2024 (6) TMI 1145 - AT - Income Tax

Ex parte order - HELD THAT - We find that the learned lower authorities have given enough opportunities to the assessee to present its case but on all the occasions the assessee has not presented the case before them and therefore there is nothing wrong in the orders passed by the lower authorities. They have also provided enough opportunities to the assessee and therefore the passing of the ex parte order by the learned lower authorities cannot be found fault with. Accordingly ground number 1 and 2 of the appeal is also dismissed. High-pitched assessment - As stated that the order passed by the learned lower authorities is illegal being high-pitched, the assessee has not given any evidence that why it is a high-pitched assessment the income of the assessee is assessed merely at Rs 256,184/ and therefore same is not high-pitched. Accordingly ground of the appeal is dismissed. Tax credit denial - All the persons who have paid manpower services to the assessee, has deducted tax at source. The ld. AO should verify from each of such person to confirm whether the TDS made by them is correct and such services are rendered by the assessee by issuing summons u/s 131 or by issue of notices u/s 133 (6) of the act. AO may also examine them. As huge TDS is outstanding which needs to be refunded to the assessee, AO may also issue summons to the parties u/s 131 based on the TDS details available in form no 26AS also. If those parties confirm that they have paid the amounts to the assessee and necessary services have been provided by the assessee, the assessee should be granted credit for such taxes paid. This direction is necessary in order to verify whether the claim of TDS refund of the assessee is genuine or not in view of allegation of the AO which were not disproved by the assessee. In case ld. AO finds that there are no services provided by the assessee then in those circumstances, AO may take any action against the beneficiaries of such bogus bills and also against the assessee company. As assessee failed to substantiate its return before ld AO and CIT (A), We direct the assessee to produce before ld AO the directors of the company along with books of accounts to show that TDS belongs to the company for rendering necessary services with all the TDS certificates , copies of the bills and nature of services and how those services are rendered, within 90 days of receipt of this order. If the ld. AO is satisfied with such a huge claim of TDS of the assessee, same should be granted to assessee along with interest. Accordingly ground number 4 of the appeal is allowed with above directions. Proof of transactions and services rendered - This is a conduit company operated by one accommodation entry provider. This is the finding of the fact arising on the basis of search. No contrary evidence is provided before us. However, in the interest of justice we set aside this ground of appeal back to the file of the AO with direction to the assessee to prove before the AO by producing directors of the company, necessary proof of services rendered, necessary proof of all kind of transactions entered by the assessee, along with the list of creditors, debtors stating their address PAN and where those are assessed.

Summary

Issues:
Assessment order validity, High-pitched assessment, Tax credit denial, Accommodation entry provider involvement, Penalty proceedings initiation.

Analysis:
1. The appeal was filed against the CIT's order dismissing the appeal against the assessment order. The main contention was the high-pitched assessment, denial of tax credit, and involvement in accommodation entries.
2. The assessee declared a net loss but paid tax under MAT provisions. The case was selected for scrutiny, and it was found that the company was involved in accommodation entries with Shri Shirish C. Shah.
3. The AO held that the company was not engaged in actual business activities but in issuing bogus entries. The AO disallowed the TDS claim as the company failed to justify its transactions.
4. The CIT(A) confirmed the AO's findings, stating that the company was merely a conduit company operated by an accommodation entry provider. The appeal was dismissed due to lack of cooperation from the assessee.
5. The Tribunal noted that the assessee did not appear despite notices. The conduct of the assessee indicated evasion of findings. The issue was decided based on available facts.
6. The department representative supported the lower authorities, stating the company was an accommodation entry provider without actual business activities. The lower authorities' decisions were deemed correct.
7. Grounds of appeal were analyzed by the Tribunal. Grounds 1 and 2 were dismissed as the assessee failed to present its case. Ground 3, regarding high-pitched assessment, was also dismissed as the income was not considered high.
8. Ground 4, concerning the denial of tax credit, was allowed with directions for verification of TDS claims. Ground 5 was set aside for the assessee to prove transactions and services rendered. Ground 6, regarding premature penalty proceedings, was dismissed.
9. The appeal was partly allowed, setting aside certain grounds for further verification and dismissing others. The order was pronounced in June 2024.