2018 (11) TMI 203 - AT - Income Tax

Reopening of the assessment - unexplained deposits - unexplained liabilities - assessee company is part of one of the companies operated for providing accommodation entries - CIT(A) deleted the additions - Held that:- There is no evidence that assessee has submitted confirmation of those parties. Even before the ld CIT(A) it was not rebutted that assessee is not an accommodation entry provider. Further, in absence of preliminary discharge of initial onus by the assessee of the sums credited in the books, of the assessee, the ld AO is not duty bound to issue any summons u/s 131 of the Act.

When assessee has not provided the complete details of the persons from whom the sums were received, it is not correct to say that the AO should have issued summons to those parties. The ld CIT(A) has deleted the addition for the reason that assessee filed details of credit and debit entries of the bank account and also the loans paid. CIT(A) has blind foldedly accepted the explanation of the assessee without giving any credence to the fact of the case that assessee company is an accommodation entry provider and unless the real beneficiaries are named by it, it cannot escape the taxation of the sum credited in its books of account.

As assessee’s director has confessed that assessee company is providing accommodation entries, then, CIT(A) even did not care to verify that who are the beneficiaries and what is the amount of commission received by assessee from the beneficiaries from providing accommodation entries. Without even calling for all these details, the ld CIT(A) has deleted the addition. In view of this, we reverse the finding of the ld CIT(A) and confirm the order of the ld Assessing Officer with respect to the addition - Decided in favour of revenue.

Current liabilities unexplained - Held that:- The assessee submitted before the ld CIT(A) that it received sum of ₹ 14 lakhs from Shreys Infradevelopers Pvt. Ltd and San Portfolio Pvt Ltd of ₹ 135000/-, however, no confirmation was provided of these parties. In view of this the addition has been made by the ld AO. The ld CIT(A) deleted the addition without even asking for the confirmation. We find that unless the assessee submits the confirmation of these parties the addition cannot be deleted. In view of this we reverse the finding of the ld CIT(A) and restore the order of the ld AO - Decided in favour of revenue.