2019 (12) TMI 577 - AT - Income Tax

Addition u/s 68 - Re-opening of assessment - addition of full value of sale proceeds including long term capital gain as accommodation entry based on the statement of the Director of the Company which is engaged in fraudulent billing activities and in the business of providing bogus speculation profit/loss, commodities, profit/loss on commodity trading (through MCX) - HELD THAT - 0n the basis of detailed inquiries and the material available on record, the AO has made addition and CIT(A) has considered the issue threadbare and after applying various judicial pronouncements reached to the conclusion that assessee has taken accommodation bill which was in the form of credit entry of the books of accounts and credit worthiness of the creditors was not proved. The detailed finding so recorded by the lower authorities are as per material on record. However, nothing was produced before me so as to persuade me to deviate from the finding recorded by lower authorities. Accordingly, do not find any reason to interfere in the order of the lower authorities. Appeal of the assessee is dismissed.

Summary

Issues:
Appeal against order of CIT(A)-2, Mumbai for A.Y.2006-07, 2007-08 & 2008-09 under section 143(3) r.w.s. 147 of the Income Tax Act, 1961.

Analysis:
1. Issue of Accommodation Entries and Long Term Capital Gains:
The appeals were filed by the assessee against the addition of full value of sale proceeds, including long term capital gain, as accommodation entry based on the statement of Mukesh M Chokshi. The assessment for the relevant years was reopened due to information indicating that the assessee had obtained accommodation entries and showed long term capital gains from the sale of shares. The AO found that the assessee entered into bogus transactions through which payments were made, leading to the escape of assessment. The AO made additions regarding the alleged accommodation entries received by the assessee. The CIT(A) confirmed the AO's action based on various judgments indicating that the entities involved were engaged in providing accommodation entries and not genuine business transactions. The CIT(A) observed that the appellant had taken an accommodation bill, and the credit worthiness of the creditor was not proved. The addition made by the AO was sustained, and the appeal was dismissed.

2. Judicial Pronouncements and Findings:
The CIT(A) referred to judgments of the Hon'ble ITAT regarding Mukesh Choksi and his business entities, highlighting that they were involved in providing accommodation entries and not genuine business activities. The CIT(A) noted that the credit worthiness of the entities was not established, and the appellant had obtained accommodation entries without proving the creditor's credit worthiness. The CIT(A) upheld the addition made by the AO based on the findings of the ITAT and concluded that the appellant's actions fell within the realm of unaccounted income. The detailed findings of the lower authorities were considered, and the appeal was dismissed as no evidence was presented to challenge the lower authorities' conclusions.

3. Confirmation of CIT(A)'s Action:
The Tribunal confirmed the CIT(A)'s decision, stating that the facts and circumstances across all relevant years were similar. The Tribunal upheld the CIT(A)'s reasoning and confirmed the dismissal of all appeals by the assessee. The order was pronounced in open court on 14/11/2019, and the appeals were ultimately dismissed.