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2015 (12) TMI 189 - AT - Income TaxAddition u/s 68 on account of alleged bogus accommodation entries - CIT(A) deleted the additions - whether the assessee company had discharged its onus that is lying upon it in terms of the provisions of Section 68 or not? - Held that - A perusal of the assessment, reveals that the assessee company failed to discharge the initial onus that was lying upon it in terms of the provisions of Section 68 of the Act as he failed to furnish the identity, creditworthiness and genuineness of the transaction of share application money received of ₹ 20,02,030/-. The ld. CIT(A) had deleted the addition solely on the ground that there were no credit in the nature of M/s Garg Finvest Pvt. Ltd. and Shekhawati Finance Pvt. Ltd. In our opinion, the ld. CIT(A) fell in error by holding that the provisions of Section 68 are not applicable to the facts of the present case. Having regard to the modus operandi of accommodation entry providers, the practice of taking cash and receiving cheques in the guise of subscription and share capital consideration in the form of commission, the assessee company had not discharged its initial onus lying upon it, nor rebutted the report of Investigation Wing. Further, we find from the order of the CIT(A) that certain additional evidences/details were filed by way of paper book and there is nothing on record to show that the requirements of the provisions of Section 46A of the Income Tax Rules, 1962 had been complied with by the ld. CIT(A). In the circumstances, we are of the considered opinion that the interest of justice would be served, if the matter is restored to the file of the Assessing Officer for de-novo assessment - Decided in favour of revenue by way of remand. Validity of reassessment proceedings - Held that - The information received from the Investigation Wing of the Department enabled the Assessing Officer to form an opinion that the income chargeable to tax had escaped assessment. It is trite law that at the stage of initiation of the reassessment proceedings, there need not be conclusive finding on fact against the assessee, only requirement is reasonable belief of the Assessing Officer. See Sowdagar Ahmed Khan Vs. ITO, (1967 (11) TMI 10 - SUPREME Court); Brij Mohan Aggarwal Vs. ACIT (2004 (4) TMI 61 - ALLAHABAD High Court); & Praful Chunila Patel Vasant Chunilal Patel Vs. Asstt. CIT, (1998 (2) TMI 538 - GUJARAT High Court ). - Decided against assessee
Issues:
1. Deletion of addition under Section 68 on account of alleged bogus accommodation entries. 2. Justification of CIT(A) in deleting the addition. 3. Failure to discharge primary onus under Section 68. 4. Restoration of the matter for de-novo assessment. 5. Information from Investigation Wing for reassessment proceedings. Analysis: Issue 1: Deletion of addition under Section 68 The Revenue appealed against the CIT(A)'s order deleting an addition of Rs. 20,02,030 made under Section 68 on alleged bogus accommodation entries. The CIT(A) upheld the validity of reassessment proceedings but deleted the addition, stating there were no credits in the account of the concerned companies. The ITAT found that the assessee failed to furnish identity, creditworthiness, and genuineness of the transaction, not meeting the onus under Section 68. The ITAT held that the CIT(A) erred in holding Section 68 not applicable, considering the nature of the alleged accommodation entry providers and lack of compliance with Section 46A of the Income Tax Rules. The matter was restored for de-novo assessment. Issue 2: Justification of CIT(A) The Revenue argued that the CIT(A) unjustly deleted the addition without examining details, while the Authorized Representative supported the CIT(A)'s decision. The ITAT observed that the CIT(A) erred in not applying Section 68 to the case due to insufficient evidence and lack of compliance with procedural rules, leading to the restoration of the matter for proper assessment. Issue 3: Failure to discharge primary onus under Section 68 The ITAT noted that the assessee failed to discharge the initial onus under Section 68 by not providing necessary details regarding the share application money received. The CIT(A)'s decision to delete the addition solely based on the absence of credits in specific accounts was deemed erroneous, necessitating a fresh assessment. Issue 4: Restoration of the matter for de-novo assessment Given the failure to comply with Section 68 requirements and lack of conclusive evidence, the ITAT ordered the matter to be sent back to the Assessing Officer for a fresh assessment, ensuring proper opportunity for the assessee to present relevant information. Issue 5: Information from Investigation Wing for reassessment proceedings The ITAT acknowledged that information from the Investigation Wing justified the reassessment proceedings, emphasizing the Assessing Officer's reasonable belief of income escaping assessment, as per legal precedents cited. The appeal by the Revenue was partly allowed for statistical purposes, and the cross objections by the assessee were dismissed. This comprehensive analysis covers the key issues raised in the judgment, detailing the arguments presented, the findings of the ITAT, and the legal implications guiding the decision-making process.
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