Assessee fails to prove Rs. 125 lacs cash payments to shareholders, addition upheld for lack of evidence

The ITAT Chennai dismissed the assessee's appeal regarding additions of Rs. 125 lacs made during search proceedings. The assessee claimed cash payments were made to shareholders of another entity for facilitation work, but failed to provide adequate evidence or documentation. Despite producing receipts for cheque payments through banking channels, the assessee could not substantiate the claimed cash disbursements to 2500 shareholders. The ITAT held that the assessee failed to discharge the burden of proving that the cash amount did not constitute income, and the assessment based on incriminating material and statements was justified.

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Issues:
1. Addition arising out of search proceedings.

Detailed Analysis:
The judgment pertains to appeals for Assessment Years 2015-16 & 2016-17 arising from a common order by the Commissioner of Income Tax (Appeals). The primary issue is the additions resulting from search proceedings. The delay in filing the appeals was condoned, allowing them to be adjudicated on merits.

In the assessment proceedings, it was found that the assessee, a real estate commission agent, received payments from a chit fund company. The seized material indicated cash payments made to the assessee, which the assessee claimed were for settling shareholders of another company. Despite explanations, the Assessing Officer (AO) rejected the claims and treated the amounts as unaccounted business income.

During appellate proceedings, the assessee failed to provide evidence supporting the claim that the payments were for shareholder settlements. The Appellate Tribunal noted that while the assessee conducted legal work for the chit fund company, payments for such services were made through cheques, not cash. The lack of evidence of cash payments to shareholders led to upholding the additions.

The Tribunal dismissed the appeals, emphasizing that the onus was on the assessee to prove the payments were not income but disbursed to shareholders. The absence of supporting documentation or admission of such income by the assessee led to the rejection of the appeals. The argument that the assessment lacked incriminating material was dismissed, as the cash receipts and statements formed the basis for the assessments.

In conclusion, the Tribunal upheld the additions as unaccounted business income, emphasizing the lack of evidence supporting the assessee's claims regarding the nature of the payments received. The jurisdiction of the AO to make the assessments based on incriminating material and admissions by the assessee was deemed valid, leading to the dismissal of the appeals.

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