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2024 (2) TMI 841 - HC - Income TaxAddition u/s 68 - Addition as income of brokerage/commission @ 2% of cash deposits as accommodation entry provider - onus to prove - HELD THAT:- We find that the assessee has disclosed complete details of bank accounts, cheques issued and the cash received from those to whom accommodation entries were given, which fact has not been disputed by the appellant/department and, instead, brokerage/commission on the aforesaid cash deposit was determined as income of the assessee for giving accommodation entries. Thus, once the source of cash deposit was disclosed and in respect of such cash deposit the respondent/assessee was treated as accommodation entry provider and accordingly brokerage/commission on aforesaid cash deposit was determined as income of the assessee for providing service in the form of accommodation entry, then Section 68 becomes uninvokable on facts of the present case. In the present set of facts we find that there being cash deposit in the bank accounts, there was prima facie evidence against the assessee i.e. receipt of money. Assessee explained it that cash were given by those to whom cheques of equal amount were issued. He furnished complete details of cheques issued and the cash deposits. The assessee was held to be sub-broker of the principal broker engaged in providing accommodation entries. On these facts the assessing officer himself has treated the activity of the respondent/assessee as accommodation entry provider on brokerage/ commission basis and, accordingly, determined the income of the respondent/assessee @ 2% as brokerage on entire cash deposits of Rs. 166.59 crores. AO has not inferred that the sum credited in the books of the assessee constituted income of the previous year and instead held that the income of the respondent/assessee is 2% of the cash deposits, as brokerage. This leads to an irresistible conclusion that cash deposits was not receipt of income of the assessee and instead his income was brokerage/commission @ 2% of cash deposits as accommodation entry provider. Thus addition in the hands of the respondent/assessee u/s 68 was correctly set aside by the ITAT. As initial onus is on the assessee to establish by cogent evidence; genuineness of the transaction and creditworthiness of the investors under Section 68 by submitting proof of identity of the creditors; capacity of creditors to advance money and genuineness of the transaction. We find that the facts disclosed by the respondent/assessee before the authorities as briefly noted/discussed above, regarding cash deposits has not been disputed by the assessing officer in the assessment order and instead he held that the assessee is engaged in providing accommodation entries by receiving cash and issuing cheques and accordingly he determined the income of the respondent/assessee from brokerage @ 2% on the cash deposits. Under the circumstances, the addition made by the assessing officer under Section 68 of the Act, 1961 was unsustainable. Decided in favour of assessee.
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