DCIT Vs Shri Basant R. Agarwal (ITAT Ahmedabad)
ITAT Ahmedabad held that the income generated by the assessee cannot be held bogus only based on the modus operandi. To hold income earned by the assessee as bogus, specific evidence has to be brought on record by the Revenue. In absence of any specific finding, assessee cannot be held to be guilty.
Facts- The only effective issue raised by the Revenue is that that the learned CIT(A) erred in deleting the protective addition made under section 68 of the Act for Rs. 5,74,50,000/- on account of bogus share capital and premium credited in the companies controlled by the assessee and erred in deleting the addition commission expenses of Rs. 3,44,700/- on such bogus share capital and premium.
Conclusion-
The income generated by the assessee cannot be held bogus only based on the modus operandi, generalisation, and preponderance of human probabilities. In order to hold income earned by the assessee as bogus, specific evidence has to be brought on record by the Revenue to prove that the assessee was involved in the collusion with the entry operator/ stock brokers for such an arrangements. In simple words, there were not brought any evidence from independent enquiry to corroborate the allegation.
We hold that in absence of any specific finding against the assessee, the assessee cannot be held to be guilty. Hence, we don’t find any reason to interfere in the order of the Ld. CIT-A. Hence, the ground of appeal of the Revenue is hereby dismissed.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The captioned appeals have been filed at the instance of the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)-6, Ahmedabad dated 28/03/2019 & 02/02/2018 arising in the matter of assessment order passed under s. 143 r.w.s. 153A & 143(3) of the Income Tax Act, 1961 (here-in-after referred to as “the Act”) relevant to the Assessment Years 2009-10 to 2015-16.
2. IT(SS)A 309 to 313/Ahd/2019, 114/Ahd/2018 and 970/Ahd/2019 appeals by the Revenue for A.Ys. 2009-10 to 2015-16
3. All the captioned appeals involve identical issue of protective assessment under section 68 of the Act on account of credit of share capital and premium thereon alleged to be bogus except for A.Y. 2012-13 bearing IT(SS)A No. 311/AHD/2019 and for AY 2015-16 bearing IT(SS) A No. 970/AHD/2019 wherein one additional issue of claim of exempted long term capital gain is also involved. Therefore, we proceed to decide the issue of protective assessment first by taking up the IT(SS)A No. 309/Ahd/2019 for A.Y. 2009-10 as lead case. However, the finding to be given therein will be applicable to all the captioned appeal. The grounds of appeal of the Revenue for the AY 2009-10 reads as under:
“1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs 5,74,50,000/- made in hands of assessee under section 68 of the IT Act on account of receipt of share capital and premium without appreciating the facts in the assessment order wherein the Assessing Officer had brought out the fact that the credits were from companies whose returns and balance sheet analysis show poor financials, and whose directors and operators/brokers had admitted under oath to the fact, that these were paper companies and had earned commission income for providing these accommodation entries to the concerned companies i.e. namely Globe Ecologistics Pvt. Ltd., GTC Oilfield Pvt. Ltd., GTC Petrotech Pvt. Ltd etc. When confronted with these facts, the main person of assessee-group, Basant Agrawal, during search and seizure operation had declined under oath to cross-examine these directors/operators, thereby establishing that these credits were not genuine.
2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs 5,74,50,000/- on receipt of share capital and premium without appreciating that the assessment order had brought out the fact that decisions in the cases of Trinetra Commerce & Trade Pvt. Ltd. (2016) 75 taxmann.com70 (Calcutta) and Jagmohan Ramchandra (2004) 141 Taxman 574 (Allahabad) are applicable in case o f assessee.
3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 5,74,50,000/ made in hands of assessee on receipt o f share capital and premium without appreciating that assessment order had brought out the fact that nexus had not been proven between the funds credited to Company of which the assessee is the main Director and the funds of the declarant Company under IDS.
4. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating that the assessee was excluded from the list of persons who could avail of the Income Declaration Scheme, 2016 by virtue of clause (e) of section 198 of Finance Act, 2016 and could not, therefore, avail of the benefit of the Scheme indirectly though declaration made by another person under the Scheme.
5. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs 3,44,700/- made in hands of assessee on issue o f unaccounted commission expenses u/s 60C on share capital and premium without appreciating that assessment order had brought out the fact that the credits of share capital and premium wore from paper companies as in ground (1) to (4) above on account of commission paid as accepted by the brokers in the statement recorded under oath.
6. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O.
7. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that o f the A.O. be restored to the above extent. ”
4. The only effective issue raised by the Revenue is that that the learned CIT(A) erred in deleting the protective addition made under section 68 of the Act for Rs. 5,74,50,000/- on account of bogus share capital and premium credited in the companies controlled by the assessee and erred in deleting the addition commission expenses of Rs. 3,44,700/- on such bogus share capital and premium.
5. The facts in brief are that the assessee is an individual deriving income from all sources. The assessee is partner is several firms as well as key person/promotor/director of Globe group of companies. There was search proceeding under section 132 of the Act carried out at the premises of assessee dated 23rdJanuary 2015. During curse of investigation and assessment it was found the 4 companies control or managed by the assessee as received huge sum in the form of share capital and premium during the financial year 2008-09 to 2014-15, which is detailed as under:
