2021 (2) TMI 66 - AT - Income Tax

Addition u/s 68 - procurement of accommodation entries through share application money from non-descript companies - CIT- A deleted the addition - DR submitted that the CIT(A) was not correct in admitting additional evidence under Rule 46A without giving proper justification and has not given adequate opportunity and totally ignored the remand report given at the appellate proceedings by the Assessing Officer - HELD THAT - Inspector Report has clearly stated the wrong address and therefore, the same will not prove the case of the Department that the share applicant parties were not properly examined. The CIT(A) has taken into account all the evidences and has confronted the same to the Assessing Officer for which remand report was filed by the Assessing Officer. We find that the Assessing Officer chose not to consider the evidences on merit and simply stated that these parties were not found. Thus, the assessee in our opinion has proved the genuineness, identity and creditworthiness of these parties. The case of the sister concern in Superb Developers 2018 (7) TMI 827 - ITAT DELHI has also dealt with some of the parties involved in the present assessee s case. Thus, the parties mentioned in present assessee s case were held genuine, creditworthiness and its identity was also accepted in case of Superb Developers (supra). We further observe that each and every case law cited by the Ld. DR also highlights the point that the genuineness, identity and creditworthiness of the share applicant parties have to be established by the assessee. In the present case, the same has been done by the assessee. Therefore, the onus was discharged by the assessee company which was properly taken into account by the CIT (A). Thus, the order of the CIT(A) does not require any interference and appeal of the Revenue is dismissed.

Issues Involved:
1. Deletion of addition of ?2,32,00,000 under Section 68 of the Income Tax Act related to accommodation entries through share application money.
2. Deletion of addition of ?1,16,000 related to commission paid for procurement of accommodation entries.
3. Admission of additional evidence under Rule 46A by the CIT(A).

Issue-wise Detailed Analysis:

1. Deletion of Addition under Section 68:
The Revenue appealed against the CIT(A)'s decision to delete an addition of ?2,32,00,000 under Section 68 of the Income Tax Act, which pertained to the procurement of accommodation entries through share application money from non-descript companies. The Assessing Officer had added this amount as unexplained cash credit. The CIT(A) allowed the assessee's appeal, leading to the Revenue's contention that the CIT(A) erred in law and facts. The Ld. DR argued that the CIT(A) ignored the Inspector's report, which indicated that the share applicant parties were not found at the given addresses, thus questioning their genuineness and creditworthiness. However, the CIT(A) had examined the evidence and found that the companies in question had filed their Income Tax Returns (ITRs) and had been assessed by the Department itself in previous years, thus proving their existence and financial capacity. The Tribunal noted that the Assessing Officer did not consider the evidence on merit and merely stated that the parties were not found. The Tribunal found that the assessee had proved the genuineness, identity, and creditworthiness of the parties involved, and thus upheld the CIT(A)'s decision to delete the addition.

2. Deletion of Addition Related to Commission:
The Revenue also challenged the deletion of an addition of ?1,16,000 related to a commission paid for the procurement of accommodation entries. The Ld. DR argued that the CIT(A) erred in deleting this addition. However, the Tribunal found that the CIT(A) had rightly taken into account all the evidence and had confronted the Assessing Officer with the same, who had filed a remand report. The Tribunal upheld the CIT(A)'s decision, noting that the assessee had discharged its onus of proving the genuineness, identity, and creditworthiness of the share applicant parties.

3. Admission of Additional Evidence under Rule 46A:
The Revenue contended that the CIT(A) erred in admitting additional evidence under Rule 46A without proper justification. The Ld. DR argued that the CIT(A) did not provide adequate opportunity to the Assessing Officer and ignored the remand report. However, the Tribunal found that the CIT(A) had admitted the additional evidence because the assessee was prevented from discharging its onus due to insufficient opportunity. The CIT(A) had examined the evidence filed before the Assessing Officer and the additional evidence filed during the appellate proceedings. The Tribunal noted that the CIT(A) had taken into account all the evidence and had provided adequate opportunity to the Assessing Officer, who had filed a remand report. The Tribunal found no error in the CIT(A)'s decision to admit the additional evidence and upheld the same.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the additions under Section 68 and related to the commission paid for accommodation entries, and to admit additional evidence under Rule 46A. The Tribunal found that the assessee had proved the genuineness, identity, and creditworthiness of the share applicant parties, and that the CIT(A) had rightly taken into account all the evidence and provided adequate opportunity to the Assessing Officer.

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