2016 (6) TMI 1158 - AT - Income Tax

Addition u/s 68 - Held that - Contrarily evidences produced by the assessee of stalwart Realtors Limited of loan given which is supported by the bank statement of the lender, was not anyway found false or an accommodation entry. In view of this, we are of the view that appellant has discharged its onus cast upon him under section 68 by proving the identity, creditworthiness and genuineness of the transactions and therefore the addition of loan received by it from M/s Stalwart realtors private limited cannot be added into the hands of the assessee under section 68 - Decided in favour of assessee

Summary

Issues Involved:
1. Addition of ?28,60,000 on account of unexplained receipts towards the booking of space.
2. Addition of ?50,00,000 received from M/s Stalwart Realtors Private Limited under Section 68 of the Income Tax Act.
3. Legal issue regarding the assessment framed under Section 143(3) instead of Section 153A read with Section 153C.

Issue-wise Detailed Analysis:

1. Addition of ?28,60,000 on account of unexplained receipts towards the booking of space:

The assessee challenged the addition of ?28,60,000 confirmed by the CIT(A) on account of unexplained receipts towards the booking of space. The addition was based on a document seized from a third party, which the AO interpreted as showing unaccounted cash receipts. The assessee argued that the document did not pertain to them and had no financial implications for their business. The Tribunal noted several points in favor of the assessee:
- The document was seized from a third party with no proven connection to the assessee.
- No evidence was provided by the AO to link the document to the assessee.
- The cheques mentioned in the document were not reflected in the assessee’s bank account.
- Confirmations from the parties listed in the document were provided, stating no transactions with the assessee.
- The Tribunal found that the AO and CIT(A) had not adequately verified the confirmations or the bank transactions.

Based on these points, the Tribunal reversed the CIT(A)'s decision, holding that the addition of ?28,60,000 was not justified.

2. Addition of ?50,00,000 received from M/s Stalwart Realtors Private Limited under Section 68:

The assessee also contested the addition of ?50,00,000 under Section 68, which was received from M/s Stalwart Realtors Private Limited. The AO had added this amount, questioning the creditworthiness and genuineness of the transaction. The Tribunal examined the evidence provided by the assessee, including:
- Confirmation from the lender, along with their PAN and income tax return.
- Bank statements showing the transaction.
- Balance sheet of the lender, indicating sufficient reserves and surplus.

The Tribunal noted that the AO did not confront the assessee with any adverse evidence or statements from the investigation. The Tribunal found that the assessee had adequately demonstrated the identity, creditworthiness, and genuineness of the transaction. Consequently, the Tribunal directed the deletion of the addition of ?50,00,000.

3. Legal issue regarding the assessment framed under Section 143(3) instead of Section 153A read with Section 153C:

The assessee raised an additional legal ground, arguing that the assessment should have been framed under Section 153A read with Section 153C, as the documents were seized from a third party. The Tribunal referred to its own decision in a similar case (ITA No. 2463/Del/2013), where it was held that the assessment under Section 143(3) was valid because the impugned assessment year was outside the purview of Section 153A. The Tribunal dismissed the additional ground, upholding the assessment under Section 143(3).

Conclusion:

The Tribunal allowed the appeal of the assessee regarding the additions of ?28,60,000 and ?50,00,000, directing their deletion. However, the additional legal ground concerning the applicability of Section 153A read with Section 153C was dismissed. The appeal was partly allowed.