2012 (10) TMI 398 - AT - Income Tax

Tribunal rules in favor of assessees for 2008-09 assessments, citing lack of evidence and procedural fairness.

M/s. Easy Mercantile Pvt. Ltd. & Others Versus The DCIT, Central Circle-1, Mumbai

M/s. Easy Mercantile Pvt. Ltd. & Others Versus The DCIT, Central Circle-1, Mumbai - TMI Issues:- Assessment based on providing accommodation bills/entries- Validity of assessment without cogent material evidence- Consideration of statement by Shri Pravin Kumar Jain- Treatment of commission income in assessmentAnalysis:1. Assessment based on providing accommodation bills/entries:- The appeals involved two separate orders of Ld. CIT(A) for assessment year 2008-09, both pertaining to the issue of whether the assessees were engaged in providing accommodation bills/entries or conducting normal trading business. The AO estimated commission from providing accommodation bills and made assessments based on this premise.2. Validity of assessment without cogent material evidence:- The AO's assessment was primarily based on the statement of Shri Pravin Kumar Jain, who admitted to providing accommodation bills to various parties. However, the assessees denied involvement in such activities. The AO rejected the books of account and estimated commission without substantial evidence.3. Consideration of statement by Shri Pravin Kumar Jain:- The Tribunal noted that Shri Pravin Kumar Jain's statement did not mention the assessees, who were legal entities distinct from him. The absence of any reference to the assessees in Jain's statement raised doubts about the validity of the assessment linking them to accommodation bill transactions.4. Treatment of commission income in assessment:- The Tribunal found that the AO failed to provide concrete evidence linking the assessees to accommodation bill activities. Despite issuing notices and examining transactions, no incriminating material was found. The Tribunal concluded that the assessment was unfounded and based on irrelevant facts, leading to the deletion of the commission income addition.5. Conclusion:- The Tribunal allowed the appeals, emphasizing that the assessment lacked substantial evidence connecting the assessees to accommodation bill transactions. The absence of incriminating material and the distinct legal status of the assessees led to the rejection of the commission income addition, thereby accepting the assessees' returned income and deleting the additional ground raised.By carefully analyzing the facts, statements, and legal principles, the Tribunal overturned the assessments, highlighting the importance of cogent evidence and adherence to procedural fairness in tax assessments.