2023 (8) TMI 212 - AT - Income Tax

Appeal dismissed, reopening invalid. Lack of evidence for addition under Section 68. Verification crucial.

DCIT Central Circle-15 Versus BDR Builders & Developers P. Ltd, New Delhi

The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s order that the reopening of the case under Section 148 was invalid as it was based on ... Reopening of assessment u/s 147 - accommodation entry transactions - CIT(A) deleted addition - HELD THAT:- CIT(A) has duly examined the issue with regard to reopening of the case u/s 147 of the Act. Shri Roop Kishore Madan was not found to be entry operator from the sources of Shri R. K. Madan with regard to the amounts given to M/s. Gulab Buildtech on 03.02.2012 have been duly proved. The total amount given was Rs. 8.68 crore as against the amount alleged by the Revenue of Rs. 5.65 crores. The source of the entire amount have been duly examined by the ld CIT(A). Similarly, the loan transaction in M/s. G. B. P L. and BBPL with Sh. R. K. Madan which has been presumed to be an accommodation entry has been proved contra. Hence, the ld CIT(A) held that there was no reason to believe but it was only the suspicion which led to reopening of the case. We find no flaw in the order of the ld CIT(A), either on facts of the case or on judicial pronouncements applicable to the instant case in the background of the said facts. Hence, we decline to interfere with the well reasoned and logical order of the ld CIT(A). Decided against revenue. Issues Involved:1. Validity of reopening the case under Section 148 of the Income Tax Act.2. Deletion of addition of Rs. 17.95 crores under Section 68 of the Income Tax Act.Summary:1. Validity of Reopening the Case under Section 148 of the Income Tax Act:The Revenue challenged the decision of the CIT(A) quashing the reopening of the case under Section 148. The CIT(A) held that the reasons for reopening were based on either a change of opinion or suspicion, which is not a valid ground for reopening. The Tribunal affirmed this view, noting that the information regarding the alleged accommodation entries was already available with the Assessing Officer (AO) during the original assessment under Section 143(3). Therefore, the reopening based on the same information amounted to a change of opinion, which is not permissible. Moreover, the Tribunal observed that the AO had not independently verified the information received from the Investigation Wing and had relied on borrowed satisfaction, which is not sufficient for reopening an assessment. The Tribunal concluded that the reopening was invalid as it was based on suspicion rather than tangible material.2. Deletion of Addition of Rs. 17.95 Crores under Section 68 of the Income Tax Act:The CIT(A) deleted the addition of Rs. 17.95 crores made by the AO on account of unexplained share capital and share premium under Section 68. The Tribunal upheld this deletion, noting that the AO had not provided any concrete evidence to prove that the amounts received were accommodation entries. The Tribunal found that the assessee had provided sufficient documentary evidence, including confirmations, bank statements, and income tax returns of the parties involved, to prove the genuineness of the transactions. The AO had not rebutted these evidences with any adverse material. The Tribunal also noted that the AO had mechanically adopted the figures suggested by the Investigation Wing without conducting any independent inquiry. Consequently, the Tribunal held that the addition made by the AO was not sustainable on merits.Conclusion:The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s order that the reopening of the case under Section 148 was invalid and the addition of Rs. 17.95 crores under Section 68 was rightly deleted. The Tribunal emphasized the need for tangible material and independent verification by the AO for reopening assessments and making additions.