2023 (7) TMI 804 - AT - Income Tax

Unexplained cash credit u/s 68 - denial of natural justice - as argued assessee was not granted sufficient time to cross-examine Mr. Vipul Vidur Bhatt, on whose statement reliance has been placed by the AO - HELD THAT - As in the peculiar facts of the present case wherein the assessee made multiple detailed submissions pursuant to various notices issued by the learned CIT(A), NFAC, it cannot be held that an appropriate opportunity of being heard was not provided to the assessee and there is a violation of principles of natural justice. We find that in the preceding year, the AO relied on a similar statement recorded of Mr. Vipul Vidur Bhatt on which reliance has been placed in the year under consideration. Therefore, when the same statement of Mr. Vipul Vidur Bhatt has been relied on in both the assessment years by the AO, we find no basis in the plea of the assessee that sufficient time was not granted for cross-examining Mr. Vipul Vidur Bhatt in the year under consideration. In any case, we find that in the preceding year, despite the grant of sufficient time to the assessee, Mr. Vipul Vidur Bhatt did not comply with the summons issued u/s 131 of the Act. SEBI had barred Sunrise Asian Ltd and other entities to whom the assessee had sold the shares from accessing the securities market or buying, selling or otherwise dealing in the securities market, either directly or indirectly or be associated with the securities market in any manner for a period of 6 months to one year. Further, we find that the SEBI found the manipulative trade executed by Sunrise Asian Ltd., as well as the entities to whom these shares were sold by the assessee. Though, the assessee was not part of the investigation conducted by SEBI, however, the same does not absolve her from proving the genuineness of the transaction in shares of Sunrise Asian Ltd. under section 68 of the Act. Plea of the assessee that the payment for the acquisition of shares was made from the bank account and the shares were dematerialised and credited to the Demat account maintained by the assessee - Not only Sunrise Asian Ltd but the exit providers were also found to be involved in manipulative trade practices by the SEBI. Mr. Vipul Vidur Bhatt in his statement had admitted and confirmed that all the entities controlled and managed by him are mere bogus paper companies and he is involved in providing accommodation entry on a commission basis. Thus, not only Sunrise Asian Ltd but Conart Traders Ltd, whose shares were initially purchased by the assessee in physical form, were found to be belonging to Mr. Vipul Vidur Bhatt in the present case. Accordingly, we find no infirmity in the findings of the AO, which were confirmed by the learned CIT(A) vide impugned order - Decided against assessee.

Summary

Issues Involved:
1. Determination of total income.
2. Opportunity of being heard.
3. Addition under section 68 of the Income Tax Act.
4. Ad-hoc addition under section 69C.
5. Levy of interest under sections 234A, 234B, and 234C.

Summary:

Issue 1: Determination of Total Income
The assessee challenged the order determining the total income at Rs. 1,05,45,670 as against the returned income of Rs. 14,60,990. The Tribunal upheld the order of the CIT(A), finding no merit in the assessee's arguments.

Issue 2: Opportunity of Being Heard
The assessee contended that the appellate order was passed without providing an appropriate opportunity of being heard. The Tribunal noted that multiple written submissions were filed by the assessee, and the conditional request for a hearing was not made in lieu of these submissions. Therefore, it was held that there was no violation of the principles of natural justice.

Issue 3: Addition under Section 68
The CIT(A) upheld the AO's addition of Rs. 89,06,550 by treating long-term capital gains as unexplained cash credit. The Tribunal found that the AO conducted a thorough investigation, including examining the company whose shares were purchased and the identity of the purchasers, who were found to be closely related to a known entry operator. The Tribunal dismissed the assessee's contention that sufficient time was not granted for cross-examination, noting that the same statement of the entry operator was relied upon in both the assessment years, and no new evidence was provided.

Issue 4: Ad-hoc Addition under Section 69C
The CIT(A) confirmed the AO's ad-hoc addition of Rs. 1,78,131 under section 69C, treating it as commission paid for availing accommodation entries. The Tribunal upheld this addition, noting the lack of corroborative evidence from the assessee to refute the AO's findings.

Issue 5: Levy of Interest under Sections 234A, 234B, and 234C
The Tribunal dismissed the ground related to the levy of interest under sections 234A, 234B, and 234C as consequential.

Conclusion:
The appeal by the assessee was dismissed, with the Tribunal finding no merit in the grounds raised. The order was pronounced in the open court on 18/07/2023.