2020 (11) TMI 271 - AT - Income Tax

Addition u/s 68 - fraudulent loan transactions - interim order of SE'BI on suspected banking transactions - CIT(A) deleted the addition by holding that assessee has furnished all the documents and details proving conclusively the three ingredients of identity, creditworthiness of the lenders and the genuineness of the transactions - HELD THAT - As decided in own case order of SEBI proves that the matter regarding suspected banking transactions are not money laundering as alleged by the A.O in his order. Thus, basic reliance placed by the AO on SEBI order in itself is not valid today in the light of the fact cleared all the allegations. CIT(A) also held that the share application money received by the assessee is not be added u/s. 68 of the act having regards to the facts of the case wherein the same was doubted as an accommodation entry from the group of Pravin Kumar. From entity of facts and circumstances as narrated above, we find that A.O the AO has merely relied on the interim order of SE'BI in the case of M/s. Pyramid Satsmira instead of gathering any evidences to show that the unaccounted cash of the assessee has changed consequently, resulting in the cheque payment. The interim order of the SEBI has be reversed vide the final order dated 31.03.2015. CIT(A) also taken into consideration all the facts as narrated above. No new facts or contrary judgment/material has been brought on record to controvert the finding of the Id. CIT(A). We find no reason to interfere the findings so recorded by the Id. CIT(A). The contention of the Ld. D.R. that in the present year there is no SEBI investigation is correct, but the issue is same on merits and therefore the same is squarely covered by the decision of the co-ordinate bench of the Tribunal as stated above - uphold the order of Ld. CIT(A) by dismissing the appeal of the Revenue.

Summary

Issues:
- Revenue's appeal against deletion of addition under section 68 of the Act

Analysis:
1. The Revenue appealed against the deletion of an addition of ?1,80,00,000 made by the Assessing Officer (AO) under section 68 of the Income Tax Act. The case involved the reassessment of the assessee for the assessment year 2008-09 based on information received regarding accommodation entries from various group companies. The AO added the amount to the assessee's income as unexplained cash credit.

2. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition, stating that the assessee provided documents proving the identity, creditworthiness of the lenders, and genuineness of the transactions. The lenders confirmed the transactions, and the amounts were accounted for in both the assessee's and lenders' books of accounts.

3. The Assessee's representative argued that a similar issue was decided in favor of the assessee in a previous year by a co-ordinate bench of the Tribunal. The Revenue contended that the current case was not covered by the previous decision due to the absence of SEBI investigation this year.

4. The Tribunal noted that the co-ordinate bench decision established that the assessee had fulfilled the onus of proving identity, creditworthiness, and genuineness of the transactions. The Tribunal upheld the CIT(A)'s order, emphasizing that the AO's reliance on SEBI investigation findings was not valid, as subsequent SEBI orders cleared the alleged entities of any wrongdoing.

5. The Tribunal dismissed the Revenue's appeal, stating that despite the absence of SEBI investigation this year, the issue remained the same on merits and was covered by the previous decision. The Tribunal upheld the CIT(A)'s order to delete the addition under section 68 of the Act.

This detailed analysis of the legal judgment highlights the key issues, arguments presented by both parties, and the Tribunal's decision based on the evidence and legal precedents cited in the case.