2023 (3) TMI 411 - AT - Income Tax

Reopening of assessment u/s 147 - reasons to believe - formation regarding the assessee trust beneficiary of the accommodation entries received from SHAM/bogus companies - HELD THAT - There is no dispute with regard to the fact that the AO was provided with certain information by the Investigation Wing which was related to availing of accommodation entries from the entity related to Shri Pradeep Kumar Jindal. Therefore, the case laws relied upon by the Ld. Counsel for the assessee would not help hence, re-opening of the assessment is in accordance with law. Thus, Ground Nos. 1 to 3 raised by the assessee are dismissed. Addition u/s 68 - assessee submitted that the entire amount has been offered to tax and has been included in voluntary donation - As the case laws relied upon by the Ld. Counsel for the assessee would not help as he could not controvert the fact that during the course of assessment proceedings, Ld.AR of the assessee had offered the amount for taxation. Therefore, looking to the facts of the present case, the assessee could not rebut the findings of AO. Coupled with the fact that during the course of assessment proceedings, Ld.AR of the assessee had offered the impugned amount for taxation thus, grounds are devoid of merit. Ground Nos. 5 to 8 raised by the assessee in this appeal are hence, dismissed.

Summary

Issues involved:
The legal judgment involves issues related to the legality of reopening the assessment under section 147 of the Income Tax Act, 1961, and the merit of additions made during the assessment.

Reopening of Assessment:
The AO re-opened the assessment based on information regarding accommodation entries received from bogus companies, leading to the addition of Rs. 4,61,250 as unexplained expenditure. The assessee challenged the legality of reopening, arguing that it was based on borrowed satisfaction. However, the Tribunal upheld the reopening, citing information related to accommodation entries as the basis for the decision.

Merits of Additions:
The assessee contested the additions made during the assessment, particularly the addition of Rs. 4,50,000 as unexplained cash credit under section 68 of the Act. The assessee claimed that the amount had already been offered for tax as part of voluntary donations, thus should not be added again. Additionally, the assessee argued that the addition of Rs. 11,250 as unexplained expenditure lacked basis and violated principles of natural justice by denying the opportunity for cross-examination of alleged entry operators. The Tribunal dismissed these arguments, noting that the AR of the assessee had offered the amount for taxation during the assessment proceedings, leading to the rejection of the grounds raised by the assessee.

Conclusion:
The Tribunal upheld the reopening of the assessment under section 147 and dismissed the appeal of the assessee regarding the additions made during the assessment. The Tribunal found that the grounds raised by the assessee lacked merit, as the AR had offered the disputed amount for taxation during the assessment proceedings. Consequently, the appeal of the assessee was dismissed on 9th March 2023.