2019 (10) TMI 1565 - AT - Income Tax

Addition u/s 68 - discharge of onus - receipt of accomodation entry - HELD THAT - After the assessee has adduced evidence to establish prima facie onus shifts to the Department. In the instant case, the AO has not done even preliminary inquiry to disprove the contentions of the assessee. AO has failed to disprove the contention of the assessee that (i) the loan taken from Ahuja Group and repaid are genuine and reflected in its books of accounts and there is no cash receipt or cash withdrawal, (ii) Shri Ahuja had nowhere in the statement admitted to having given any accommodation entry to the assessee, (iii) even if Shri Ahuja maintained parallel books, it is of no concern to the assessee who had reflected the loan transactions in his books of accounts, (iv) if it is presumed that Rs.35 lacs given to the assessee by Ahuja group is an accommodation entry and out of this Rs.25 lacs has been repaid, there is no sense of making an addition of an entry amounting to Rs.61,50,000/-, which is Rs.1.50 lacs more than the amount of loan given and repaid. Though the onus shifted to the AO, he failed to disprove the contentions of the assessee. Therefore, in view of the above factual scenario and position of law, we uphold the order of the Ld. CIT(A). Appeal filed by the revenue is dismissed.

Summary

Issues:
1. Addition of Rs.61,50,000/- u/s 68 of the Income Tax Act
2. Admissibility of additional evidence under Rule 46A
3. Validity of reopening the assessment u/s 147

Issue 1: Addition of Rs.61,50,000/- u/s 68 of the Income Tax Act:

The appeal involved the addition of Rs.61,50,000/- under section 68 of the Income Tax Act. The Assessing Officer (AO) made this addition based on transactions revealed in unaccounted parallel books, alleging unexplained income. The AO contended that cash received by the assessee from Ahuja Group was not properly recorded in the books. However, the Commissioner of Income Tax (Appeals) (CIT(A)) found the AO's conclusions to be based on presumptions and conjectures. The CIT(A) referred to the requirement of proof and held that suspicion cannot replace concrete evidence. Citing the case of Umacharan Shaw and Bros v. CIT, the CIT(A) deleted the addition.

Issue 2: Admissibility of additional evidence under Rule 46A:

The Appellate Tribunal noted that the CIT(A) did not admit any additional evidence in violation of Rule 46A of the Income Tax Rules, 1962. It emphasized the importance of the assessee establishing the identity of the creditor, capacity to advance money, and genuineness of the transaction to meet the burden under section 68 of the Act. The Tribunal highlighted that once the assessee provides prima facie evidence, the onus shifts to the Department. In this case, the AO failed to disprove the contentions raised by the assessee, leading to the upholding of the CIT(A)'s decision.

Issue 3: Validity of reopening the assessment u/s 147:

Regarding the validity of reopening the assessment under section 147, the Tribunal dismissed the cross-objection filed by the assessee challenging the AO's action. Citing the case of ACIT v. Rajesh Jhaveri Stock Brokers P. Ltd., the Tribunal held that the intimation under section 143(1)(a) does not constitute an assessment, thereby validating the issuance of notice under section 148. Consequently, the cross-objection was dismissed.

In conclusion, the Appellate Tribunal upheld the CIT(A)'s decision to delete the addition of Rs.61,50,000/- made by the AO under section 68 of the Income Tax Act. The Tribunal also dismissed the appeal filed by the revenue and the cross-objection filed by the assessee, emphasizing the importance of concrete evidence over mere suspicions in tax assessments.