2015 (9) TMI 704 - AT - Income Tax

Addition on account of accommodation entries received - CIT(A) deleted the addition - Held that - As decided in CIT vs. Pradeep Gupta 2006 (11) TMI 184 - DELHI HIGH COURT from the very beginning Ld AO had shifted entire burden upon the assessee and no material was brought by him to prove his allegation that the impugned amount represented assessee company s undisclosed income. Therefore, on this ground alone the entire addition deserves to be deleted and may kindly be held so. AO did not bother to adjudicate the explanation of the assessee and simply noted that when the entry provider has accepted that they provided accommodation entries after receipt of cash from the parties who need entries and the AO further held that, therefore, the submissions of the assessee are not acceptable in view of admission of entry providers. AO had shifted entire burden upon the assessee and no material was brought by him to prove his allegation that impugned amount actually represent undisclosed income of the assessee. Thus CIT(A) has not erred in deleting the addition - Decided against revenue.

Summary

Issues:
Appeal against deletion of addition on account of accommodation entries received by the assessee.

Analysis:
1. The Revenue appealed against the deletion of an addition of Rs. 25,50,150 made on account of accommodation entries received by the assessee for AY 2001-02.
2. The Assessee had filed its return of income declaring a loss, and the department intended to add the said amount to the assessee's income based on information from the Investigation Wing.
3. The AO added the entire sum to the assessee's income without considering the explanations provided by the assessee, leading to an appeal by the assessee.
4. The CIT(A) deleted the addition, citing lack of material provided to the appellant for presenting arguments and concluding that the AO did not adhere to natural justice principles during assessment.
5. The CIT(A) found that the appellant had received the amount through banking channels, had filed confirmations, and the AO failed to prove the transaction's genuineness or the appellant's undisclosed income.
6. The CIT(A) relied on judicial pronouncements emphasizing the burden of proof on the AO and the need for evidence to support additions under Section 68 of the Income Tax Act.
7. The Tribunal upheld the CIT(A)'s decision, citing a High Court judgment emphasizing the importance of the Revenue producing evidence and the burden of proof resting on the AO in reassessment cases.
8. The Tribunal found no valid reason to interfere with the CIT(A)'s order, concluding that the case was covered in favor of the assessee based on legal precedents.
9. Consequently, the appeal of the Revenue was dismissed, affirming the deletion of the addition made by the AO.

This detailed analysis highlights the procedural irregularities, burden of proof, and legal principles applied in the judgment, leading to the dismissal of the Revenue's appeal against the deletion of the addition on account of accommodation entries received by the assessee.