The Delhi bench of the Income Tax Appellate Tribunal (ITAT) confirmed the addition under Section 60 of the Income Tax Act, 1961 due to the failure of the assessee to prove the creditworthiness of the creditor and genuineness of the transaction.
The assessee company filed its return of income declaring loss at Rs.53,05,870/-. The assessment under Section 143(3) of the Income Tax Act by making an addition of Rs.1,00,00,000/- on account of compensation received on breach of contract in respect of the purchase of immovable property and Rs.50,00,000/- on account of unexplained cash credits.
The Assessing Officer completed the assessment under Section 254/143(3) of the Income Tax Act wherein allowed the relief of Rs.1,00,00,000/- and made an addition of Rs.50,00,000/- under Section 68 of the Income Tax Act. The Commissioner of Income Tax (Appeal) [CIT(A) dismissed the appeal filed by the assessee by confirming the addition of Rs.50,00,000/- made under Section 60 of the Income Tax Act.
The Departmental Representative submitted that the assessee contested that the said addition claimed to have been made arbitrarily and illegally, but the assessee has produced only confirmation of Treat well Investment Leasing Pvt. Ltd. and the copy of acknowledgment for filing of return but has not provided any evidence to prove the identity and creditworthiness of Creditor and genuineness of the transaction.
It is a well-settled position that the identity and creditworthiness of the creditor and the genuineness of the transaction have to be proved with cogent evidence, which has not been done by the assessee, therefore, submitted that the present appeal is liable to be dismissed.
The Two-member bench comprising of Shamim Yahya (Accountant member) and Yogesh Kumar U.S. (Judicial member) held that the assessee has not produced any document before the CIT(A) or before the bench to prove the identity to the creditworthiness of the creditor and the genuineness of the transaction. The CIT(A) has also observed that ‘the assessee has failed to explain cash credit of Rs.50,00,000/- within the meaning of Section 68 of the Income Tax Act. Therefore, the lower authorities have committed no error and the bench finds no infirmity in the order of the CIT(A). Thus, the appeal of the assessee was dismissed.
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