The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has upheld addition under Section 68 of the Income Tax Act 1961 on failure to prove the creditworthiness of the parties and genuineness of transaction.
The assessee company ,Shalibhadra Exports Pvt. Ltd. was engaged in the business of trading in gold bars and jewellery and had filed its return of income for the impugned year dated 30.09.2013. The assessee’s case was selected for scrutiny.
Subsequently, the assessee’s case was reopened based on the information from the investigation wing that large value of funds was noticed to have been credited in the assessee’s bank account by transfer and RTGS and debited by cash, transfers and RTGS which according to the information was unexplained transfer of funds and usage of accounts for parking of funds.
The A.O. passed the assessment order under Section 43(3) read with Section 147 of the Income Tax Act dated 21.12.2019 where the total income was determined by making an addition as ‘unexplained cash credit’ under Section 68 of the Income Tax Act in the account of the assessee.
Mahesh Akhade on behalf of the revenue submitted that the assessee had been non compliant before the lower authorities in spite of several opportunities given.
He further submitted that the assessee had not furnished any documentary evidence to establish the creditworthiness of the source from where the impugned amount was credited in the assessee’s accounts and that the assessee had also failed to substantiate the genuineness of the impugned transaction.
The two-member Bench of OM Prakash Kant, (Accountant Member) and Kavitha Rajagopal, (Judicial Member) dismissed the appeal filed by the assessee holding that the assessee had failed to prove the creditworthiness and genuineness of the transaction.
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