ACIT Vs Jotindra Steel & Tubes Ltd. (ITAT Delhi)
ITAT Rejects Unexplained Cash Addition Due to Lack of Direct Evidence; ITAT Rules Share Sale Proceeds Cannot Automatically Be Treated as Cash Credits; ITAT Upholds Deletion of Addition Based on Alleged Accommodation Entry Transactions; ITAT Accepts Foreign Share Application Money Supported by RBI Compliance Records; ITAT Says Additions Cannot Be Made Solely on Presumptions from Seized Excel Files; ITAT Dismisses Revenue Appeal After Finding No Defect in CIT(A)’s Findings; ITAT Holds Section 68 Addition Unsustainable Where Share Transactions Were Properly Documented.
The appeal before the Income Tax Appellate Tribunal (ITAT), Delhi Bench, arose from the order of the Commissioner of Income Tax (Appeals) [CIT(A)] for Assessment Year 2013-14 involving additions made under Sections 68 and 69 of the Income Tax Act.
The assessee company, engaged in manufacturing and trading of steel, tubes, pipes, fabrication work, and furnace operations, was subjected to search and seizure proceedings under Section 132 as part of the Mauria Group search conducted on 7 August 2013. The Assessing Officer (AO) made three major additions during assessment proceedings.
First, the AO added Rs.6 crore under Section 68, alleging that sale proceeds received from transfer of shares in two Kolkata-based companies were unexplained. According to the AO, the transactions involved layered banking activities through companies maintaining accounts in the same bank branch, and the entities lacked genuine business activity. The AO concluded that the assessee had routed its own unaccounted money through accommodation entries in the guise of share sale transactions.
