2012 (12) TMI 966 - AT - Income Tax

Reopening of assessment - accommodation entries - Held that - The assessee has discharged his onus by filing complete details ie. purchase of shares share certificate Demat account confirmation from Buniyad Chemicals Limited of whose shares were purchased. Consideration was paid through account payee cheque therefore there is no material against the assessee from which it can be said that the transaction entered by the assessee was not genuine. It is further noticed that in case of Kataria Ketan Ishwarlal (2010 (4) TMI 1029 - ITAT MUMBAI) the additions were made on the basis of statement of Shri Mukesh Chokshi. The Tribunal by noting that Mr. Chokshi has issued a general statement and it cannot be applied in each and every case there was no direct evidence against that assessee. Accordingly the amount of addition made in that case was deleted by the Tribunal. Here facts are similar. Neither the statement of Mukesh Chokshi was provided to the assessee nor there was any cross examination of Mukesh Chokshi whereas contrary to that the assessee has filed all the details required for providing for purchase of shares were genuine. It is not a case of the department whatever the consideration was paid by the assessee through cheque for purchasing of shares have come back to the assessee under the garb of bogus purchases as there is no evidence against the assessee. Keeping in mind all these facts and circumstances of the case thus hold that the addition made and sustained on account of purchase of shares only on the basis of statement of Mukesh Chokshi was not justified - Decided in favour of assessee. Unaccounted gift - unexplained credit - Held that - admit the additional evidence as they go to the root of the case. The additional evidences are in shape of gift given to the assessee by one Ms Fareeda Manasswala. Copy of her passport and confirmation letter are filed as additional evidences. They were not filed before the AO or before the CIT(A). Therefore to meet the end of justice I set aside this issue to the file of the Assessing Officer to consider these evidences and then pass a fresh order after affording opportunity of being heard to the assessee - Decided in favour of assessee for statistical purposes..

Issues:
1. Validity of reopening of assessment
2. Addition of Rs. 1,74,318
3. Addition of Rs. 1,25,000 as unexplained credit

Issue 1: Validity of reopening of assessment
The case involved a search and seizure operation under Section 132 in connection with a group of companies, including the assessee's involvement in purchasing shares through a company providing accommodation entries. The assessment was reopened under Section 148 based on this information. The CIT(A) upheld the reopening, citing the decision of the Hon'ble Supreme Court in a relevant case. The Tribunal also confirmed the addition made on merit regarding the alleged sale of shares as accommodation entries. However, upon detailed examination, the Tribunal found that the assessee had provided complete details of the share purchase, including payment through proper banking channels, share certificates, Demat account details, and confirmation from the issuing company. The Tribunal noted that the evidence provided by the assessee was sufficient to prove the genuineness of the transactions, especially in comparison to a similar case where additions were deleted due to lack of direct evidence. Consequently, the Tribunal deleted the addition made on the basis of the statement of the individual involved in the accommodation entries racket.

Issue 2: Addition of Rs. 1,74,318
The Assessing Officer had made an addition of Rs. 1,74,318 on account of alleged sale of shares as accommodation entries, which was confirmed by the CIT(A). The assessee contended that all necessary documentation, including share purchase details, certificates, and confirmations, were provided to establish the genuineness of the transactions. The Tribunal found that the assessee had fulfilled the burden of proof by providing comprehensive evidence, and there was no material to suggest that the transactions were not genuine. Drawing parallels to a previous case where additions were deleted due to lack of direct evidence, the Tribunal concluded that the addition made by the department was not justified and proceeded to delete it.

Issue 3: Addition of Rs. 1,25,000 as unexplained credit
Another addition of Rs. 1,25,000 was made on account of a gift receipt, as the assessee failed to provide evidence to prove the gift's genuineness. Both the AO and the CIT(A) upheld this addition. During the appeal, the assessee submitted additional evidence, including a copy of the donor's passport and confirmation letter, which were not presented before the lower authorities. The Tribunal, considering the significance of these new pieces of evidence, set aside the issue to the Assessing Officer for fresh consideration, allowing the assessee an opportunity to be heard. The Tribunal ordered a reevaluation of this issue based on the additional evidence provided.

In conclusion, the Tribunal partially allowed the assessee's appeal and remanded the matter back to the Assessing Officer for fresh consideration regarding the addition of Rs. 1,25,000 as unexplained credit.

← Previous Next →