Case Law Details
Homeway Marketing (P) Ltd. Vs ITO (ITAT Delhi)
The issue under consideration is whether the addition made u/s 68 for assessee helped various beneficiaries in providing accommodation entries in relation to capital and expenses is justified in law?
ITAT states that, the Assessing Officer has taken the debits, credits income expenditure, the liabilities expenses altogether added up and considered it as an escapement of income. The initial assumption of the AO that the assessee has not accounted the commission income being a conduit of the entry operator has been enlarged to the assumption to escapement of income adding up of the figures of balance sheet and P&L a/c. Such action on the part of the Assessing Officer smacks of the basic application of mind while recording the reasons. Therefore a conclusion arises as to abject non-application of mind. It is apparent that the AO did not applies own mind to the information and examine the basic material for information. The information has not been examined with reference to the facts on record with the assessing authority or with the return of income filed by the assessee. It is discernible that the AO has not applied his mind to the material received as well as to the material before him in the form of assessment records to come to a correct conclusion that the income had escaped assessment. From the reasons recorded, ITAT find that the Assessing Officer had no clarity as to what he considers as income escaped assessment whether the commission on the entries provided or the total amount of entries. Further, while calculating the assessment proceedings, the Assessing Officer made addition of the entries which the Assessing Officer himself has accepted that these entries have been provided to other companies as accommodation entries. In that case, there is an inbuilt contradiction in the action of the Assessing Officer while concluding the assessment proceeding. The AO treats that the assessee has been utilized to provide entries to other companies wherein he treated the assessee as a conduit and also he treated the assessee as the owner of this amount. The AO mentions that the assessee is helping various beneficiaries in providing accommodation entries in relation to capital and expenses. On merits, the AO has not made any primary, independent enquiry to arrive at a conclusion to tax the amount u/s 68 of the Act. In the result, the appeals of the assessees is allowed.
FULL TEXT OF THE ITAT JUDGEMENT
The present appeals have been filed by the assessee against the order of the ld. CIT(A)-XI, New Delhi dated 29.11.2013 in ITA No. 878/Del/2014 and the order of the ld. CIT(A)-XVIII, New Delhi dated 24.12.2013 in ITA No. 1694/Del/2014.
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