The Income Tax Appellate Tribunal (ITAT), Delhi bench comprising Shri AnilChaturvedi, AM&ShriKul Bharat, JM has held that the onus to prove the genuineness and the creditworthiness of the creditor is with the assessee which was failed and uphold the addition u/s 68 of the Income Tax Act,1961.
The appellant filed an original return declaring income of Rs.2,38,100/- which was processed u/s 143(1) of the Act. The AO found that the assessee company had obtained accommodation entries from certain conduit/paper companies and the assessment was re-opened u/s 147 of the Act. In response to the statutory notice u/s 148, the representative for the assessee attended the proceedings and requested to consider the original return filed u/s 139(1) of the Act as a return filed u/s 148 of the Act.
The AO issued notice u/s 142(1) of the Act along witha detailed questionnaire which required to state the reason for unexplained credits of Rs.1,61,45,000/- in the books of accounts. The AO issued the remand proceedings and notices u/s 133(6) were issued to all the four companies from whom the appellant has shown to have taken credits which were returned undelivered by the postal authorities.
It was observed that section 68 permits the Assessing Officer to add the credit appearing in the books of account of the assessee if no explanation regarding the nature and source of the credit is proven or the explanation offered is not satisfactory.
The Coram observed that the assessee failed to prove the genuineness and creditworthiness of the creditors. The assessee failed to provide materialsubstantiatingthe claims. The Tribunal held that AO was justified in adding back the amount of Rs. 2,21,47,750/- u/s 68 to the total income of the appellant and dismissed the appeal filed by the appellant.
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