Section 68 of the Income Tax Act, 1961 — Cash Credit — From the enquiry of the AO, it transpired that the creditor companies were not genuine,  hence, the burden shifted on the assessee to controvert the material brought on record by the Assessment Officer which assessee had failed to produce any contrary material to controvert the evidence brought on record by the Assessment Officer, thus, addition made was justified.[2019] 52 ITCD 99 (RAJ)
Facts: Assessee was an individual and proprietor of a firm 'M/s. Vinod Steels'. The assessee had filed his Income Tax Return on 19.9.2012 for Assessment Year 2012-13 declaring total income of 1,86,260/-. The case of assessee was taken-up for scrutiny and notice under Section 143(2) was issued. One of the issue raised by the Assessment Officer was that during the course of assessment proceedings, it had transpired that the assessee had taken unsecured loans from two different companies. From one company, namely 'Tanish Tradecom Pvt. Ltd.' (hereafter referred to as 'TTPL'), loan of Rupees Two Crores was taken, whereas, from other company namely 'M/s. Punit Oils and Chemicals Pvt. Ltd.' (hereinafter referred to as 'POCPL') a loan to the tune of Rupees One Crore was taken. The explanation submitted by the assessee during the course of assessment proceedings was ignored by the Assessment Officer and it was held that the creditor companies were not genuine business concerns. Hence, it was held that the loans taken by the assessee were not genuine. The Assessment Officer, vide assessment order dated 30.3.2015, made an addition of Rupees Three Crores under Section 68. Aggrieved against the said order, assessee preferred an appeal before the Commissioner, Income Tax (Appeals). The appeal filed by the assessee was dismissed. Aggrieved against the said order, the assessee preferred an appeal before the Income Tax Appellate Tribunal under Section 253. However, the said appeal was dismissed. Hence, the present appeal by the assessee.
Held, that the assessee had explained in assessment proceedings that he had taken loan of Rupees Two Crores from TTPL and a loan of Rupees One Crore from POCPL. However, during the course of assessment proceedings, it transpired that the said companies were not genuine. The Inspector, Income Tax, had made verification with regard to genuineness of creditor companies. As per the report of the Inspector, reproduced in the order dated 20.11.2017 passed by the Commissioner of Income Tax (Appeals), Ajmer, it was found that address of both the companies was same. When the Inspector went to the disclosed addresses of the companies, it was found that the premises was a seven storied old building having many offices and residential flats. However, the creditor companies were not found at the disclosed addresses. No signboards or letter-boxes in the names of creditor companies were found at the given address. The room was found locked. Inspector had met various persons in the vicinity and no person could state the existence and business activities of both the companies. During the course of arguments, learned counsel for the assessee had stressed that the creditor companies were also being assessed under the Income Tax Act. The documents shown by the learned counsel for the assessee with regard to Income Tax Returns of the creditor companies, filed for the assessment year 2012-13, reveal that addresses of the companies are the same on which verification had been done by the Inspector, Income Tax. Thus, it is evident that the Assessment Officer had conducted inquiry with regard to assessment proceedings and on inquiry, it transpired that the creditor companies were not genuine. Hence, the burden shifted on the assessee to controvert the material brought on record by the Assessment Officer. It has been noticed by the Tribunal that the assessee had failed to produce any contrary material to controvert the evidence brought on record by the Assessment Officer. The Tribunal, after elaborately considering the material on record, has rightly dismissed the appeal filed by the assessee.