9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (6) TMI 1164 - AT - Income TaxUnexplained credits u/s. 68 - proof of guinity and creditworthiness of lenders - addition on protective basis - Held that - On analysis of the investment account reveal that the company has made investment of ₹ 5,04,01,000/. The statement given by Sh. PN Jha assumes importance wherein he categorically admitted that the company was doing the business of investment and finance and during the year the bank accounts of the company have been used to provide the accommodation entries. The addition of ₹ 3,17,67,951/- made by the Assessing Officer on protective basis, which is not sustainable in the eyes of law, because in this case the AO himself stated in the assessment order that the Department is looking after the cases of beneficiaries and the amounts channelized through this group would be taxed in the hands of the beneficiaries, the amount of total credits of ₹ 3,17,67,951/- made in its bank account with Kotak Mahindra Bank, KG Marg, New Delhi, during the year is added to the income of the assessee on protective basis. In this case we find that AO has not made any substantive assessment. There may be substantive assessment without any protective assessment, but there cannot be any protective assessment without there being a substantive assessment. Keeping in view all we are of the considered view that Ld. CIT(A) has rightly deleted the addition - Decided against revenue
Issues Involved:
1. Deletion of addition of ?3,17,67,951/- made on account of unexplained credits under Section 68 of the Income Tax Act. Detailed Analysis: Issue 1: Deletion of Addition of ?3,17,67,951/- under Section 68 of the Income Tax Act Background: - The assessee filed its return for Assessment Year 2005-06 declaring an income of ?3,557/-. The return was processed under Section 143(1) of the Income Tax Act, 1961. - The Assessing Officer (AO) issued a notice under Section 143(2) for further scrutiny. During the assessment, it was noted that the share capital of the assessee company increased by ?1,01,90,000/- and Reserve and Surplus increased by ?1,98,64,000/-, indicating shares were allotted at a premium. - The AO observed that confirmations for the share capital raised were received from Karol Bagh post office, although some parties were from the Delhi Gate area, raising doubts about the genuineness of transactions. - The AO concluded that the assessee was involved in providing accommodation entries and added ?3,17,67,951/- to the income of the assessee on a protective basis. CIT(A) Findings: - The CIT(A) elaborately discussed the issue and noted that the AO made the addition on a protective basis, acknowledging the assessee as an entry operator. - The case was remanded to the AO for specific comments on the share application money. The AO's remand report confirmed total credits of ?3,17,67,952/- in the bank accounts. - The statement of the Director of the company, recorded under Section 131, revealed that the company was engaged in investment and finance and provided accommodation entries, earning a commission income. Tribunal’s Observations: - The Tribunal noted that the AO made the addition on a protective basis without any substantive assessment. - The Tribunal emphasized that there cannot be a protective assessment without a substantive assessment. The AO himself stated that the amounts would be taxed in the hands of the ultimate beneficiaries. - The Tribunal upheld the CIT(A)'s decision to delete the addition, agreeing that the AO's protective assessment was not sustainable in law. Conclusion: - The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s order to delete the addition of ?3,17,67,951/- made on account of unexplained credits under Section 68. Final Order: - The appeal filed by the Revenue was dismissed. The deletion of the addition by the CIT(A) was upheld. Pronouncement: - The order was pronounced on 05/06/2017.
|
