2014 (11) TMI 1024 - AT - Income Tax

Addition u/s. 68 and u/s. 69 - Held that - There being no direct or material evidence against the assessee to hold that the share transactions were not genuine, to hold that additions made by the AO u/s 68 are not warranted and are accordingly deleted. Since we have set-aside the findings of the lower authorities that the transactions in question were not genuine, hence the consequential additions made by the AO u/s 69 observing that the assessee might have paid commission for the bogus transactions have no legs to stand. - Decided in favour of assessee.

Summary

Issues:
1. Addition of Rs. 12,00,170/- u/s. 68 and Rs. 60,009/- u/s. 69 of the Income Tax Act for assessment year 2003-04.

Analysis:
The case involved an appeal by the assessee against the Commissioner of Income Tax (Appeals) order regarding the addition of Rs. 12,00,170/- u/s. 68 and Rs. 60,009/- u/s. 69 of the Income Tax Act. The controversy arose from a search & seizure action in the case of certain companies, including one providing accommodation entries. The assessee had transactions with one such company, leading to the addition of unexplained credit and commission income by the Assessing Officer. The assessee contended that the transactions were genuine, backed by purchase and sale of shares through a registered sub-broker, with proceeds received through cheques. However, the CIT(A) was not convinced, upholding the additions. The assessee then appealed to the ITAT Mumbai.

The ITAT Mumbai considered the arguments and relied on previous Tribunal decisions in similar cases where additions were made based on statements of the same individual involved in providing accommodation entries. The Tribunal found the facts of the present case to be almost identical to those in the referenced cases. Notably, in one case, the Tribunal had allowed the appeal of the assessee, emphasizing the genuineness of the transactions based on documentary evidence and lack of specific allegations against the assessee. In another case, the Tribunal dismissed the revenue's appeal, emphasizing the need for proper verification and lack of direct evidence against the assessee.

Based on the precedents and the lack of direct or material evidence against the assessee, the ITAT Mumbai held that the additions made by the AO were not justified. Consequently, the additions u/s 68 and u/s 69 were deleted, as the transactions were deemed genuine. The ITAT Mumbai allowed the appeal of the assessee, setting aside the findings of the lower authorities and ordering the consequential additions to be deleted. Thus, the appeal was allowed in favor of the assessee.