Failure Of Assessee To Explain Identity And Creditworthiness Of Creditors And Genuineness Of Transaction: ITAT Sustains Addition

The Allahabad Bench of the Income Tax Appellate Tribunal (ITAT) has sustained the addition as the assessee failed to explain the identity and creditworthiness of the creditors and the genuineness of the transaction.The two-member bench of Vijay Pal Rao (Judicial Member) and Ramit Kochar (Accountant Member) has observed that fresh deposits being advanced for land from members raised by the assessee were in the form of cash credits, which are recorded in the assessee's books of accounts. The onus is on the assessee to explain the identity and creditworthiness of the creditor and the genuineness of the transaction . The appellant/assessee is a co-operative society. The AO made additions to the income of the assessee towards unexplained deposits and cash credits. The assessee filed an appeal with the CIT (A).The CIT(A) confirmed the additions as they were made by the AO. The assessee filed a second appeal with the tribunal, and the tribunal restored the matter back to the file of AO for verification and to restrict the addition to the amount of unexplained fresh deposits raised during the assessment year by the assessee and to delete the additions with relation to the deposits raised in the earlier years. The AO confirmed the additions towards the difference in deposits being advanced for land as is shown in the assessee's balance sheet. The deposits are advanced for land as per the statement submitted by the assessee. The matter again travelled to CIT(A) at the behest of the assessee in the second round of litigation, who deleted the addition of Rs. 6,02,264 as was made by the AO. However, CIT(A) enhanced the additions to the tune of Rs. 64,62,054 towards fresh deposits raised by the assessee by invoking the provisions of Section 68 of the 1961 Act. The department submitted that despite several opportunities being granted to the assessee, no evidence or explanations were filed by the assessee to satisfy the mandate of Section 68 of the 1961 Act. The ITAT held that the onus under section 68 was on the assessee as the sum stood credited in its books of accounts, which the assessee failed to discharge. Thus, there was no merit in the appeal filed by the assessee. Case Title: Ghaus Memorial Sahkari Awas Samiti Ltd. Versus ACIT Citation: ITA No.63/Alld./2020 Dated: 03.08.2022 Counsel For Appellant: None Counsel For Respondent: Sr.D.R. A.K. Singh Click Here To Read/Download Order

Failure Of Assessee To Explain Identity And Creditworthiness Of Creditors And Genuineness Of Transaction: ITAT Sustains Addition

Mariya Paliwala

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