2014 (7) TMI 863 - AT - Income Tax

Addition u/s 68 and 69 Genuineness of claim Held that - The assessee has as well filed the documents before the authorities below in support of the claim - These are copies of acknowledge of return of income along with computation, audited balance sheet and profit and loss account, replies of the assessee filed before the AO, ledger account of investment, statement showing details of investment as on 31.3.2002 and 31.3.2003, statement of details of investments sold, statement of bank account for the period 1.4.2002 to 31.3.2003, purchase details of investment sold during the year along with corresponding bank statement, details of parties to whom investments were sold, etc. - CIT(A) has rightly deleted the addition made by the AO u/s 68 of the Act - he was also justified in deleting the addition made on account of commission for providing accommodation entries @ 2% - Decided against Revenue.

Summary

Issues Involved:
1. Deletion of addition under section 68 of the Income Tax Act, 1961.
2. Deletion of addition under section 69 of the Income Tax Act, 1961.
3. Validity of reopening assessment under section 147 of the Act.

Deletion of Addition under Section 68:
The Revenue challenged the first appellate order that deleted the addition of Rs. 27,00,000 made under section 68 of the Income Tax Act, 1961. The Revenue argued that the assessee failed to produce the persons from whom amounts were received, and cash deposits were made in their bank accounts before issuing cheques, raising doubts about the genuineness of the transactions. The CIT(A) deleted the addition, stating that the onus lies on the Revenue to prove unexplained money emanated from the assessee. The CIT(A) found that the shares sold were acquired in earlier years, and the genuineness of the transactions was supported by various documents, including income tax returns and confirmations. The CIT(A) concluded that the assessing officer was not justified in making the addition under section 68, and the Tribunal upheld this decision based on the material facts provided by the assessee.

Deletion of Addition under Section 69:
The Revenue also contested the deletion of the addition of Rs. 54,000 made under section 69 of the Income Tax Act, 1961, on account of commission for providing accommodation entries. The CIT(A) found in favor of the assessee, stating that the first appellate order was comprehensive and reasoned, leading to the deletion of this addition. The Tribunal upheld the CIT(A)'s decision, noting that the material facts presented supported the deletion of this addition.

Validity of Reopening Assessment under Section 147:
The assessee objected to the reopening of the assessment under section 147 of the Act. However, due to the favorable findings on the merits of the case regarding the additions under sections 68 and 69, the issue of the validity of reopening proceedings became academic and did not require adjudication. The Tribunal dismissed both the appeal and cross objection, upholding the decisions of the CIT(A) on the deletions of the additions under sections 68 and 69.

In conclusion, the Tribunal dismissed the appeal, upheld the deletion of additions under sections 68 and 69, and considered the issue of the validity of reopening proceedings as academic in nature, leading to the dismissal of both the appeal and cross objection.