2019 (6) TMI 837 - AT - Income Tax

Addition u/s. 68 - assessee as beneficiaries of accommodation entries in the form of share application money from the companies of Sh. Praveen K. Jain - HELD THAT - All the three companies have allegedly received share application money of ₹ 25.00 lakh from three bogus companies operated by Shri Praveen K. Jain. There is uniform pattern in all the three companies in which shares of face value of ₹ 10/- were allegedly issued at a premium of ₹ 40/- per share. Search and survey action on Shri Praveen K. Jain amply proved, rather it was admitted by himself, that he was engaged in providing accommodation entries through a web of his bogus companies, which were engaged in providing accommodation entries to various assesses. The assessees in appeal are also beneficiaries of such accommodation entries in the form of share application money from the companies of Sh. Praveen K. Jain. The authorities below have discussed the issue threadbare before making and confirming the additions. In the absence of assessees furnishing any further evidence to substantiate the claim of genuineness of the transactions - Decided against assessee.

Summary

Issues:
Confirmation of addition of ?25.00 lakh each made by the Assessing Officer u/s. 68 of the Income-tax Act, 1961 in the hands of three related companies.

Analysis:

Issue 1: Addition of ?25.00 lakh under section 68 of the Income-tax Act, 1961
The appeals by the related companies were related to the assessment year 2010-11, with a common issue raised against the confirmation of the addition of ?25.00 lakh each by the Assessing Officer under section 68 of the Income-tax Act, 1961. The companies, engaged in trading in herbal products, received share application money from companies operated by Shri Praveen K. Jain. The AO, based on search and survey actions, noted that Shri Praveen K. Jain was involved in providing accommodation entries through his companies. The AO treated the companies as shell companies and added the share application money to the total income of the assessees. The assessees denied receiving any accommodation entries but failed to provide evidence to substantiate the transactions' genuineness. The Tribunal upheld the additions due to the lack of further evidence from the assessees.

Issue 2: Lack of Representation by Assessees
Despite multiple adjournments and lack of representation by the assessees during the appeal hearings, the Tribunal proceeded ex parte and disposed of the appeals based on the available records and submissions by the Revenue. The absence of the assessees during the hearings further weakened their case, leading to the dismissal of all three appeals.

In conclusion, the Tribunal dismissed all three appeals due to the confirmation of the addition of ?25.00 lakh under section 68 of the Income-tax Act, 1961, as the assessees failed to provide additional evidence to support the genuineness of the transactions. The lack of representation during the appeal hearings also contributed to the dismissal of the appeals.