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of <h1>ITAT dismisses revenue's appeals on unaccounted investment, commission additions for assessment years.</h1> <h3>Dy. Commissioner of Income Tax, Central Circle 3 (2) Mumbai Versus Feathertouch Fashions P. Ltd.</h3> Dy. Commissioner of Income Tax, Central Circle 3 (2) Mumbai Versus Feathertouch Fashions P. Ltd. - TMI Issues:- Appeal against deletion of addition of unaccounted investment and commission- Protective addition of unaccounted investment- Protective addition of unaccounted commission- Confirmation of substantive additions in other companies- Assessment based on protective basis- Deletion of additions in the hands of the assessee- Dismissal of appeals by the revenueAnalysis:Issue 1: Appeal against deletion of addition of unaccounted investment and commissionThe Deputy Commissioner of Income tax filed appeals against the deletion of additions made by the Commissioner of Income-tax (Appeals) for assessment years 2011-12 and 2012-13. The additions were related to unaccounted investment and commission under section 69C. The AO contended that the entries were accommodation entries and the assessee was a conduit for introducing unaccounted funds. However, the CIT(A) held that the substantive additions had been confirmed in the hands of other companies, making the protective additions in the hands of the assessee unnecessary.Issue 2: Protective addition of unaccounted investmentThe AO made protective additions of unaccounted investment in the hands of the assessee based on the belief that the company was used for routing bogus share application money. However, the CIT(A) found that the additions had been confirmed in the hands of the actual beneficiaries, rendering the protective additions redundant.Issue 3: Protective addition of unaccounted commissionSimilarly, the AO added unaccounted commission on the routing of bogus share application money as a protective measure. The CIT(A) deleted these additions as well, citing the confirmation of substantive additions in the hands of the real beneficiaries.Issue 4: Confirmation of substantive additions in other companiesThe substantive additions made by the AO in other companies were confirmed by the CIT(A), leading to the conclusion that the protective additions in the hands of the assessee were not required.Issue 5: Assessment based on protective basisThe assessment by the AO was based on a protective basis, assuming the assessee's involvement in routing unaccounted funds. However, the CIT(A) found no evidence to support taxing the assessee when the substantive additions had been confirmed in the hands of the actual beneficiaries.Issue 6: Deletion of additions in the hands of the assesseeThe CIT(A) deleted the additions made in the hands of the assessee, emphasizing that the substantive additions had already been confirmed in the hands of other parties. The lack of evidence linking the income to the assessee led to the deletion of the protective additions.Issue 7: Dismissal of appeals by the revenueUltimately, the ITAT dismissed the appeals by the revenue for both assessment years, upholding the CIT(A)'s decision to delete the additions in the hands of the assessee based on the confirmation of substantive additions in other companies.This comprehensive analysis highlights the key issues and the reasoning behind the judgment delivered by the ITAT Mumbai in the mentioned case.
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