ACIT Vs Swikrutee Finance Pvt. Ltd. (ITAT Mumbai)
ITAT Mumbai Quashes Reopening and Upholds Deletion of Section 68/69/69C Additions in Alleged Accommodation Entry Case
The Mumbai Bench of the ITAT dismissed the Revenue’s appeal in the case of Swikrutee Finance Pvt. Ltd. for AY 2013-14, upholding the order of the CIT(A)/NFAC which had quashed the reopening and deleted additions made under sections 68, 69 and 69C.
On the jurisdictional issue of reopening, the Tribunal noted that the original assessment had been completed under section 143(3) and the notice under section 148 was issued after four years from the end of the relevant assessment year. The reasons recorded did not allege any failure on the part of the assessee to disclose material facts fully and truly. Further, the AO proceeded on an incorrect factual premise by stating that the original return was processed under section 143(1), whereas a scrutiny assessment had in fact been completed. The ITAT held that the reopening was based merely on information from the Investigation Wing, without independent application of mind, amounting to a change of opinion, and thus violative of the proviso to section 147.
On merits of the additions under section 68, the Tribunal upheld the CIT(A)’s finding that the assessee, an RBI-registered NBFC, had discharged its onus by furnishing confirmations, PAN details, income-tax returns, audited financial statements, bank statements and MCA master data of the lender companies. The loans were received and repaid through normal banking channels, interest was paid after TDS, and no defect was pointed out by the AO in the documentary evidence. The Tribunal held that mere reliance on statements and reports of the Investigation Wing alleging accommodation entries, without establishing a fund trail or granting cross-examination, was insufficient to sustain the additions.
Consequently, the disallowance of interest under section 69C and additions on account of repayment of loans treated as unexplained investment under section 69 were also deleted, since the underlying loans were found to be genuine and duly recorded in the books.
Affirming the principle that once the assessee proves identity, creditworthiness and genuineness, the burden shifts to the Revenue, the ITAT found no infirmity in the CIT(A)’s order. Accordingly, the Revenue’s appeal was dismissed in entirety.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
