2019 (9) TMI 343 - AT - Income Tax

Reopening of the assessment u/s 148 - addition u/s 68 and u/s 69C - HELD THAT - Assessee has failed to prove the creditworthiness of the Investor and genuineness of the transaction in the matter. The Ld. D.R. also referred to bank statements of the Investor Company, copy of which is filed in the paper book to show that before giving accommodation entry to the assessee, there was negligible balance in the account of the Investor Company. These facts coupled with the statement of the Director of the Investor Company clearly show that M/s. Hillridge Investment Ltd., has given accommodation entry of ₹ 40 lakhs to the assessee. The decisions relied upon by the Ld. D.R, thus, clearly supports the finding of fact recorded by the authorities below. Learned Counsel for the Assessee was not able to point-out any error in the Order of the authorities below for making the addition - Decided against assessee

Summary

Issues Involved:
1. Reopening of the assessment under section 148 of the I.T. Act.
2. Addition of ?40 lakhs under section 68 of the I.T. Act.
3. Addition of ?20,000 under section 69C of the I.T. Act.

Detailed Analysis:

1. Reopening of the Assessment under Section 148 of the I.T. Act:
The assessee's case was selected for scrutiny under sections 147/148 of the I.T. Act based on credible information from a search and seizure operation involving Surender Kumar Jain and Virender Jain, who were known for providing accommodation entries. The assessee was found to have received such entries amounting to ?40 lakhs from Hillridge Investment Ltd. The assessee challenged the reopening but did not argue this ground during the appeal. The Tribunal upheld the reopening, stating that there was credible information and material to justify the reassessment proceedings. Thus, the ground of appeal regarding the reopening of the assessment was dismissed.

2. Addition of ?40 Lakhs under Section 68 of the I.T. Act:
The assessee argued that it had provided sufficient evidence, including the investor's income tax records, bank statements, ROC records, and confirmation of the transaction. However, the A.O. found that the bank account of the investor showed regular debit and credit entries typical of entry providers, indicating a lack of genuineness and creditworthiness. The Director of Hillridge Investment Ltd., Naveen Kumar, admitted in his statement that the company provided accommodation entries and was not aware of the financial affairs for the assessment year in question. The Tribunal noted that the assessee failed to prove the creditworthiness of the investor and the genuineness of the transaction, supporting the A.O.'s addition of ?40 lakhs as bogus accommodation entries.

3. Addition of ?20,000 under Section 69C of the I.T. Act:
The A.O. also added ?20,000 under section 69C as an expenditure from undisclosed sources, based on the modus operandi of entry operators charging a commission for their services. The Tribunal found no error in the A.O.'s findings and upheld the addition.

Conclusion:
The Tribunal dismissed the appeal, affirming the reopening of the assessment and the additions made under sections 68 and 69C of the I.T. Act. The assessee failed to prove the genuineness of the transactions and the creditworthiness of the investor, leading to the conclusion that the entries were bogus accommodation entries.