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2025 (4) TMI 990 - AT - Income TaxAddition of accommodation entry of bogus billing - CIT(A) deleted addition - HELD THAT - Assessee furnished various evidence during the re-assessment proceedings to discharge its onus of establishing the genuineness of the payment made to M/s. Culminating Management Pvt. Ltd. However as is evident from the perusal of the assessment order the AO without considering any of these evidences made the impugned addition merely relying upon the information received from the Investigation Wing Kolkata. Further we find that the AO also did not make any independent investigation or inquiry in respect of the transaction entered into by the assessee with M/s. Culminating Management Pvt. Ltd. As evident from the record that the AO did not examine any of these aspects of the instant case and merely because M/s. Culminating Management Pvt. Ltd. had raised the invoice on the assessee for the market development services made the addition in the hands of the assessee on the basis that the assessee has availed accommodation entry of bogus billing without also appreciating the fact that the said invoice was reimbursed inclusive of charging of service tax by M/s. Tide Water Oil Co. (India) Ltd. Since no material has been brought on record by the Revenue to controvert the material placed on record by the assessee during the reassessment proceedings to substantiate its claim of genuineness of transaction we do not find any infirmity in the findings of the learned CIT(A) in deleting the addition made by the AO. Accordingly the impugned order on merits is upheld and the sole ground raised by the Revenue is dismissed.
1. ISSUES PRESENTED and CONSIDERED
The core legal question considered by the Tribunal is whether the addition of Rs. 71,91,040/- made by the Assessing Officer (AO) on account of accommodation entry in the form of bogus billing was justified, or whether the transaction was genuine and the addition should be deleted. Specifically, the Tribunal examined:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Legitimacy of the addition on account of accommodation entry of bogus billing Relevant legal framework and precedents: The addition was made under the provisions of the Income Tax Act, 1961, particularly under section 147 (reassessment) and section 250 (appeal). The principle that a transaction cannot be held as bogus merely on the basis of payment mode (such as RTGS) or information from investigation without independent inquiry is well established in tax jurisprudence. The burden lies on the Revenue to establish the accommodation entry beyond doubt. Court's interpretation and reasoning: The Tribunal noted that the AO relied solely on the information received from the Investigation Wing, which alleged that M/s Culminating Management Pvt. Ltd. was a shell company controlled by certain individuals engaged in providing accommodation entries. However, the AO did not conduct any independent investigation or inquiry to verify the genuineness of the transaction. The Tribunal emphasized that mere reliance on investigation reports without corroborative evidence or independent inquiry is insufficient to sustain an addition. Key evidence and findings: The assessee produced documentary evidence including:
The Tribunal found that these documents supported the genuineness of the transaction and demonstrated that the assessee was acting as an intermediary or Market Development Partner rather than availing accommodation entries. Application of law to facts: The Tribunal applied the principle that the Revenue must establish the accommodation entry beyond mere suspicion or reliance on investigation reports. Since the assessee discharged its onus by furnishing credible evidence of the transaction's genuineness, and the AO failed to rebut this with independent findings, the addition was not sustainable. Treatment of competing arguments: The Revenue argued that M/s Culminating Management Pvt. Ltd. was a dummy company and the transaction was a bogus billing. The Tribunal rejected this contention on the ground that no independent inquiry was made and the assessee's evidence remained uncontroverted. The Tribunal also noted that the assessee's role as Market Development Partner and the reimbursement by the principal company negated the allegation of accommodation entry. Conclusions: The Tribunal upheld the CIT(A)'s deletion of the addition of Rs. 71,91,040/-, concluding that the transaction was genuine and not an accommodation entry. Issue 2: Validity of reassessment proceedings under section 147 of the Income Tax Act Relevant legal framework: Section 147 provides for reassessment where income has escaped assessment. Rule 27 of the ITAT Rules, 1963 allows for applications challenging the validity of reassessment proceedings. Court's interpretation and reasoning: The assessee filed an application under Rule 27 challenging the reassessment proceedings. However, during hearing, the assessee's representative submitted that if relief was granted on merits, the application need not be pressed. Application of law to facts: Since the Tribunal upheld the deletion of the addition on merits, the reassessment proceedings did not result in any adverse finding against the assessee. Accordingly, the application under Rule 27 was dismissed as not pressed. Conclusions: The Tribunal dismissed the application challenging the reassessment proceedings as not pressed in view of the merits ruling. 3. SIGNIFICANT HOLDINGS The Tribunal's crucial legal reasoning includes the following verbatim excerpts:
Core principles established by the Tribunal are:
Final determinations on each issue:
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