Addition to Unexplained Credit will sustain in the Absence of Evidence to prove Enhanced amounts payable: ITAT [Read Order]

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that the addition to unexplained credit will sustain in the absence of evidence to prove enhanced amounts payable.

The assessee, M/s. Mahamaya Exports Pvt. Ltd. challenged the Commissioner of Income Tax (Appeals)-31 [CIT (Appeals)] New Delhi, dated 20.12.2017 for the assessment year    2013-14.     

The assessee engaged in the business of developing residential and commercial projects at various places in Haryana State.  The Assessing Officer noticed that the assessee has shown a balance of Rs.148,93,34,700/- on account of sundry creditors as of 31st March 2013. 

The assessee was required to furnish the details of such sundry creditors along with a copy of accounts of the creditors and confirmations from the respective creditors with the nature of the transaction.

It was stated by the assessee that out of Rs.148,93,34,700/- a sum of Rs.8.40 crores was received in advance against the sale of property and the balance of Rs.140,53,34,700/- has arisen as a liability due to cancellation of the agreement to sell the property. 

The modus operandi adopted by the assessee concluded that the assessee has substantially evaded the tax liability by reducing the profit, and treated the outstanding balance in the sundry creditors amounting to Rs.148,93,34,700/- as unexplained cash credit of the assessee. On appeal, the CIT (Appeals) sustained the addition to the extent of Rs.146,48,34,700/- as the assessee received only Rs.2.45 crores in the earlier years which the CIT (Appeals) deleted from the outstanding sundry creditors of the current assessment year.  

A Coram of Shri Shamim Yahya, accountant member and Shri Challa Nagendra Prasad, Judicial Member observed that as per section 68, the onus was on the assessee to prove not only the source but also the nature of the credits. From the details submitted the Tribunal observed that the enhanced amounts payable for land do not have any credible basis and the nature of such enhanced credits remains unexplained.

The Tribunal upheld the order of the CIT (Appeals) and rejected the appeal by the assessee. Ms Rinku Singh appeared for the department while none appeared for the assessee. 

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates.