Malay Prasad Vs ACIT (ITAT Allahabad)
As could be seen from provisions of Section 68 of the 1961 Act that if any sum is found credited in the books of accounts maintained for any previous year , and the assessee offers no explanation about the nature and source thereof or the explanation offered by the assessee is not , in the opinion of AO , satisfactory , the sum so credited may be charged to income-tax as the income of the assessee for that previous year. There has been fresh cash deposits in the bank accounts of the assessee maintained with ICICI Bank to the tune of Rs. 3,22,68,500/- in the year under consideration which is sought to be explained by assessee to have been received from Mr. Anuj Sonkar and Mr. Siddharth Agarwal . The said amount is credited by assessee in its books of accounts in the ledger account of these two creditors. Mr. Anuj Sonkar has in statement recorded before AO has denied to have any financial transactions with the assessee during the year under consideration. The assessee has not filed copies of income tax returns/statement of affair/Balance Sheets of these two creditors nor the assessee has filed confirmations from these parties. The identity of Mr. Anuj Sonkar is proved as he appeared before AO and furnished his Aadhar Card , but he categorically denied to have any financial transactions with the assessee during the year under consideration. The assessee did not asked for cross examination of Mr. Anuj Sonkar, The assessee could not prove identity of Mr. Siddharth Agarwal nor creditworthiness could be proved as neither copy of income tax return nor copies of Balance Sheet/Statement of affair was filed by assessee. The assessee also could not prove the purpose of granting these alleged cash amounts and even terms and conditions of these alleged credit entries were not brought on record by assessee, thus genuineness of these transactions could not be proved. Thus, in nut-shell the assessee did not discharged primary onus as is cast by the 1961 Act within the provisions of Section 68 of the 1961 Act. It is only when the primary onus is discharged by tax-payer , then the onus will shift to Revenue to bring on record cogent material to bring to tax income by way of cash credit within provisions of Section 68 of the 1961 Act which section creates a deeming fiction wherein cash credits which are not satisfactorily explained are deemed as income of the taxpayer , but in the instant case the assessee has miserably failed to discharge primary onus as is cast u/s 68 of the 1961 Act with respect to cash deposits in his bank accounts with ICICI bank to the tune of Rs. 3,22,68,500/- allegedly from these two creditors.
Thus, keeping in view entire factual matrix of the case as detailed above, we hold that the authorities below have rightly invoked provisions of Section 68 of the 1961 Act and held that cash deposits in the assessee’s ICICI Bank accounts to the tune of Rs. 3,22,68,500/- was the money of the assessee which was deposited by assessee in his bank accounts, during the year under consideration , and these two creditors namely Mr. Anuj Sonkar and Mr. Siddharth Agarwal in whose name the assessee has allegedly shown to have credited these amounts are bogus creditors. We uphold the orders of authorities below and hold that Section 68 was rightly invoked in the instant case. We order accordingly.
FULL TEXT OF THE ORDER OF ITAT ALLAHABAD
This appeal, filed by assessee, being ITA No. 32/Alld/2020, is directed against appellate order dated 19.12.2019 in Appeal No. CIT(A), Allahabad/10226/2017-18 passed by learned Commissioner of Income Tax (Appeals,)Allahabad(hereinafter called “theCIT(A)”),for assessment year(ay)2015-16, the appellate proceedings had arisen before learned CIT(A) from assessment order dated 23.12.2017 passed by learned Assessing Officer (hereinafter called “the AO”) u/s 143(3)of the Income-tax Act, 1961 (hereinafter called “the Act”) for ay: 2015-16.We have heard learned CIT-DR through video conferencing mode through virtual court, while none appeared for assessee.
2. The grounds of appeals raised by assesse in memo of appeal filed with Income- Tax Appellate Tribunal, Allahabad ( hereinafter called “ the tribunal” ) reads as under :
“1.That in any view of the matter , the order passed under Section 143(3) dated 23.12.2017 is bad both on the facts and in law and his action as confirmed by the CIT(A) by passing an ex-parte decision without providing an opportunity to the assessee is highly unjustified within facts and circumstances of the case.
2. That in any view of the matter, both the lower authorities failed to provide an opportunity to the assessee before passing order and also failed to consider the fact, evidence , replies etc. , hence the order of the lower authorities are liable to be cancelled.
3. That in any view of the matter, the assessee claimed the loss of Rs. 2,58,66,234.00 from trading activity of shares and in support of loss books of accounts were produced required explanations and details were furnished in compliance to their notices but the AO failed to consider the loss figure while computing the income.
4. That in any view of the matter , the lower authorities failed to set off the declared loss against the addition under section 68 made by the AO and confirmed by CIT(A) , the loss claimed is liable to be set off against the addition under section 68 but both the authorities kept silent and as a result, the assessee is debarred from justice.
5. That in any view of the matter, addition of Rs. 3,22,68,500.00 made by without the provision of section 68 by AO and his action as confirmed by CIT(A) is not correct, the addition under section 68 is liable to be deleted when the parties are genuine and the assessee fulfilled the required condition under section 68 of the Act.
6. That in any view of the matter , charge of penal interest under section 234A , 234B and 234C of the Act is highly unjustified.
7 .That in any view of the matter, the assessee reserves its right for any fresh ground , addition , alter , delete before hearing of the appeal. And a reasonable opportunity of being heard should be given before taking any coercive action against the assessee.
It is therefore respectfully prayed that the assessment order may kindly be revised accordingly and relief be allowed.”
3. The brief facts of the case are that the assessee e-filed his return of income with department declaring total income of Rs. Nil and current year loss of Rs. 2,66,78,299/- on 29.03.2017. The case of the assessee was selected by Revenue for limited scrutiny by CASS, for the following reasons:
a) Whether sundry creditors are genuine.
b) Whether the investment and income relating to commodity transactions are duly disclosed.
c) Whether the investment and income relating to securities (derivative) transactions are duly disclosed.
d) Whether deduction claimed on account of interest expenses is admissible.
3.2 Statutory notices u/s 143(3) and 142(1) of the 1961 Act were issued by AO from time to time to assessee, which as per Revenue were duly served on assessee.The AO in view of limited scrutiny asked assessee to furnish details as to sundry creditors, commodity, derivative transactions and interest expenses claimed by assessee. The assessee submitted part replies but did not furnished complete replies as sought by AO despite notices issued by AO requesting to furnish complete details. The assessee is a legal professional and has also earned income from on-line trading in futures and options as well other sources. The assessee has shown loss on share trading and other business of Rs.2,85,66,234 and in ITR , the assessee claimed Rs. 2,66,78,299/- as current year loss to be carried forward.
3.3 The AO during the course of assessment proceedings observed from the Balance Sheet and ledger accounts submitted by the assessee that the assessee has shown following sundry creditors:-
