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2023 (2) TMI 575 - AT - Income TaxUnaccounted income - unexplained investment - HELD THAT - Barter Group had floated several companies so as to receive the share capital in these companies and providing accommodation entries to those beneficiaries who wanted their unaccounted money has to be brought in their books through accommodation entries. In fact, the names of 13 companies reveal in respect of providing the accommodation entries in the garb of unsecured loans share application money. CIT(A) observed that the appellant company made investment in the company name M/s. Subodhsagar Share Services Pvt. Ltd. which collected huge sum from various companies including the assessee company. Since the assessee company did not provide any satisfactory explanation for the investment made in the form of share application money the AO has rightly made addition. The assessee has only given the details of M/s. Subodhsagar Share Services Pvt. Ltd. that also in the tabular form and not exactly how the funds owned by the assessee. Therefore, the CIT(A) was right in confirm the addition. Hence, appeal of the assessee is dismissed.
Issues:
Appeal against CIT(A)'s order sustaining additions for unaccounted income based on alleged undisclosed investments and accommodation entries. Analysis: 1. The appeal challenges the CIT(A)'s decision to uphold additions of Rs. 46,80,000 as unaccounted income. The appellant argued that the investments in question were disclosed in the audited books of accounts, making the additions unjustified under settled legal principles. 2. The appellant contended that Section 69 applies only when investments are not recorded in the books of accounts. Since the investments were duly recorded, the CIT(A) erred in confirming the additions on the grounds of unexplained investments. 3. Additionally, the appellant claimed not to be the ultimate beneficiary of the alleged accommodation entry, asserting that no additions should have been made based on this premise. The appellant sought to amend the grounds of appeal as necessary. 4. The Assessing Officer initiated proceedings under Section 147, alleging that the appellant invested in companies providing accommodation entries. Subsequently, additions were made under Section 69 based on incriminating evidence found during a search, totaling Rs. 46,80,000. 5. The CIT(A) dismissed the appellant's appeal, leading to the appeal before the ITAT. The appellant cited a delay in filing the appeal due to an ex-employee's failure to communicate the CIT(A)'s order, which was condoned by the Tribunal. 6. Despite notices, the appellant did not appear for the hearing, and no new address was provided. The Tribunal relied on submissions made during assessment and before the CIT(A) for its decision. 7. The Departmental Representative argued that the CIT(A) rightly confirmed the additions as the appellant failed to establish the source of funds and the identity of allottees. Lack of evidence regarding accommodation entries further supported upholding the CIT(A)'s decision. 8. Upon review, the Tribunal noted the appellant's failure to provide details or respond to notices during assessment. The appellant maintained that investments were made from existing capital without generating new sources, but the CIT(A) found the explanation unsatisfactory, leading to the dismissal of the appeal. 9. Ultimately, the Tribunal upheld the CIT(A)'s decision, dismissing the appellant's appeal against the additions of Rs. 46,80,000 as unaccounted income.
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