NYK Enterprises Pvt. Ltd. Vs ITO (ITAT Delhi)
Section 68 Addition Deleted – ITAT Says Investigation Wing Report Alone Cannot Prove Bogus Share Capital
The Delhi ITAT deleted additions made u/s 68 towards alleged bogus share application money received by M/s NYK Enterprises Pvt. Ltd., holding that the Assessing Officer merely relied upon Investigation Wing reports relating to the so-called “Jain Brothers” accommodation entry network without conducting any independent enquiry against the assessee. The AO had treated amounts of ₹58.93 lakh and ₹26.50 lakh as unexplained share capital based on information that the assessee had allegedly received accommodation entries through shell companies operated by the Jain Brothers group.
The Tribunal observed that the assessment order contained lengthy discussions on shell companies, accommodation entries and human probability theories, but there was “not even an iota of evidence” showing any independent enquiry by the AO to establish the assessee’s alleged involvement. The ITAT noted that despite the assessee requesting copies of relied-upon materials, cross-examination of alleged entry operators and issuance of summons u/s 131 to concerned parties, no such effective investigation was undertaken. Relying on the Supreme Court ruling in CIT vs. Orissa Corporation Pvt. Ltd., the Tribunal held that once the assessee furnishes basic details, the burden shifts to the department to conduct meaningful enquiry. Since the Revenue failed to independently verify the transactions or establish any direct nexus between the assessee and alleged entry operators, the additions u/s 68 were deleted in entirety.
FULL TEXT OF THE ORDER OF ITAT DELHI
