2016 (2) TMI 1189 - AT - Income Tax

Addition u/s 68 - receipt of accommodation entries from Mukesh Chokshi - Held that - It is evident that Mahasagars Securities Pvt. Ltd. and Alliance Intermediaries Network Pvt. Ltd. were involved in providing accommodation entries and the assessee has shown long term capital gain as assessee s own money from undisclosed sources. The assessee has not brought anything on record to controvert the finding of the AO or the ld.CIT(A). No infirmity on the order of the AO and the CIT(A) has rightly confirmed the same. Thus all the grounds of the assessee are dismissed.

Summary

Issues:
1. Disallowance of appeal by CIT (A)
2. Addition of undisclosed income under section 68 of the IT Act 1961
3. Treatment of exempted Long Term Capital Gain as unexplained credit under section 68
4. Allegations of sham and bogus transactions

Analysis:

Issue 1: Disallowance of appeal by CIT (A)
The appeal arose from the order of the Ld.CIT(A)-10, Ahmedabad for the Asstt.Year 2006-2007. The assessee contended that the CIT (A) erred in law and on facts by not allowing the appeal fully. However, the CIT (A) confirmed the addition of undisclosed income under section 68 of the IT Act 1961, leading to the subsequent grounds of appeal by the assessee.

Issue 2: Addition of undisclosed income under section 68 of the IT Act 1961
The AO reopened the assessment after finding that the appellant had obtained fake share transaction bills from companies engaged in providing accommodation entries. The AO concluded that the declared Long Term Capital Gains were from accommodation entries and treated the amount as income from undisclosed sources under section 68. The CIT (A) upheld this decision, citing previous cases establishing the involvement of certain companies in accommodation entries.

Issue 3: Treatment of exempted Long Term Capital Gain as unexplained credit under section 68
The appellant's claim of exempted Long Term Capital Gain was disputed by the authorities due to the nature of the transactions involving bogus bills for share purchases and sales. The AO considered these transactions as accommodation entries and not genuine, leading to the treatment of the sales consideration as unexplained credit under section 68. The CIT (A) supported this decision based on the evidence presented during the assessment.

Issue 4: Allegations of sham and bogus transactions
The appellant's transactions involving Talent Infoways Ltd. were flagged as sham and bogus by the authorities, as they were linked to companies known for providing accommodation entries. The appellant failed to provide sufficient evidence to counter these allegations, leading to the confirmation of the addition of undisclosed income. The ITAT upheld the decisions of the AO and CIT (A), dismissing all grounds raised by the appellant.

In conclusion, the ITAT affirmed the decisions of the lower authorities, emphasizing the involvement of companies in providing accommodation entries and the lack of genuine transactions by the appellant. The appeal was dismissed, and the undisclosed income addition under section 68 was upheld.