2022 (6) TMI 402 - AT - Income Tax

Addition u/s 68 - assessee had taken accommodation entries - HELD THAT - From the finding of Ld. CIT(A), it is evident that the assessee failed to prove the genuineness of transaction and creditworthiness of the creditors. Even before this Tribunal, no material is placed to substantiate its claim by the assessee. Therefore, we do not see any reason to interfere into the finding of lower authorities. The grounds raised by the assessee are hereby, dismissed.

Issues Involved:
1. Legality of the assessment order under sections 143(3) and 147 of the Income Tax Act.
2. Validity of the assessment without invoking section 153C.
3. Assessment based on borrowed information and lack of independent satisfaction by the AO.
4. Discrepancy between returned income and assessed income.
5. Jurisdictional errors in framing the assessment order.
6. Lack of proper permission under section 151 before issuing notice under section 148.
7. Lump sum addition of Rs. 1,61,45,000/- based on presumption and guesswork.
8. Classification of the appellant as a conduit/shell company.
9. Legality of the assessment order considering accepted investments.
10. Non-invocation of section 145 in making additions.
11. Consistency with income declarations in preceding and subsequent years.
12. Lack of reasonable opportunity provided to the appellant.
13. Charging of interest under sections 234A and 234B.

Issue-wise Detailed Analysis:

1. Legality of the Assessment Order:
The assessee challenged the legality of the assessment order passed under sections 143(3) and 147 of the Income Tax Act, arguing that the provisions of section 153C were not invoked. The Tribunal found that the assessment was reopened based on enquiries that revealed the assessee had obtained accommodation entries from conduit/paper companies. The AO issued a notice under section 148, and despite multiple notices and questionnaires, the assessee failed to provide the necessary details. Thus, the Tribunal upheld the assessment order.

2. Validity Without Invoking Section 153C:
The appellant contended that the assessment order was invalid due to the non-invocation of section 153C. The Tribunal, however, did not find merit in this argument as the assessment was reopened under section 147, which was appropriate given the circumstances.

3. Borrowed Information and Lack of Independent Satisfaction:
The assessee argued that the AO acted on borrowed information without recording independent satisfaction. The Tribunal noted that the AO had conducted enquiries and provided the reasons for reopening the assessment, which were communicated to the assessee. The Tribunal found that the AO had sufficient basis to reopen the assessment.

4. Discrepancy Between Returned and Assessed Income:
The appellant denied liability for the assessed total income of Rs. 1,61,45,000/- against the returned income of Rs. 2,38,100/-. The Tribunal observed that the AO added the amount as unexplained credits based on the assessee's failure to provide explanations or details during the assessment proceedings.

5. Jurisdictional Errors:
The appellant claimed jurisdictional errors in framing the assessment order. The Tribunal found that the AO had issued the necessary statutory notices and followed due process, thereby assuming jurisdiction as per law.

6. Lack of Proper Permission Under Section 151:
The appellant argued that the AO did not obtain proper permission under section 151 before issuing the notice under section 148. The Tribunal did not find any evidence to support this claim and upheld the AO's actions.

7. Lump Sum Addition Based on Presumption:
The AO made a lump sum addition of Rs. 1,61,45,000/- as commission income based on presumption and guesswork. The Tribunal upheld this addition, noting that the assessee failed to furnish any details or explanations regarding the credits received from conduit companies.

8. Classification as a Conduit/Shell Company:
The appellant argued that no further additions were required as it had already been declared a conduit/shell company. The Tribunal rejected this argument, stating that the addition under section 68 was made in the hands of the appellant for failing to establish the credits' genuineness.

9. Legality Considering Accepted Investments:
The appellant claimed the assessment order was illegal as the investments made from the receipts were accepted as correct. The Tribunal found that the assessee failed to prove the genuineness of the transactions and creditworthiness of the creditors, thus upholding the AO's addition.

10. Non-invocation of Section 145:
The appellant argued that the AO did not invoke section 145 in making the additions. The Tribunal noted that the AO added the amount as unexplained credits under section 68, which was justified given the lack of evidence provided by the assessee.

11. Consistency with Income Declarations:
The appellant contended that the declared income was accepted as correct in preceding and subsequent years. The Tribunal found that each assessment year stands on its own and upheld the addition based on the specific facts of the case.

12. Lack of Reasonable Opportunity:
The appellant claimed that no reasonable opportunity was provided before completing the assessment. The Tribunal observed that the AO issued multiple notices and questionnaires, but the assessee failed to respond, thus dismissing this ground.

13. Charging of Interest:
The appellant contested the charging of interest under sections 234A and 234B. The Tribunal did not find any reason to interfere with the AO's decision to charge interest as per the provisions of the Income Tax Act.

Conclusion:
The Tribunal dismissed the appeal, upholding the AO's addition of Rs. 1,61,45,000/- as unexplained credits and rejecting all grounds raised by the assessee. The order was pronounced on 24th May 2022.

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