Minakshi Builders Vs CIT (ITAT Pune)
ITAT Pune held that information from the office of DIT (Inv.)-II is a tangible information enabling AO to form a belief that income has escaped assessment and hence proceedings of re-assessment justified.
Facts- Based on the information that appellant is a beneficiary of accommodation entries of bogus unsecured loan and advances, a notice u/s 148 of the Income Tax Act, 1961 was issued and the case was taken for scrutiny assessment.
Despite several notices of hearing, the appellant only provided a bald explanation stating that the loans and advances were booking advance of the flats. He only filed copies of Balance Sheet, Deed of Partnership of appellant and confirmation letters of closing balance as on 31.12.2012 in his books of account. The assessee had not discharged the onus of proving the genuineness of the transactions, identity of creditors and creditworthiness of the investors to make the investment in question to the satisfaction of AO. Therefore, AO had brought to tax the accommodation entries and completed the assessment vide order dated 3 1.03.2015 passed u/s 144 r.w.s. 147 of the Act.
Being aggrieved, an appeal was filed before the ld. CIT(A) which was dismissed. Being aggrieved, the present appeal is filed.
Conclusion- AO, on receipt of the information from the DIT (Inv.)-II, Mumbai that the appellant is beneficiary of the accommodation entries of bogus loans and advances from one Mr. Bhawarlal Jain Group formed an opinion that the income had escaped assessment to tax and issued a notice u/s 148 as the appellant had not filed any return of income. This information constitutes a tangible information enabling the Assessing Officer to form a belief that the income chargeable to tax had escaped assessment and the proceedings of the re-assessments are justified and valid in law
In the present case also, the appellant deliberately withheld the information from the Assessing Officer as well as the ld. CIT(A) which is within exclusive knowledge of appellant to establish the genuineness of transactions of purchase of shares of that company. It is nothing but a fraud played by the appellant against the Assessing Officer as well as the ld. CIT(A) who are quasi judicial authorities employed for execution of the provisions of the Income Tax Act. Therefore, the principle of fraud can be squarely applied to the facts of the present case and principles of natural justice have no application.
FULL TEXT OF THE ORDER OF ITAT PUNE
These are the appeals filed by the assessee directed against the common order of ld. Commissioner of Income Tax (Appeals)-2, Pune [‘the CIT(A)’] dated 20.01.2020 for the assessment years 2007-08 to 2012-13 respectively.
2. Since the identical facts and common issues are involved in all the above captioned six appeals, we proceed to dispose of the same by this common order.
3. For the sake of convenience and clarity, the facts relevant to the appeal in ITA No.447/PUN/2020 for the assessment year 2007-08 are stated herein.
4. The appellant raised the following grounds of appeal :-
“1. The LD ITO, Ward 1 Ahmednagar has wrongly made the additions of Rs 15,00,000 to the returned income for AY 2007-08 towards unexplained cash credit u/s 69A of the IT Act , inspite of the fact that, the loan /advance obtained by the appellant by crossed account payee cheques and the said loan/advance were supported with confirmation and the identity of the creditors has been proved through Tax PAN No held by the creditors. Therefore the said additions made by AO is not justified and the same may please be deleted.
2. The LD AO has wrongly made the above said addition ignoring the confirmation and ignoring facts that identity of creditors has been proved through their income tax PAN no and creditors are financially
3. Looking to the facts & circumstances of the case the LD ITO ward 1 Ahmednagar has wrongly charged interest of Rs.9,49,212/- u/s 234A/B of IT Act consequent to the above said wrong addition and therefore the interest may please be deleted.
4. The appellant may please be allowed to ADD/Alter/Amend any ground of appeal.”
5. Briefly, the facts of the case are as under :-
The appellant is an individual engaged in the business of Builders, Promoters and Real Estate. No Return of Income was filed for the assessment years 2007-08 to 2012-13. The Assessing Officer received information from the office of the DIT (Inv.)-II, Mumbai that the appellant is a beneficiary of accommodation entries of bogus unsecured loans and advances provided by one Bhawarlal Jain Group. The said accommodation entries were received during the assessment years 2007-08 to 2012-13. As per the said information, such bogus unsecured loans and advances entries provide by said broker, Bhawarlal Jain Group, the details of which are as under :-
