2015 (5) TMI 472 - AT - Income Tax

Addition u/s 68 - reopening of assessment - Held that - So far the issue relating to the reopening of the assessment proceedings is concerned, the Ld. A.R. of the assessee has been fair enough to admit that the issue was squarely covered against the assessee by the decision of the co-ordinate bench of the Tribunal in the case of Smt. Jyoti D. Shah 2015 (5) TMI 460 - ITAT MUMBAI wherein the Tribunal, in almost identical facts, while adjudicating the issue of reopening on the basis of statement of Shri Mukesh Chokshi and further on the basis of details obtained during the search by the investigation wing, has held that under the circumstances the AO was having sufficient reason to believe that there was an escapement of income and accordingly he was justified in reopening the assessment under section 147. In the case in hand, the reopening was made on the basis of information regarding receipt of accommodation entries of share capital provided by the group companies of Shri Mukesh Chokshi and further on the basis of statement of Shri Mukesh Chokshi. - Decided against assessee. Ingenuine transactions - Held that - The assessee had filed evidence to support the receipt of share application money which was supported by copies of share application money, confirmation from shareholder and other documents. To further support, the assessee has filed copy of its bank account to contend that there are no cash deposits or withdrawals. In view of the above stated legal position and in the light of reliable evidences brought on record by assessee to substantiate identity, genuineness and creditworthiness of shareholders, which have not been controverted by the Revenue, the additions made solely on the basis of general statement of Shri Mukesh Chokshi cannot be held to be justified and the same are accordingly ordered to be deleted. - Decided in favour of assessee.

Summary

Issues Involved:
1. Reopening of assessment under section 147 of the Income Tax Act.
2. Addition of Rs. 4,25,00,000/- under section 68 of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Reopening of Assessment under Section 147 of the Income Tax Act:
The appeal concerns the reopening of assessment proceedings based on information from the DDIT (Investigation) Unit-1(4) regarding the assessee receiving share application money from companies floated by Shri Mukesh Chokshi. The AO issued a notice under section 148 of the Act to reassess the escaped income. The CIT(A) upheld the reopening, and the Tribunal noted that the issue was covered against the assessee by a prior decision in the case of "Smt. Jyoti D. Shah" (ITA No.1843/M/2012). In that case, the Tribunal held that the AO had sufficient reason to believe there was an escapement of income based on statements and details obtained during a search by the investigation wing. The Tribunal thus found the reopening justified.

2. Addition of Rs. 4,25,00,000/- under Section 68 of the Income Tax Act:
The AO added Rs. 4,25,00,000/- as unexplained cash credits under section 68, concluding that the share application money received by the assessee from companies controlled by Shri Mukesh Chokshi was not genuine. The CIT(A) confirmed this addition. The assessee argued that the transactions were genuine, providing names, addresses, bank details, and other documentation to prove the identity, creditworthiness, and genuineness of the transactions. The assessee also contended that the statement of Shri Mukesh Chokshi was general and did not specifically mention the assessee.

The Tribunal considered the rival contentions and noted that the department relied solely on the general statement of Shri Mukesh Chokshi without direct evidence against the assessee. The Tribunal referenced several decisions where similar additions based on general statements were deleted, emphasizing that the identity, creditworthiness, and genuineness of the transactions were substantiated by the assessee with documentary evidence. The Tribunal concluded that additions made solely on the basis of the general statement of Shri Mukesh Chokshi were not justified and ordered the deletion of the addition.

Conclusion:
The Tribunal upheld the reopening of the assessment under section 147 but deleted the addition of Rs. 4,25,00,000/- under section 68, finding that the assessee had provided sufficient evidence to prove the genuineness of the transactions, and the addition was based solely on a general statement without direct evidence. The appeal was partly allowed.