2023 (10) TMI 464 - AT - Income Tax

Addition u/s 69C - bogus purchases - Two accommodation entry providers have admitted in their statements that the said two companies were controlled by them and by using these companies for providing bogus accommodation entries to various persons including the assessee - HELD THAT - From the first appellate order, we note that the CIT(A) had not only considered the findings of the AO but also considered explanations and documentary evidences submitted by the assessee and thereafter, held that there was no merit in the submissions of appellant company as appellant had taken the accommodation entry in the form of bogus purchases from said two dummy companies controlled by Shri Himanshu Verma. With these observations,CIT(A) upheld the addition under section 69C of the Act in respect of bogus purchases and had also upheld the addition on account of unexplained expenditure on commission paid for arranging impugned accommodation entries of bogus purchases. We are unable to see any valid reason to interfere with the findings arrived by the learned CIT(A) while confirming both the additions made by AO. Therefore, sole grievance of assessee being devoid of merits is dismissed.

Summary

Issues Involved:
1. Whether the addition under section 69C of the Income-tax Act, 1961, for unexplained expenditure on bogus purchases was justified.
2. Whether the commission for arranging accommodation entries was correctly added.

Summary:

Issue 1: Addition under section 69C for Unexplained Expenditure on Bogus Purchases
The assessee challenged the addition made by the AO under section 69C of the Income-tax Act, 1961, amounting to Rs. 21,89,190/-, which was upheld by the CIT(A). The AO's addition was based on the sworn statements of Shri Himanshu Verma and Shri Anjani Kumar, who admitted using companies for providing accommodation entries, rendering the purchases non-genuine. The assessee argued that the purchases were supported by bills, payments were made through banking channels, and the transactions were confirmed by the suppliers. However, the AO and CIT(A) concluded that the purchases were bogus, as the companies involved were controlled by Shri Himanshu Verma, who admitted to providing accommodation entries. The Tribunal noted that the AO had validly assumed jurisdiction under section 148 and had acted on credible information, not mechanically. The Tribunal upheld the addition, finding no merit in the assessee's submissions.

Issue 2: Addition for Commission on Accommodation Entries
The AO also added Rs. 21,890/- as commission for arranging accommodation entries, which was upheld by the CIT(A). The CIT(A) referred to the AO's findings and the lack of compliance by the assessee in producing the parties involved. The Tribunal upheld this addition as well, agreeing with the CIT(A) that the assessee had taken accommodation entries in the form of bogus purchases from dummy companies controlled by Shri Himanshu Verma.

Conclusion:
The Tribunal dismissed the appeal, upholding the additions made by the AO and confirmed by the CIT(A) under sections 69C for unexplained expenditure on bogus purchases and for commission on accommodation entries.