ITO Vs Jatin Investment Pvt. Ltd. (ITAT Delhi)
The Revenue filed two appeals before the ITAT Delhi challenging the order of the Commissioner of Income Tax (Appeals) deleting additions made under Section 68 of the Income-tax Act on account of alleged unexplained sale proceeds of shares and consequential commission. The Assessing Officer (AO) had reopened the assessment under Section 147 on the basis of information received from the Investigation Wing alleging that the assessee had received accommodation entries amounting to Rs. 93,45,000.
The AO issued notices under Section 131 to the persons from whom the amounts had been received. Since the summons were returned unserved and the assessee failed to produce the parties, the AO concluded that the transactions were accommodation entries. Holding that the assessee had failed to establish the identity, creditworthiness and genuineness of the transactions, the AO treated Rs. 93,45,000 as unexplained cash credits under Section 68 and also made an addition of Rs. 1,86,900 towards alleged commission for obtaining accommodation entries.
The assessee contended before the Commissioner (Appeals) that the amounts represented sale proceeds of shares held as investments and not share capital or unsecured loans. It submitted that no fresh funds had been introduced during the relevant year, all share transactions were recorded in the books of account, the investments were reflected in the balance sheet, and any surplus on sale had already been offered to tax. The assessee also furnished confirmations, bank statements, income-tax returns of the purchasers and other supporting documents, and argued that taxing the sale proceeds again under Section 68 would amount to double taxation.
