2017 (2) TMI 996 - AT - Income Tax

Addition on undisclosed income u/s 68 - Held that - Before making addition u/s 68 the AO has neither gave any finding on the identity of the person, source of share capital. The AO straightway came to the conclusion about the non- genuinenity without bringing any material on record against the assessee. The AO has not given any wattage to the evidences furnished by the assessee. In these circumstances we deem it appropriate to restore the case to the file of AO to reconsider the case of assessee and give fresh finding by speaking order on the evidences furnished by assessee, after considering the above referred decision of Hon ble Bombay High Court in Mukesh Ratilal Marolia (2011 (9) TMI 919 - BOMBAY HIGH COURT) and Lovely Exports (P) Limited (2008 (1) TMI 575 - SUPREME COURT OF INDIA ). - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Appeal against addition of undisclosed income under section 68 of the Income Tax Act.

Analysis:
The appeal was directed against the order of the Commissioner of Income-tax (Appeals) for Assessment Year 2010-11, where the only ground raised was the confirmation of the addition of ?10,00,000 as undisclosed income under section 68 of the Act. The case revolved around the treatment of Share Capital from Mihir Agencies Pvt. Ltd. as unexplained cash credit. The assessee argued that the addition was solely based on a third-party statement and provided documentary evidence to support the transaction. The authorities disregarded the evidence and relied on the statement of Mukesh Choksi, linking the transaction to providing accommodation entries. The assessee cited various court decisions to support their case, emphasizing the need for the AO to consider the evidence provided. The Revenue, however, supported the authorities' decision, claiming the assessee failed to discharge the onus and did not provide necessary balance sheet details.

During the assessment, the AO concluded that the share capital was undisclosed income based on the modus operandi explained by Mukesh Choksi and the investigation revealing the group's involvement in providing accommodation entries. The AO and CIT(A) did not give any finding on the evidence filed by the assessee, solely relying on the third-party statement. The Tribunal referred to relevant court decisions emphasizing the importance of considering evidence before treating amounts as undisclosed income. The AO was directed to re-examine the case, considering the evidence provided by the assessee and relevant court decisions, providing the assessee with a fair opportunity before passing a new order. The appeal was allowed for statistical purposes, and the case was restored to the AO for fresh consideration.

In conclusion, the Tribunal's judgment highlighted the necessity for authorities to thoroughly examine evidence before treating amounts as undisclosed income under section 68 of the Income Tax Act. The decision underscored the importance of providing a fair opportunity to the assessee and considering relevant court precedents in such cases. The appeal was allowed, emphasizing the need for a comprehensive review of the evidence presented by the assessee before making any additions.