2019 (2) TMI 279 - AT - Income Tax

Reopening of assessment u/s 147/148 - receipt of accommodation entries by assessee - whether Department does not know the name of the party from whom the alleged accommodation entries were received and the reassessment was done merely on the basis of suspicion? - Held that:- In the case of a cash entry, it is necessary for the assessee to prove not only the identity of the creditor but also the capacity of the creditor and genuineness of the transactions. The onus lies on the assessee, under the facts available on record. A harmonious construction of section 106 of the evidence Act and section 68 of the Income Tax Act will be that apart from establishing the identity of the creditor, the assessee must establish the genuineness of the transaction as well as the creditworthiness of the creditors.

As during hearing of these appeals, the Bench asked the Ld. DR is there any evidence of cash transaction, the DR fairly and judiciously agreed that there was no cash deposit before the issuance of cheque. Another question raised by the Bench, whether in the statement, the name of the assessee has been specifically mentioned to this also, the ld. DR fairly agreed that the name of the assessee has not been specifically mentioned. Thus, considering all the grounds decided in favour of the assessee.

Addition made u/s 69C on account of commission expenses - Held that:- We note that while deliberating upon the issue in the appeal of the assessee, we have deleted the addition by an elaborate discussion, therefore, this ground of the Revenue also fails as the part addition sustained by the Ld. Commissioner of Income Tax (Appeal) has been deleted by the Tribunal. Thus, there is no merit in the impugned ground raised by the Revenue.

Disallowance u/s 14A - Held that:- Commissioner of Income Tax (Appeal) fairly noted that the ld. Assessing Officer wrongly disallowed the expenditure without pointing out as to which expenditure relates to any exempt income. The interest expenditure of ₹ 3,14,431/- is the interest expenditure of the bank which was not utilized for any investment nor relates to exempt income. In view of this factual matrix, we find no infirmity in the conclusion of the CIT(Appeal) decided in favour of the assessee.