2018 (5) TMI 1744 - AT - Income Tax

Addition u/s 68 - Assessments u/s 153A - addition on account of loan shown to have been received by the assessee from PTU - Held that - In view of section 68, where any sum is found credited in the books of the assessee for any previous year the same may be charged to income-tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In view of the factual and legal position discussed above, it is crystal clear that PTU provided only accommodation entries to the assessee in the garb of unsecured loan of ₹ 1 crore which, in our considered opinion, has been rightly added by the authorities below. We, therefore, countenance the impugned order on this score.

Summary

Issues Involved:
1. Jurisdiction under Section 153A and 153C of the Income-tax Act.
2. Addition of ?19,35,720/- under Section 68 for Assessment Year 2008-09.
3. Addition of ?16,70,000/- under Section 68 for Assessment Year 2009-10.
4. Addition of ?1 crore under Section 68 for Assessment Year 2014-15.

Detailed Analysis:

1. Jurisdiction under Section 153A and 153C of the Income-tax Act:
The assessee contended that the Assessing Officer (AO) exceeded his jurisdiction by examining issues for addition under Section 153A and 153C as the impugned assessment years were abated, and no incriminating material was found during the search. The Tribunal noted that the assessment years under consideration were completed assessments and not pending assessments abating on the date of search. The Tribunal relied on the judgment in Kabul Chawla vs. CIT, which held that completed assessments can only be interfered with based on incriminating material found during the search. Since no incriminating material was found for the majority of the creditors, the Tribunal held that the AO exceeded his jurisdiction in making additions without such material.

2. Addition of ?19,35,720/- under Section 68 for Assessment Year 2008-09:
The AO made an addition of ?19,35,720/- under Section 68 for unsecured loans/sundry creditors, which the assessee had voluntarily surrendered during assessment proceedings. The Tribunal noted that the original assessment for the year was completed, and no incriminating material was found during the search, except for an amount of ?3,75,000/- in the name of Shri Matwar Prasad, who denied giving any loan. The Tribunal upheld the addition of ?3,75,000/- but deleted the remaining ?15,60,720/- as it was not based on any incriminating material found during the search.

3. Addition of ?16,70,000/- under Section 68 for Assessment Year 2009-10:
Similar to the previous year, the AO made an addition of ?16,70,000/- for unsecured loans from seven persons, including ?4,30,000/- from Shri Matwar Prasad, who denied giving any loan. The Tribunal upheld the addition of ?4,30,000/- based on incriminating material but deleted the remaining ?12,40,000/- as it was not supported by any incriminating material found during the search.

4. Addition of ?1 crore under Section 68 for Assessment Year 2014-15:
The AO added ?1 crore received as a loan from M/s Pediment Tie-Up (P) Ltd., Kolkata (PTU), considering it a paper/shell company providing accommodation entries. The AO's conclusion was based on the report from DDIT (Investigation), Kolkata, which identified PTU as a paper company managed by an entry operator, Shri Rajendra Bubna. The Tribunal noted that PTU had no tangible assets, declared meager income, and had a high share premium, which cast doubt on its genuineness. The Tribunal also considered the non-compliance of PTU's directors with summons and the assessee's lack of knowledge about the loan. Based on the surrounding circumstances and human probabilities, the Tribunal upheld the addition of ?1 crore, concluding that PTU provided only accommodation entries to the assessee.

Conclusion:
The Tribunal partly allowed the appeals for Assessment Years 2008-09 and 2009-10 by deleting additions not supported by incriminating material, while it upheld the additions based on incriminating material. For Assessment Year 2014-15, the Tribunal dismissed the appeal, confirming the addition of ?1 crore as an accommodation entry. The Tribunal emphasized the importance of incriminating material found during the search for making additions in completed assessments.