Case Law Details
ITO Vs Grace Development Associates (ITAT Mumbai)
ITAT Mumbai held that addition under section 68 of the Income Tax Act untenable as AO failed to conduct any investigation or enquiry in respect of information submitted by the assessee. AO also failed to conduct independent investigation and simply relied on third party statements and facts.
Facts- The assessee has filed ROI for the A. Y 2013-14 on 08.01.2014, disclosing a total income of Rs.Nil and the ROI was processed u/s. 143(1) of the Income Tax Act. Thereafter, there was a search and seizure operations conducted in the case of Shri Bhanwarlal Jain & group/concerns, which were providing accommodation entries.
AO received the information that the assessee was one of the beneficiaries of the accommodation entries provided by the group concerns. Therefore the AO has reason to believe that the income has escaped assessment and after recording reasons for reopening of assessment, issued notice u/s. 148 of the Act.
AO issued notice u/s. 143(2) and 142(1) of the Income Tax Act, along with the questionnaire. In compliance, the AR of the assessee appeared from the time to time and furnished the details supporting the return of income and documentary evidences, as well as information in respect of unsecured loans received from the group concerns. Whereas the AO considered the statement recorded in the course of search and issued notice under Section 142(1), on the assessee, to prove the identity, creditworthiness and genuineness of the transactions of unsecured loan creditors. Whereas the assessee had obtained loans from three parties i.e 1) M/s. Varsha Gems, of Rs. 1.32 crores;
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