2023 (3) TMI 96 - AT - Income Tax

Assessment u/s 153A - Addition u/s 68 - Assessee company is a non-banking Finance Company and engaged in the business of investment and received accommodation entries - HELD THAT - AO though examined the reply of the Assessee and claim to the effect that the Assessee has not received any accommodation entry, however, came to the conclusion that from the information gathered by the department that the Assessee company is engaged in providing accommodation entries in lieu of cash to various entities including Sajan Kumar Jain group of companies and family members of Shri Sajan Kumar. Moreover, the same has been admitted by Shri Pradeep Kumar Jindal in his statement recorded u/s. 132(4) of the Act. It is also pertinent to mention here that the Assessee company is controlled, managed and run by Shri Pradeep Kumar Jindal. In view of this, it is established that these are accommodation entries and have been routed through the front company, i.e., the Assessee company. It is pertinent to mention that this share capital investment has been made in the hands of the Assessee company which is a front company as explained above, therefore, the entire amount in the form of share premium and share capital is added in the hands of the Assessee company. Entries on the basis of which addition have been made, already subjected to tax in the case of Shri Pradeep Kumar Jindal, who by letter dated 18.01.2023 accepted the fact that he has already accepted the commission income on the accommodation entries given by M/s. Pawansut Holdings Ltd. as part of his taxable income in respect of assessment years 2010-11 and 2015-16 and his personal appeals for the said assessment years for A.Y. 2010-11 and for A.Y. 2015-16 are pending in ITAT for its direction on multiple additions, rate and calculation of commission and its taxability as per law. By considering the order passed by the Hon ble Coordinate bench and the confirmatory letters issued by Shri Pradeep Kumar Jindal, we are inclined to dismiss the appeals of the Revenue department.

Summary

Issues:
1. Assessment years 2010-11 and 2015-16 - Addition of income based on seized documents.
2. Allegations of providing accommodation entries by the Assessee.
3. Appeal challenging additions made by the Assessing Officer.
4. Acceptance of commission income by another individual.
5. Dismissal of appeals by the Revenue Department.

Analysis:
1. The appeals by the Revenue Department were against orders passed by the Commissioner of Income-tax for the assessment years 2010-11 and 2015-16. The Assessing Officer initiated proceedings under section 153C of the Income-tax Act based on seized documents from a search operation related to other individuals.
2. The Assessing Officer alleged that the Assessee, a non-banking Finance Company, received accommodation entries totaling Rs. 8,25,00,000 from front companies. Despite the Assessee's denial, it was concluded that the company was involved in providing accommodation entries and was controlled by another individual, leading to the addition of the entire amount in the Assessee's hands.
3. The Assessee challenged the additions before the Commissioner, who partially allowed the appeals by considering that the commission income from accommodation entries had already been confirmed in the hands of another individual. The Revenue Department, dissatisfied with this decision, appealed.
4. The Assessee claimed that the commission income had been accepted by the other individual in his taxable income for the relevant years. The Tribunal considered the confirmatory letters provided by this individual and dismissed the appeals of the Revenue Department, subject to certain directions.
5. The Tribunal, after careful consideration of the facts and the confirmatory letters, dismissed the appeals of the Revenue Department. However, it allowed the Revenue to take appropriate steps if the additions in the hands of the other individual were deleted in his own cases for the relevant assessment years. The Tribunal directed the placement of relevant documents in the assessment records and appeal files for further reference.

This detailed analysis highlights the issues, proceedings, and decisions made in the judgment, providing a comprehensive understanding of the legal aspects involved.