ITAT Delhi: Unexplained Tax Credit Supports Misappropriated Payable Amounts

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) ruled that the unexplained credit will uphold when there is no proof proving the enhanced amounts that are liable to pay.

The taxpayer, M/s. Mahamaya Exports Pvt. Ltd. questioned the Commissioner of Income Tax (Appeals)-31 [CIT (Appeals)] New Delhi, on 20.12.2017 for the assessment year 2013-14.

The taxpayer would have been involved in the business of developing residential and commercial projects in different places in the state of Haryana. The Assessing Officer saw that the taxpayer has shown a balance of Rs.148,93,34,700/- on account of sundry creditors dated 31st March 2013.

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The taxpayer needed to file the information of the same sundry creditors as well as a copy of accounts of the creditors along with the confirmations from the corresponding creditors with the type of transactions.

The same was mentioned via taxpayer that from Rs 148,93,34,700/- a sum of Rs.8.40 crores was obtained in advance with respect to the property sale and the balance of Rs 140,53,34,700 has asked as an obligation because of the cancellation of the agreement to sell the property.

Taxpayers choose the measures which ended that the taxpayer has evaded the tax liability via diminishing the profit and treating the outstanding balance in the sundry creditors amounting to Rs.148,93,34,700 as unexplained cash credit of the taxpayer. On the petition, the CIT(appeals) uphold the sum of Rs 146,48,34,700 since the taxpayer has only obtained Rs 2.45 cr in the former years which CIT(appeals) deleted from the outstanding sundry creditors of the present assessment year.

A Coram of Shri Shamim Yahya, accountant member, and Shri Challa Nagendra Prasad, Judicial Member sees that under income tax section 68, the taxpayer has been burdened to provide not only the source but indeed the kind of credits. From the information provided the Tribunal sees that the additional amounts subjected to be paid for the land do not secure any credible basis and the kind of the same additional credits remains unelaborated.

The Tribunal kept the order of the CIT (Appeals) and denied the taxpayer’s petition. Ms Rinku Singh appeared for the department while none appeared for the taxpayers.