2019 (9) TMI 185 - AT - Income Tax

Addition u/s 68 - bogus share application money and accommodation entries - Investigation Wing of Mumbai that a search u/s. 132 was conducted in the cases of Praveen Kumar Jain Group were providing accommodation entries - assessee s contention that the assessee has stated that neither statement of Shri P.K. Jain was supplied nor any chance to cross examination was granted by the A.O - HELD THAT - In the case of Shri Praveen Kumar Jain where Shri P.K. Jain has admitted that he was indulged in providing entries to various companies and assessee has received accommodation entry in the form of share application money/share premium from various paper companies controlled and managed by Shri P.K. Jain. The assessee has specifically requested for the statement of Shri P.K. Jain to the A.O. but ld. A.O. did not supply the same. Since statement of Shri P.K. Jain was not supplied to the assessee on the basis of addition was made and in the absence of said statement assessee could not cross examine to Shri P.K. Jain and same is amount to miscarriage of justice despite of the fact that assessee made a formal request to the lower authorities. In our considered opinion and after considering the aforesaid judgment, no addition can be made on the basis of which violate principle of natural justice.

Summary

Issues:
1. Validity of re-opening assessment under section 147.
2. Jurisdiction of the Assessing Officer in passing reassessment order.
3. Consideration of objections to reassessment proceedings.
4. Addition of capital investment as bogus share application money.
5. Levy of interest under sections 244A and 234B.

Validity of re-opening assessment under section 147:
The appeal challenged the order of the Ld. CIT(A) upholding the re-opening of the assessment under section 147. The appellant contended that the conditions for re-opening were not satisfied. The appellant argued that the reassessment order was invalid due to lack of proper jurisdiction and being based on change of opinion and borrowed satisfaction. The appellant also raised objections to the reassessment proceedings, citing the submission of relevant evidence to the Assessing Officer. The Tribunal examined the facts of the case, where it was discovered that the assessee had obtained accommodation entries from a bogus concern. The Tribunal considered the appellant's request for the statement of a key individual, which was not provided by the Assessing Officer. The Tribunal referred to legal precedents highlighting the importance of proper reasoning and tangible material in re-opening assessments, ultimately ruling in favor of the appellant due to the lack of independent application of mind by the Assessing Officer.

Jurisdiction of the Assessing Officer in passing reassessment order:
The Assessing Officer had initiated reassessment proceedings based on information received from the Investigation Wing regarding accommodation entries obtained by the assessee. The appellant contested the addition made by the Assessing Officer without providing the statement of a crucial individual for cross-examination. The Tribunal considered legal judgments emphasizing the necessity of allowing cross-examination and providing relevant statements to the assessee. Citing the absence of the statement and the denial of the opportunity for cross-examination, the Tribunal ruled in favor of the appellant, highlighting the violation of principles of natural justice.

Consideration of objections to reassessment proceedings:
The appellant had raised objections to the reassessment proceedings, submitting relevant evidence and requesting the statement of a key individual involved in the case. Despite the appellant's contentions, the Assessing Officer proceeded with the addition without providing the requested statement for cross-examination. The Tribunal examined the facts and legal precedents, ultimately ruling that the addition made without providing the statement and the opportunity for cross-examination amounted to a miscarriage of justice, violating principles of natural justice.

Addition of capital investment as bogus share application money:
The Assessing Officer had added a significant amount as capital investment made by certain companies, treating it as bogus share application money. The appellant contested this addition, providing evidence to prove the legitimacy of the investments. The Tribunal considered the submissions made by the appellant and ruled in favor of the appellant, stating that the onus under section 68 to prove the investment had been discharged, and therefore, no addition should have been made.

Levy of interest under sections 244A and 234B:
The appellant contested the levy of interest under sections 244A and 234B. The Tribunal did not find merit in the levy of interest based on the facts of the case and ruled in favor of the appellant, stating that no interest should have been levied under the mentioned sections. The Tribunal allowed the appeal filed by the Assessee, granting relief on technical grounds without adjudicating the appeal on factual material.

This detailed analysis of the judgment highlights the key issues involved, the arguments presented by the parties, and the Tribunal's rulings based on legal precedents and principles of natural justice.