Santosh Chopra Vs ITO (ITAT Raipur)
ITAT Raipur held that addition towards unexplained cash credits u/s 68 of the Income Tax Act sustained as assessee failed to prove the identity and creditworthiness of lenders of unsecured loans.
Facts- During the course of the assessment proceedings, it was observed by the A.O that as per the records the assessee had outstanding unsecured loans of Rs. 62,89,310/- (Cr.). The A.O in order to verify the authenticity of the aforesaid loan transactions directed the assessee to place on record the confirmations a/w the bank accounts of the lenders. As is discernible from the assessment order, the assessee though filed the confirmations of the lenders but failed to produce their bank accounts. The A.O considering the fact that the assessee despite specific directions had failed to produce the copies of the bank accounts of the lenders, held the unsecured loans that were raised by the assessee during the year from three parties aggregating to Rs. 26,72,250/- as unexplained cash credits. Accordingly, the A.O after making the aforesaid additions, vide his order passed u/s. 143(3) dated 28.03.2015 assessed the income of the assessee at Rs. 30,06,000/-.
Aggrieved the assessee carried the matter in appeal before the CIT(Appeals) but without success.
Conclusion- Held that as the assessee had failed to discharge the primary onus that was cast upon him as regards proving the identity and creditworthiness of the aforementioned lenders, as well as genuineness of the transactions under consideration, therefore, finding no infirmity in the view taken by the CIT(Appeals) who had on the basis of a well-reasoned order rightly held the impugned loans aggregating to Rs. 26,72,250/- as unexplained cash credits u/s.68 of the Act, I uphold the same.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 13.09.2022, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 28.03.2015 for the assessment year 2012-13. The assessee has assailed the impugned order on the following grounds of appeal:
“1. “On the facts and in the circumstances of the case, the order appealed against is perverse, arbitrary, unjustified and bad in law;
2. That there is no justification either in law or on facts with the CIT(A) to sustain the addition of Rs.26,72,250/- in total income for the transaction taken place between lender of unsecured loan & assessee without proper enquiry by challenging genuinity of the transaction, when sufficient and appropriate evidence is submitted by assessee to prove genuinity. Therefore, addition of Rs.26,72,250/- in total income by CIT (A) is illusionary and based on suspicion and surmises without scrutinizing/enquiring about the documents submitted by assessee is incorrect, unjustified & deserves to be deleted;
3. That, there is no enabling provision now which permits to challenge the genuinity of transaction without scrutinizing to the utmost extent the documents submitted by the assessee, If the assessee has submitted sufficient & appropriate evidence to prove;
4. That during the assessment proceeding assessee books of accounts was not rejected under the provision of section 145(3) of The Income Tax Act, 1961. Hence, the addition is illusionary and based merely on suspicion and so should be deleted.
5. That the addition sustained by the Ld. CIT (A) is arbitrary under the facts and circumstances of the case and also, there is no justification for the Ld. CIT(A) to sustain the disallowance of loan as explained above; and
6. The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.”
2. Succinctly stated, the assessee which is engaged in the business of earning commission and brokerage on sale of agricultural produce, had e-filed his return of income for Y.2012-13 on 29.03.2013, declaring an income of Rs.3,29,527/-. Return of income filed by the assessee was processed u/s. 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act.
3. During the course of the assessment proceedings, it was observed by the A.O that as per the records the assessee had outstanding unsecured loans of Rs. 62,89,310/- (Cr.). The A.O in order to verify the authenticity of the aforesaid loan transactions directed the assessee to place on record the confirmations a/w the bank accounts of the lenders. As is discernible from the assessment order, the assessee though filed the confirmations of the lenders but failed to produce their bank accounts. The A.O considering the fact that the assessee despite specific directions had failed to produce the copies of the bank accounts of the lenders, held the unsecured loans that were raised by the assessee during the year from three parties aggregating to Rs. 26,72,250/- as unexplained cash credits. Accordingly, the A.O after making the aforesaid additions, vide his order passed u/s. 143(3) dated 28.03.2015 assessed the income of the assessee at Rs. 30,06,000/-.
4. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals) but without success.
5. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before me.
6. I have heard the Ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the ld. A.R to drive home his contentions.
7. On a perusal of the record, I find that the A.O in the course of assessment proceedings in order to verify the authenticity of the unsecured loans that were claimed to have been raised by the assessee, had directed him to place on record the confirmations of the lenders a/w their bank accounts. As observed by me hereinabove, the assessee had though filed the confirmations of the lenders but failed to produce their bank accounts. Ostensibly, the unsecured loans of Rs. 62,89,310/- (supra) comprised of two parts, viz. (i) old unsecured loans of Rs.36, 17,060/-; and (ii) unsecured loans that were raised by the assessee during the year from three parties of Rs. 26,72,250/-. Bifurcated details of the impugned unsecured loans raised by the asessee during the year is culled out as under:
