2021 (5) TMI 67 - AT - Income Tax

Reopening of assessment u/s 147 - addition u/s 68 - A.O. received information from DDIT (Inv.), Unit 7(4), Mumbai that a person named Shri Vipul Vidur Bhat has floated bogus entities and provided accommodation entries by way of bogus loan entries and assessee herein has availed loan of ₹ 15 lakhs from the above said concern - HELD THAT - A.O. has made the addition on the basis of information received from DDIT, Mumbai and he did not examine the explanations given by the assessee vis-a-vis the books of accounts. A.O. was not justified in making the addition wholly placing reliance on the statement given by Shri Vipul Vidur Bhat and without considering the explanations furnished by the assessee. In my view, the A.O. should have examined the ledger accounts of the assessee and also explanations furnished by it, surrounding circumstances etc. to find out the genuineness of the transactions. A.O. should have provided opportunity for cross examination. Under these set of facts, this issue requires fresh examination at the end of the A.O. Accordingly restore this issue to the file of the A.O. with a direction to examine it afresh after affording adequate opportunity to the assessee - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Delay in filing appeal
2. Addition of ?15 lakhs under section 68 of the Act

Issue 1: Delay in filing appeal
The appellant's appeal against the order of Ld. CIT(A) was delayed by 119 days. The appellant attributed the delay to the professional pressure on its authorized representative, who failed to file the appeal in time. The appellant requested the bench to condone the delay, stating that it was beyond their control. The Tribunal, after hearing the submissions, condoned the delay and admitted the appeal for hearing.

Issue 2: Addition of ?15 lakhs under section 68 of the Act
The case involved the appellant, engaged in the manufacture of solar panels, availing a loan of ?15 lakhs from a concern named M/s. Sampada Chemicals Ltd. The Assessing Officer (A.O.) reopened the assessment based on information that the concern provided bogus accommodation entries. The A.O. added the loan amount to the appellant's income under section 68 of the Act, which was confirmed by Ld. CIT(A). The appellant contended that the loan was genuine, repaid through banking channels with interest, and TDS was deducted. The A.O. relied on a statement by Shri Vipul Vidur Bhat without giving the appellant an opportunity for cross-examination.

The Tribunal found that the A.O. did not examine the appellant's explanations adequately and solely relied on Shri Vipul Vidur Bhat's statement. It was noted that the A.O. should have considered the ledger accounts, explanations, and circumstances to determine the transaction's genuineness. The Tribunal held that the appellant should have been given an opportunity for cross-examination. Consequently, the order of Ld. CIT(A) was set aside, and the issue was remanded to the A.O. for fresh examination, with directions to provide the appellant with an opportunity for cross-examination if requested.

In conclusion, the appeal filed by the appellant was treated as allowed for statistical purposes, with the Tribunal emphasizing the importance of due process and examination of facts in such cases.