The Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) has held that mere furnishing of income Tax returns and bank statements without giving any explanation for deposits would not meet the requirement under Section 68 of the Income Tax Act.
The assessee, Gopal Agarwal Secunderabad was an individual who derives income from salary, house property and other sources. He filed his return of income on 31.07.2009 declaring total income and agricultural income.The case was selected for scrutiny.
The Assessing Officer noted that a survey under Section 133A of the Income Tax Act was conducted in the case of Basai Steels & Power (P) Ltd wherein the assessee was the Managing Director and also the head of the promoter’s family.
During the survey, certain documents/materials were impounded including ledger account statements of Ramakrishna for the periods June 2008 to May, 2009 which contained details of cash given to Ramakrishna on various dates totaling to Rs.18.28 crores.
The subsequent inquiries from HDFC & AXIS Banks of Secunderabad revealed that the credits to Gopal Agarwal and his family member’s Bank Accounts was from “ALROSTMA”, a money exchanger in Dubai and a vague explanation was given about the transactions.
In absence of any satisfactory explanation, the Assessing Officer invoked the provisions of section 68 of the Income Tax Act and made addition.
C.P. Ramaswami appeared for the assessee submitted that the entire money has come through banking channels and the RBI has not found any irregularity in the transactions. He submitted that the money obtained has been invested in Basai Steel Works (P) Ltd and addition has already been made in the hands of Basai Steel Works (P) Ltd and the appeal filed by Basai Steel Works (P) Ltd has been dismissed by the Tribunal.
Rajendra Kumar appeared on behalf of the revenue submitted that under the provisions of Section 68 of the Income Tax Act, the three ingredients namely, the identity and capacity of the loan creditor and the genuineness of the transaction needed to be furnished by the assessee.
He further submitted that the onus lies on the assessee to substantiate with the evidence to the satisfaction of the Assessing Officer regarding the above three ingredients. In the instant case, the assessee had failed to discharge the onus cast on him.
The two-member Bench of R.K. Panda, (Accountant Member) Laliet Kumar, (Judicial Member) upheld the addition made holding that, the assessee in the instant case had failed to give the names and address of the lenders, the details of interest payment, if any, the date of repayment if any etc.
The assessee had not fulfilled the onus cast on him in terms of provisions of Section 68 of the Income Tax Act by proving the 3 ingredients namely the identity and creditworthiness of the lenders and the genuineness of the transaction, the bench further observed.
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