2019 (10) TMI 516 - AT - Income Tax

Reopening of assessment u/s 147 - Assessee stated that the A.O. has failed to give any details about the information and documents which have been relied upon by the A.O. at assessment stage - HELD THAT - A.O. has specifically recorded the fact in the assessment order that initially in different account of the Investors, the cash have been deposited from where the amount have been transferred to the another accounts of Investors and then transferred to assessee. These informations are specific to show that against the cash, entry have been provided to the assessee by entry providers. Assessee failed to produce any evidence before the authorities below. Therefore, it is a fit case of escapement of income on account of failure on the part of assessee to disclose fully and truly all material facts. Therefore, reopening of the assessment is wholly justified in the matter. The objections of the assessee have been separately disposed of by the A.O. in which no infirmity have been pointed out by the assessee. At the stage of recording of the reasons for reopening of the assessment, all relevant facts leading to belief are justified. Sufficiency of those material is not necessary. On making further enquiry into the matter, it is specifically found that cash were deposited in the Bank accounts of entry providers from where the amounts in question have been transferred to the account of the assessee. Therefore, there is escapement of income chargeable to tax on account of assessee s failure to furnish full and true particulars. Since in this case return was only processed under section 143(1), therefore, A.O. was justified in reopening of the assessment on bringing the material on record that there was an escapement of income from assessment in the matter. No infirmity have been pointed-out in the Orders of the authorities below for initiation of re-assessment proceedings in the matter. No justification to interfere with the Order of the Ld. CIT(A) in upholding the initiation of re-assessment proceedings in the matter. - Decided against assessee Addition u/s 68 - several entries provided by the entry providers which were not explained by the assessee, which were entered into the Bank account of the assessee - HELD THAT - Merely showing that transactions were carried out through Banking channel in the facts and circumstances of the case is not sufficient to prove the genuineness of the transaction in the matter. The Hon ble Supreme Court in the case of CIT, West Bengal-II vs., Durga Prasad More 1971 (8) TMI 17 - SUPREME COURT and Smt. Sumati Dayal vs., CIT, Bangalore 1995 (3) TMI 3 - SUPREME COURT have held that Courts and Tribunals have to Judge the evidence before them by applying the test of human probability. If the said test is applied in this matter, it is clearly established that assessee failed to prove identity of the accommodation entry providers, their creditworthiness and genuine of the transaction in the matter. We, therefore, do not find any justification to interfere with the Orders of the authorities below in making the addition - Decided against assessee.

Summary

Issues Involved:
1. Initiation of re-assessment proceedings under section 147 of the I.T. Act, 1961.
2. Addition of ?50 lakhs under section 68 of the I.T. Act, 1961.

Detailed Analysis:

1. Initiation of Re-assessment Proceedings:
The primary issue was whether the re-assessment proceedings initiated under section 147 of the I.T. Act, 1961, were valid. The A.O. received specific information from the DIT (Inv.), New Delhi, indicating that the assessee had received accommodation entries amounting to ?25,00,000/- which were not reflected in the balance sheet filed with the original return. The A.O. issued a notice under section 148, and the assessee responded by stating that the original return should be treated as filed under section 148. The A.O. provided the reasons for reopening the assessment, which were based on specific details of accommodation entries credited to the assessee's Bank of America account.

The Ld. CIT(A) upheld the initiation of re-assessment proceedings, noting that the A.O. had specific information about the accommodation entries, including bank account details and instrument numbers. The Ld. CIT(A) referred to various judgments, including those of the Hon'ble Delhi High Court and the Hon'ble Supreme Court, to support the validity of the re-assessment. The Tribunal concurred, stating that the A.O. had sufficient material to form a belief that income had escaped assessment due to the assessee's failure to disclose fully and truly all material facts. The Tribunal dismissed the assessee's ground challenging the re-assessment proceedings.

2. Addition of ?50 Lakhs under Section 68:
The second issue was the addition of ?50 lakhs under section 68 of the I.T. Act, 1961, made by the A.O. The A.O. had added ?1,31,30,000/- as unexplained credits, but the Ld. CIT(A) deleted ?81,33,000/-, leaving ?50 lakhs under scrutiny. The assessee provided additional evidence before the Ld. CIT(A), explaining various credits in their Bank of America account. However, the Ld. CIT(A) noted that the evidence was insufficient, as it lacked PANs, bank statements, or income-tax particulars of the accommodation entry providers: Suma Finance & Investment Ltd., Arun Finvest (P) Ltd., and Polo Leasing & Finance (P) Ltd.

The Tribunal found that the assessee failed to produce necessary details or directors of these companies for examination. The A.O. had specific information that cash was deposited in the bank accounts of these entry providers before issuing cheques to the assessee. The Ld. CIT(A) confirmed the addition, relying on the judgment of the Hon'ble Delhi High Court in the case of M/s. Titan Securities, which upheld similar additions under comparable circumstances.

The Tribunal upheld the addition of ?50 lakhs, noting that the assessee did not discharge the burden of proving the identity, creditworthiness, and genuineness of the transactions. The Tribunal emphasized that the transactions were found to be accommodation entries, and the assessee acted as a conduit for transferring these entries to its sister concern, M/s. Shiv Cable & Wire Industries. The Tribunal dismissed the assessee's grounds regarding the addition under section 68.

Conclusion:
The Tribunal dismissed the appeal of the assessee, upholding both the initiation of re-assessment proceedings under section 147 and the addition of ?50 lakhs under section 68 of the I.T. Act, 1961. The Tribunal found no justification to interfere with the orders of the authorities below, as the assessee failed to provide adequate evidence to substantiate its claims.