ITO Vs Srishti Fincap Pvt. Ltd. (ITAT Delhi)
The Revenue filed an appeal before the ITAT Delhi challenging the order of the Commissioner of Income Tax (Appeals) deleting an addition of Rs. 25,10,000 made under Section 68 of the Income-tax Act for Assessment Year 2004-05. The Assessing Officer (AO) had reopened the assessment under Section 147 and issued notice under Section 148 based on information received from the Investigation Wing alleging that the assessee had received accommodation entries through an entity named Exclusive Garments.
The assessee explained that it had received two account payee cheques of Rs. 5,05,000 each and not Rs. 40,40,000 as mentioned in the notice. It submitted that the amounts represented payments received against regular business transactions involving the sale of shares and not share capital or share application money. The assessee stated that the shares sold during the relevant year had been held as opening stock, no purchases were made during the year, and the sale proceeds were duly recorded in its books of account and disclosed in the return of income.
The AO rejected the explanation, relying on the Investigation Wing’s report and information obtained under Section 133(6). He concluded that the transactions represented accommodation entries and treated Rs. 25,10,000 as unexplained cash credit under Section 68. The CIT(A), however, deleted the addition, leading to the Revenue’s appeal before the Tribunal.
