If assessee merely acted as a conduit without any right in money, no addition can be made u/s 69A

Brief of the case:

In the case of M/s Bhagwati Motors Vs. ITO Chandigarh bench of ITAT have held that Assessee merely acted as a conduit without any right in money, therefore, no addition under section 69A of the Act could be made against the assessee. Assessee took money through cheque from one company and transferred the whole amount in bank account of another company, without any commission/consideration. CIT (A) dismissed appeal filed by assessee. On further appeal ITAT deleted the additions after observing that assessee is only a conduit for transfer of money.

Facts of the case:

• Assessee is in the trading of oil and lubricants and filed return of income at Rs. 48,990/- which was processed u/s 143(1).
• Subsequently case was reopened u/s 148 on the basis of information received from ACIT, CC, Chandigarh.
• ACIT, Central Circle, Chandigarh during the course of assessment proceedings in Mittal Group cases has gathered information about purchase of plot bearing at Chandigarh by M/s Sharvilla Estates Pvt. Ltd. from Smt. Era K. Ohri and her daughters.
• The assessee has issued cheques of Rs. 39 lacs to M/s Sharvilla Estates Pvt. Ltd. but the assessee has not shown this investment in the return of income filed, therefore, it was considered to be unaccounted money of the assessee.
• In reply to the notice assessee submitted that this amount was paid to other company through assessee as the said company is known to assessee only not to lender company.
• AO asked evidence and in response assessee filed bank statements.
• From the perusal of bank statements it was shown that amount was credited in the account of assessee from a different company and again it was noticed that this amount was subsequently debited into the account of another company which was also known to the assessee.
• The amount of Rs. 39 lacs have still not been received back by the assessee firm.
• From the perusal of assessment orders of the both the companies it was noticed that during the assessment proceedings of the respective companies, which are known to the assessee and are parties in the transaction, that cash was deposited in the account of one company by another company. They have given accommodation entry only
• Perusal of the assessment order of the company, in whose account sum was debited, revealed that no addition has been made and it has been held by the AO that the addition on protective basis have been made in the hands of Shri Mukesh Mittal, the Founder Director of the company which also include amount of 39 Lakhs.
• The perusal of the assessment order of founder revealed that addition of Rs. 1,07,05,000/- has been made on account of unexplained deposit in the bank account in the name of its company.
• No other evidence was filed by assessee hence AO noted that assessee has failed to adduce evidence in support of the claim that Rs. 39 lacs and same is added to the income of assessee.

Contention of the assessee: