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2015 (12) TMI 1657 - AT - Income TaxAddition u/s 68 - reopening of assessment - Held that - Nowhere in the assessment order the ld. Assessing Officer has brought into existence any material to show that the company Victory Software P. Ltd. is a non-existing and a fictitious entity. It is, therefore, incorrect to arrive at a conclusion that the money received by the assessee by way of share application from Victory Software is bogus. We also hold that the assessee has discharged its burden u/s 68 as it had filed the enormous details in respect of M/s Victory Software P. Ltd. before the ld. Assessing Officer for him to investigate upon in detail. The ld. Assessing Officer has failed to establish that the details filed by the assessee are wrong. He has also failed to produce sufficient material on record to prove that the receipt of money by the assessee from M/s Victory Software P. Ltd. is accommodation entries from the entry operator S.K. Jain Group. In the above circumstances, we allow grounds filed by the assessee and held that reopening by the ld. Assessing Officer was met valid. - Decided in favour of assessee.
Issues Involved:
1. Validity of reassessment proceedings under section 148. 2. Nexus between information and escapement of income. 3. Burden of proof under section 68. 4. Allegations of non-allotment of shares. 5. Legal significance of allegations in assessment proceedings. 6. Verification of veracity of claims by the Assessing Officer. Issue 1: Validity of reassessment proceedings under section 148: The appellant challenged the initiation of reassessment proceedings under section 148, claiming they were void ab initio due to the Assessing Officer's failure to verify the information before recording reasons. The appellant argued that the reasons recorded were vague and lacked a nexus with any material on record. The CIT(A) upheld the validity of the proceedings, leading to the appeal. Issue 2: Nexus between information and escapement of income: The Assessing Officer initiated reassessment based on information received regarding accommodation entries. The appellant contended that the share application money received was genuine and submitted relevant documents. The CIT(A) rejected the submissions, leading to the appeal before the Tribunal. Issue 3: Burden of proof under section 68: The appellant argued that the burden under section 68 was discharged by providing substantial evidence during assessment proceedings. The Assessing Officer, however, treated the share application money as undisclosed income. The Tribunal examined the evidence presented by both parties to determine the genuineness of the transaction. Issue 4: Allegations of non-allotment of shares: The CIT(A) presumed that shares were not allotted to the share applicant, which the appellant contested. The Tribunal analyzed the evidence and submissions to ascertain the correctness of the assumption made by the CIT(A). Issue 5: Legal significance of allegations in assessment proceedings: The appellant emphasized that mere allegations in the assessment order do not establish the veracity of the claims. The Tribunal evaluated the legal implications of the allegations and the necessity for concrete evidence to support any additions to the income. Issue 6: Verification of veracity of claims by the Assessing Officer: The Assessing Officer's reliance on information received without independent verification was challenged by the appellant. The Tribunal scrutinized the actions taken by the Assessing Officer, including issuing summons and conducting inquiries, to determine the credibility of the claims made during reassessment. In conclusion, the Tribunal allowed the appeal, holding that the Assessing Officer failed to establish the share application money received as bogus. The burden of proof under section 68 was considered discharged by the appellant, emphasizing the importance of concrete evidence in assessment proceedings. The Tribunal's decision highlighted the necessity for thorough verification and substantiation of claims before making additions to the income.
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