2015 (4) TMI 468 - AT - Income Tax

Disallowance of accommodation entries received - unaccounted money - Noncooperation of assessee - Held that - CIT(A) granted relief for the assessee on justified and cogent reasons. The assessing officer made addition on information of investigation wing but the AO could not bring any positive or sustainable evidence or any other adverse material on the record to substantiate his conclusions. Per contra, the assessing officer recorded statement of Sh. Ashok Gupta, the Director of the J.R.D. Stock Broker who confirmed the transaction supporting the verified copy of account with the assessee. In view of above stated facts and circumstances, we reach to the conclusion and the addition made by the AO was not sustainable which was rightly deleted by the CIT(A) during first appellate proceedings - Decided against Revenue.

Summary

Issues:
- Appeal against the order of the Commissioner of Income Tax (Appeals) regarding addition of income from accommodation entries
- Allegation of uncooperative behavior by the assessee during assessment proceedings

Analysis:
1. Appeal against CIT(A) Order:
The revenue appealed against the CIT(A) order deleting the addition of income amounting to Rs. 52,54,284 made by the AO due to accommodation entries received by the assessee from M/s JRD Stock Brokers Pvt. Ltd. The revenue contended that the CIT(A) erred in ignoring the fact that the assessee introduced unaccounted money with the help of accommodation entry providers, as revealed by a detailed investigation by the department's wing. Additionally, the revenue argued that the assessee's lack of cooperation during assessment proceedings, including not producing the Director of M/s JRD Stock Brokers Pvt. Ltd., justified the AO's decision to base the assessment on information from the investigation wing.

2. Assessee's Defense and CIT(A) Decision:
The assessee submitted all available details during assessment proceedings, with additional bank statements provided during the first appellate proceedings. The CIT(A) admitted and considered this additional evidence, as the AO did not make any adverse comments in the remand report. The CIT(A) found in favor of the assessee, noting that the AO failed to provide concrete evidence to support the addition. The Director of M/s JRD Stock Brokers Pvt. Ltd. confirmed the transactions with the assessee, and the CIT(A) concluded that the AO's addition was baseless and unsubstantiated.

3. Tribunal's Analysis and Decision:
Upon reviewing the submissions and relevant documents, the Tribunal observed that the Director of M/s JRD Stock Brokers Pvt. Ltd. supported the transactions in his statement recorded on oath during the remand proceedings. The Tribunal noted that the AO was satisfied with the explanations provided by the assessee, and the required bank statements and account details were eventually submitted. Considering these facts, the Tribunal agreed with the CIT(A)'s decision to delete the addition made by the AO. The Tribunal found no valid reason to interfere with the CIT(A) order, as the AO failed to present concrete evidence while the Director's statement supported the transactions. Consequently, the Tribunal dismissed the revenue's appeal, upholding the CIT(A) decision.

In conclusion, the Tribunal upheld the CIT(A) decision to delete the addition of income based on accommodation entries, as the AO failed to provide substantial evidence to support the addition, and the Director of the broker confirmed the transactions with the assessee.