2021 (6) TMI 573 - AT - Income Tax

Unexplained cash credit u/s 68 - providing accommodation entry. - HELD THAT - In the present case we note that the lower authorities have noted that notice u/s. 133(6) has not be responded - assessee has submitted that the assessee was not required to produce the director of the investor company - the issue of additional evidence and additional ground are no more germane to the issue at hand as the assessee has himself produced affidavit from Shri S.C. Shah for the proposition that he is not providing accommodation entry. Identity, creditworthiness and genuineness of the transaction - The same is not clear from the documents on record. The same is also cogently not brought out in the orders of the authorities below. Assessee submits that if the assessee is asked to produce representative/director of the investor company the same can be attempted. In the facts and circumstances of the case we deem it appropriate to remit this issue of addition u/s. 68 of the Act to the file of the Assessing Officer. The Assessing Officer shall issue necessary notices to the assessee company and shall make the necessary examination with respect to identity, creditworthiness and genuineness of the transaction. He shall properly examine the documents and financial statement being submitted by the assessee company and pass a speaking order. The grounds raised by the assessee for both the years are remitted to the file of the ld. AO to decide the same in the light of the aforesaid decision of this Tribunal. Accordingly, the grounds raised by the assessee are allowed for statistical purposes. Appeals of the assessee are allowed for statistical purposes.

Summary

Issues:
Appeal against confirmation of addition of share application money as non-genuine for A.Y. 2011-12 and 2012-13.

Detailed Analysis:

Issue 1: Addition of Share Application Money for A.Y. 2011-12
The assessee received share capital of ?50 lakhs from a company allegedly belonging to a person involved in providing accommodation entries. The Assessing Officer (AO) treated the receipt as unexplained cash credit under section 68 of the Income Tax Act solely based on a statement from the person involved. The AO disregarded all documents provided by the assessee to prove the genuineness of the transaction. The Tribunal found that the issue was similar to a previous case where the matter was remitted to the AO for further examination. Consequently, the Tribunal remitted the issue to the AO for proper examination of identity, creditworthiness, and genuineness of the transaction, emphasizing the importance of providing the assessee with an opportunity to be heard.

Issue 2: Addition of Share Application Money for A.Y. 2012-13
Similarly, for A.Y. 2012-13, the AO added ?3,46,00,000 of share application money as unexplained cash credit based on statements from companies allegedly belonging to the same person. The AO's decision was upheld by the Commissioner of Income Tax (Appeals). Following the same reasoning as in the previous issue, the Tribunal remitted the matter to the AO for a thorough examination of the transaction's genuineness, identity, and creditworthiness, ensuring the assessee's right to present relevant documents and be heard.

Conclusion:
The Tribunal allowed both appeals for statistical purposes, remitting the issues to the AO for further examination in line with the Tribunal's previous decision. The importance of providing the assessee with an opportunity to present evidence and be heard was emphasized throughout the analysis, ensuring a fair and thorough assessment of the transactions in question.