2015 (7) TMI 1046 - AT - Income Tax

Addition on income from other sources - receipt of accommodation entries - Held that - As found from the record that assessee has neither received any accommodation entry in the form of LTCG nor offered any income under such head. Even in the bank statement the AO did not find any credit entry of ₹ 5,20,215/- to support the contention that assessee was in receipt of cheque of ₹ 5,20,215/- on account of bogus LTCG. The assessee has also confirmed that she has only one bank account. Merely on the plea that computer of M/s Mahasagar Securities Pvt. Ltd. indicated issue of accommodation entry in the name of assessee, the amount cannot be added in the hands of the assessee unless AO brings on the record cogent evidence to show that amount was actually received by assessee or credited in her bank account. It is also not the case of AO that Bank account of Mahasagar Securities Pvt. Ltd. indicates any issue of cheque in the name of assessee. Merely entry in computer found at the premises of Mahasagar Securities Pvt. Ltd. could not be made the basis of addition in the hands of assessee unless some corroborative evidence is brought on record by AO to substantiate the stand that assessee was in receipt of such bogus entry. Under these circumstances, in the absence of any evidence on record, we do not find any merit in the action of the AO for adding a sum of ₹ 5,20,215/- as bogus LTCG in the hands of the assessee. - Decided in favour of assessee

Summary

Issues:
1. Confirmation of income from other sources by CIT(A) despite the appellant's denial.
2. Acceptance of fraudulent claim by CIT(A) and reliance on a fraudulent statement by the director.
3. Non-reply to the report called for by the Commissioner of Income Tax (Appeal) by the assessing officer.
4. Escaped assessment of income chargeable to tax.
5. Allegations of engaging in fraudulent billing activities and providing bogus speculation profit/loss.
6. Treatment of long-term capital gain (LTCG) as payments made out of undisclosed income.
7. Confirmation of AO's action by CIT(A).
8. Lack of evidence supporting the addition of income as bogus LTCG.
9. Verification of bank statements and balance sheets to refute the claim of receiving accommodation entries.

Analysis:
1. The appellant contested the confirmation of income from other sources by CIT(A), denying receipt, earning, or declaration of any amount. The appellant challenged the acceptance of a fraudulent claim and the reliance on a director's statement. Additionally, the non-reply to the report called for by the Commissioner of Income Tax (Appeal) was highlighted as a procedural error.

2. The case involved allegations of engaging in fraudulent billing activities and providing bogus speculation profit/loss. The AO found that the appellant's income had escaped assessment, leading to the treatment of LTCG as payments from undisclosed income. The AO's conclusion was based on evidence obtained during a search and seizure action.

3. The CIT(A) upheld the AO's actions, prompting the appellant to appeal. The appellant presented an affidavit denying any transactions related to the alleged income. The Tribunal considered the lack of credit entry in the bank statement supporting the claim of receiving a specific amount.

4. The Tribunal reviewed the evidence and submissions, concluding that the appellant did not receive any accommodation entries as claimed by the AO. The absence of corroborative evidence led to the rejection of the AO's addition of income as bogus LTCG. The Tribunal emphasized the importance of substantiating claims with concrete evidence.

5. Ultimately, the Tribunal allowed the appeal, ruling in favor of the appellant due to the lack of evidence supporting the addition of income as bogus LTCG. The decision was based on a thorough examination of the facts and documentation provided by the appellant.