Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (8) TMI 1761 - AT - Income TaxUnexplained cash credit u/s 68 - Held that:- There is no dispute that the entire share capital has been accepted as bogus by the assessee itself. It would not be out of place to mention that the assessee itself has accepted this before the Settlement Commission in its petition. There is no dispute that the petition of the assessee was dismissed by the Settlement Commission as the assessee could not pay tax as per the provisions of law. The fact of the matter is that the assessee has admitted that the share capital is bogus. Whether the assessee is entitled for benefit of rotation of cash thereby restricting the addition to the extent of peak credit? - Held that:- No doubt, the assessee in its explanation has time and again stated that it has inflated the cost of land/building/plant and machinery/expenditure. It is also not in dispute that the assessee has time and again contended that by inflating the assessee has rotated cash back in its books of account, therefore, bogus share capital introduced through accommodation entries taken from the brokers. But the most important fact is that the assessee could not adduce a single piece of evidence to demonstrate that the money has been circulated and reintroduced in the books of account. The assessee could not demonstrate any nexus between the inflation of items mentioned elsewhere and reintroducing the cash generated from such inflation. Forget about the direct evidences, there is not even a single circumstantial evidence to substantiate the claim of the assessee. The first appellate authority, in his wisdom, blindly accepted the theory of the assessee without asking for /looking for any evidence in support of the claim of peak credit theory. Since the assessee could not adduce any evidence, the benefit of peak credit cannot be given to the assessee. The first appellate authority has grossly erred in giving benefit and, therefore, his finding deserves to be set aside. We accordingly set aside the order of the CIT(A) to this extent and restore that of the Assessing Officer. Appeal filed by the Revenue is, accordingly, allowed. Addition of loan - The loan taken during the year under consideration appears to have been repaid in the subsequent years as can be seen from the bank accounts exhibited in the paper book. In our considered opinion and in the interest of just and fair play, we restore this issue to the file of the Assessing Officer. The assessee is directed to furnish bank statement for verification. The Assessing Officer is directed to examine the bank statement and decide the issue afresh. The assessee is also directed to furnish PAN details of all the five parties from whom unsecured loans have been taken. Needless to mention, the Assessing Officer shall give reasonable and proper opportunity of being heard to the assessee. Addition of ₹ 44.40 lakhs is concerned, we find that the same was not made by the Assessing Officer but was made by the CIT(A). There is no doubt that the powers of the CIT(A) are co-terminous to that of the Assessing Officer, but at the same time, the CIT(A) cannot enhance an assessment unless the assessee has had reasonable opportunity of showing cause as per provisions of section 251(2) of the Act. In our considered opinion, any act of the first appellate authority done in violation of provisions of section 251(2) of the Act would make his order a nullity. We, accordingly, direct the Assessing Officer to delete the addition of ₹ 44.40 lakhs. Appeal of the assessee is allowed in part for statistical purposes.
|