ITO Vs Randeep Investment (P) Ltd. (ITAT Mumbai)
Conclusion:
Addition made under section 68 on account of share capital received by assessee as unexplained credit was to be deleted in absence of any material or inquiry conducted by AO that the issuing companies were non-existing entities or a paper company and AO had not brought material on record to dislodge the veracity of the evidences filed by assessee.
Held:
AO noted that Shri SK Gupta was providing accommodation entries to various beneficiaries through different mediators by charging commission and assessee had provided cash to obtain credit entry in the Name of the company controlled by Sh. S K Gupta which represented assessee’s income from undisclosed sources. Therefore, AO made addition under section 68 by reopening of assessment on account of share capital received by assessee as unexplained credit. It was held AO did not carry out any sort of prima facie inquiry nor he had issued any notices u/s 133(6) to the companies to examine the veracity of assessee’s claim that nature and source of credit had been proved and the identity, creditworthiness and genuineness of the transaction had been established. AO had to bring some material on record to dislodge the veracity of the evidences filed by assessee. In absence of any inquiry, such a material or documents filed by the assessee could not be discarded. AO had simply relied upon the information received from Investigation Wing, without even carrying out any prima facie inquiry so as to show that assessee’s contention or material filed by him could not be relied upon. In absence of any material or inquiry conducted by AO that these were non-existing entities or a paper company and there being no rebuttal from the side of department, addition made u/s 68 was directed to be deleted.
FULL TEXT OF THE ITAT JUDGEMENT
The aforesaid cross appeals filed by the assessee as well as by the revenue against impugned order dated 2 1.4.2015, passed by Ld. CIT (Appeals)-10, New Delhi for the quantum of assessment u/s 147/143(3).
2. We will first take up the assessee’s appeal, wherein the assessee has challenged, firstly, the validity of proceedings u/s 148 and reopening of assessment u/s 147 on the ground that ‘reasons recorded’ are not in accordance with law; secondly, the approval granted by the Ld. CIT in terms of section 151 is purely mechanical; thirdly, the addition of Rs. 28 lacs as sustained by CIT (A) out of total addition of Rs. 1,53,50,000/- u/s 68; and lastly, addition of Rs. 28,000/- made u/s 69C on account of commission/premium allegedly paid by the assessee for getting the share capital.
3. The facts in brief are that assessee has filed its return of income on 29.3.2007 which was duly processed u/s 143(1). Thereafter a notice u/s 148 was issued on 16.3.2013. Before issuing of notice, AO has recorded following reasons: –
