of proof/ source of income/ clarification of transaction as regards the cash deposit. Hence, grounds of appeal raised by the assessee are accordingly dismissed and the addition made by the AO and sustained by the CIT(A) are confirmed. Our aforesaid view is supported by the decision of Vaishnavi Bullion Pvt. Ltd.[2022 (12) TMI 1309 - ITAT HYDERABAD] which has been referred by the Ld. CIT(A) in his order, wherein on identical facts the Hyderabad bench has upheld the addition in dispute as unexplained credit in the hands of the assessee by dismissing the appeal of the assessee by observing that since the assessee has failed to prove the identity of the creditors, genuineness of the transactions and creditworthiness of the creditors, thereby, the assessee failed to discharge his onus u/s 68 of the Act. Decided against assessee. Issues: Whether the addition of total bank credit entries of Rs. 5,87,26,522/- as unexplained income under Section 69A of the Income-tax Act, 1961 (and consequential disallowance of expenses of Rs. 7,61,821/-) is sustainable where the assessee failed to furnish evidence regarding source, identity and genuineness of the receipts.Analysis: The assessment record shows multiple notices and a final show-cause opportunity; no adequate evidence or source particulars were furnished by the assessee. The Assessing Officer treated the excess bank credits as unexplained income under Section 69A and disallowed claimed expenses as unexplained. The CIT(A) upheld those additions, relying on precedent that where the assessee fails to prove identity, genuineness and creditworthiness of creditors or source of receipts, the onus remains unfulfilled and additions under the relevant provisions are permissible. The Tribunal noted the absence of any documentary proof or clarifications on the cash deposits and found no jurisdictional or procedural defect warranting interference; the request for remand was considered and rejected on the available facts.Conclusion: The addition of Rs. 5,87,26,522/- as unexplained income under Section 69A and the disallowance of expenses of Rs. 7,61,821/- are confirmed; the appeal is dismissed - decision is in favour of the Revenue.