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2019 (2) TMI 1134 - AT - Income TaxUnexplained expenditure u/s 69C - Held that:- The assessee was involved in providing accommodation entries to 47 parties, but while arriving at final conclusion to delete addition made by the AO towards disallowance of total purchases, directed the AO to delete addition without recording any reasons as to how the profit declared by the assessee is matched with the commission charged on accommodation entries. Notice that the assessee, before the AO, never filed any documents. CIT(A), without appreciating this fact, has accepted the arguments of the assessee that it earns only 1 to 1.5% commission on bogus bills, without further verifying the facts gathered by the AO during the course of assessment proceedings in the light of assessee’s written submission that it has provided similar accommodation entries to another 47 entities. Insofar as disallowance of expenditure, the CIT(A) has allowed 25% adhoc deduction towards expenses on gross commission income without narrating how the assessee has proved expenditure debited to the P&L Account with necessary evidences. Although there is merit in the findings of the CIT(A) that no income could be earned without expenditure, but it is for the assessee to prove expenditure debited to the P&L Account with necessary evidence and also to prove that such expenditure has been incurred wholly and exclusively for the purpose of business. We, therefore, are of the opinion that the findings of the Ld.CIT(A) are not supported by any evidence and are contrary to assessee’s own admission. The issue needs to go back to the AO for further verification in the light of the fact that the assessee is involved in providing similar accommodation entries to another 47 entities for the purpose of ascertaining the true and correct nature of transactions carried out by the assessee. Hence, we set aside the issue to the file of the AO and direct him to redo the assessment after affording reasonable opportunity of hearing to the assessee.- Appeal filed by the revenue allowed for statistical purpose.
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