2018 (6) TMI 1113 - AT - Income Tax

Unexplained cash credits u/s 68 - Held that - When the assessee in course of proceeding brings certain facts to the notice of the assessing officer, it is the duty of the assessing officer to conduct necessary enquiry to ascertain the veracity of assessee s claim. In these circumstances without countering assessee s contention that the amount in question does not appear as a credit in the books of account, the Departmental Authorities were not justified in making the addition as unexplained cash credit under section 68 of the Act. Since, we find that the Departmental Authorities have not properly enquired into assessee s claim on the issue of receipt of share application money, we are inclined to restore the issue to the Assessing Officer for de novo adjudication after due opportunity of being heard to the assessee. Assessee s appeal is allowed for statistical purposes.

Summary

Issues:
1. Addition of Rs. 69,00,000 as unexplained cash credits under section 68 of the Income Tax Act.
2. Failure to consider the statement of facts submitted before the Commissioner (Appeals) in totality.

Analysis:
1. The dispute in this case revolves around the addition of Rs. 69,00,000 as unexplained cash credit under section 68 of the Income Tax Act, 1961. The Assessing Officer re-opened the assessment under section 147 based on information obtained during a search and seizure operation related to accommodation entries provided by Shri Pravin Jain. The Assessing Officer concluded that the share application money of Rs. 69 lakh credited to the assessee's account were merely accommodation entries and added this amount back under section 68. The assessee contended that the amount was received on behalf of a third party, Shri Harshvardhan Jain, and was not credited in their books. Despite the submissions made, both the Assessing Officer and the Commissioner (Appeals) upheld the addition. The ITAT found that the Departmental Authorities did not properly investigate the claim made by the assessee regarding the receipt of share application money. Consequently, the issue was restored to the Assessing Officer for fresh adjudication with the opportunity for the assessee to be heard.

2. The second issue raised by the assessee was the failure to consider the statement of facts submitted before the Commissioner (Appeals) in totality. The assessee argued that the share application money was received on behalf of Shri Harshvardhan Jain and was not credited in their books. The ITAT noted that the Commissioner (Appeals) dealt with the issue in a summary manner without proper reasoning, despite the crucial fact that the amount in question was not shown as a credit in the assessee's books. The ITAT emphasized that when the assessee brings forth relevant facts during proceedings, it is the duty of the assessing officer to conduct a thorough enquiry to verify the claim. As a result, the ITAT allowed the grounds raised by the assessee for statistical purposes and directed a fresh adjudication by the Assessing Officer to properly examine the veracity of the claim regarding the disputed amount belonging to a third party and not appearing in the assessee's books.

In conclusion, the ITAT allowed the assessee's appeal for statistical purposes, highlighting the importance of a detailed investigation into claims made by taxpayers during assessment proceedings to ensure a fair and accurate determination of tax liabilities.