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Addition for Unexplained Cash Credit justified in respect of Unexplained Creditors shown as Bogus: ITAT
March, 12th 2021

The Income Tax Appellate Tribunal (ITAT), Allahabad Bench ruled that the addition for unexplained cash credit is justified in respect of unexplained creditors shown as bogus.

The AO asked the assesMr. Malay Prasad see,  to discharge its initial burden of proof regarding identity and creditworthiness of the creditors and genuineness of transactions. The assessee submitted confirmations of Shri Chhatoo Prasad and Shri Krishna Mohan but did not submit confirmation of Shri Anuj Sonkar and Shri Siddharth Agrawal. The assessee did not submit copies of ITR of any of the aforesaid creditors.

The assessee did not submit bank statements or any other original records regarding financial transactions with the above-mentioned creditors. The assessee did not produce any of the aforesaid parties for examination by the AO. The assessee also did not explain the details of the purposes of transactions. The assessee instead of discharging its primary onus as is cast under section 68 of 1961, requested AO to summon the above parties for necessary verification. The AO at the request of the assessee summoned Shri Anuj Sonkar by issuing a summons under section 131(1) of the 1961 Act.

Mr. Anuj Sonkar appeared before the AO and denied having any financial transactions with the assessee. The AO also recorded his statement in which he categorically denied having any financial transactions with the assessee. The statement of Shri Anuj Sonkar is reproduced by AO in his assessment order.

The assessee submitted in rebuttal that said Anuj Sonkar has purposefully denied the financial transactions with the assessee, but no record/evidence as per AO was produced by assessee to substantiate his stand.

The AO held that the two creditors namely Anuj Sonkar and Siddharth Agarwal are bogus. The AO observed that Mr. Anuj Sonkar has himself denied to have any financial transactions with the assessee. So far as Mr. Siddharth Agarwal is concerned, the AO observed that the assessee has not filed any confirmation and ITR of Shri Siddharth Agarwal and the AO held that this creditor is bogus and the money is assessee’s own money which is wrongly represented as trade payable.

 

The AO made additions of sum of Rs. 3,22,68,500 under section 68 read with Section 115BBE of the 1961 Act, vide assessment order dated 23.12.2017 passed under section 143(3) of the 1961 Act.

The coram consisting of Vijay Pal Rao and Ramit Kochar held that the authorities below have rightly invoked provisions of Section 68  and held that cash deposits in the assessee’s ICICI Bank account to the tune of Rs. 3,22,68,500 was the money of the assessee which was deposited by the assessee in his bank accounts, during the year under consideration, and these two creditors namely Mr. Anuj Sonkar and Mr. Siddharth Agarwal in whose name the assessee has allegedly shown to have credited these amounts are bogus creditors.

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