2018 (3) TMI 1731 - AT - Income Tax

Tribunal overturns tax assessment, emphasizes evidence, cross-examination rights

M/s. Iskon Developers Pvt. Ltd. Versus The Income Tax Officer, Ward-12 (4), New Delhi.

M/s. Iskon Developers Pvt. Ltd. Versus The Income Tax Officer, Ward-12 (4), New Delhi. - TMI Issues:Reopening of assessment under section 148 of the Income Tax Act, 1961, addition of Rs. 15 lacs under section 68, addition of Rs. 30,000 on account of commission.Reopening of Assessment:The case involved a company that received fresh share application money of Rs. 15 lacs, which was flagged due to its connection with a group providing accommodation entries. The Assessing Officer (A.O.) reopened the assessment under section 148 based on this information. The assessee contested the reopening, citing lack of opportunity for cross-examination and delay in initiating proceedings after receiving the information. The A.O. made additions based on the belief that the funds were sourced from a dubious group. However, the Tribunal found the reassessment proceedings flawed due to lack of proper evidence and cross-examination rights, ultimately setting aside the reopening.Addition under Section 68:The A.O. added Rs. 15 lacs under section 68, suspecting the source of funds and the genuineness of the transaction. The assessee provided various documents to establish the identity and creditworthiness of the investor, including an affidavit, ITR, balance sheet, and bank statement. Despite the A.O.'s reliance on the Investigation Wing's report, the Tribunal noted that the assessee was not provided with crucial information or witness statements used against them. Relying on case law, the Tribunal concluded that without proper confrontation of adverse material and in the absence of further inquiry, the addition could not be sustained. The Tribunal set aside the addition under section 68.Addition of Commission:Additionally, the A.O. added Rs. 30,000 as commission without substantial evidence. The Tribunal found no basis for this addition and deleted it along with the Rs. 15 lacs addition under section 68. The Tribunal's decision was based on the lack of concrete evidence against the assessee and the failure to provide crucial information for cross-examination. The appeal of the assessee was allowed, and the additions were deleted on merit.In conclusion, the Tribunal ruled in favor of the assessee, setting aside the additions of Rs. 15 lacs and Rs. 30,000. The decision highlighted the importance of providing proper evidence, allowing cross-examination, and ensuring a fair assessment process in such cases.