2023 (10) TMI 656 - AT - Income Tax

Tribunal affirms partial additions under sections 68 and 69C, emphasizes onus discharge

The Tribunal dismissed the appeal, affirming the CIT(A)'s decision to partially uphold the additions made by the AO under sections 68 and 69C of the Act. ... Onus to prove genuineness, identity and creditworthiness of shareholders under section 68 - addition treated as unexplained expenditure under section 69C - reliance on bank statement entries to determine taxable credit - remand report verification of bank credits - ex parte adjudication for non-appearanceOnus to prove genuineness, identity and creditworthiness of shareholders under section 68 - reliance on bank statement entries to determine taxable credit - remand report verification of bank credits - Validity of addition of share application money to the hands of the assessee under section 68 - HELD THAT: - The Tribunal considered the Assessing Officer's addition of Rs. 60,00,000 shown as share application money and the assessee's contention that it had discharged the onus under section 68. The CIT(A) on remand called for the AO's verification and found that the bank statement produced showed only one credit of Rs. 30,00,000 (vide the identified instrument) and did not record the second alleged credit. The Tribunal accepted the factual finding in the remand report that the entry dated 24.09.2008 was not reflected in the bank account and that the assessee had failed to discharge the statutory onus in respect of the credited amount of Rs. 30,00,000. On that basis the CIT(A)'s restriction of the addition to the amount actually evidenced as credited in the bank was upheld as factually and legally justified. [Paras 4, 6, 9]Addition under section 68 reduced to the amount established by bank credit (Rs. 30,00,000); the CIT(A)'s restriction is upheld.Addition treated as unexplained expenditure under section 69C - reliance on bank statement entries to determine taxable credit - remand report verification of bank credits - Validity of addition of commission as unexplained expenditure under section 69C - HELD THAT: - The AO assessed a commission as consideration for arranging the alleged accommodation entry and made an addition under section 69C. The CIT(A), having regard to the factual finding that only one of two alleged share credits was reflected in the bank records, proportionately reduced the unexplained commission addition to 50% (confirming part of the AO's finding). The Tribunal found no infirmity in the CIT(A)'s factual evaluation and reasoning that linked the confirmed bank credit to the corresponding commission element, and therefore sustained the restricted addition. [Paras 4, 7, 9]Addition under section 69C confirmed in part (restricted amount upheld); the CIT(A)'s reduction is sustained.Final Conclusion: The assessee's appeal is dismissed; the CIT(A)'s order restricting the section 68 addition to the amount evidenced by bank credit and sustaining the proportionate section 69C addition is upheld, and no interference is warranted. Issues:Reopening of case under section 147 of the Act based on information from DIT (Investigation Wing) | Addition of Rs. 60,00,000/- as share application money | Addition of Rs. 1,80,000/- as commission for arranging bogus accommodation entry | Discharge of onus under section 68 and 69C of the Act | Ex parte decision due to absence of assessee or representativeReopening of Case and Additions:The appeal challenged the reopening of the case under section 147 of the Act, questioning the addition of Rs. 61,80,000/- as concealed income based on information from the DIT (Investigation Wing). The assessee contended that the Assessing Officer (AO) did not apply independent judgment and merely replicated the investigation report's conclusions. Additionally, the AO added Rs. 60,00,000/- as share application money, which the assessee argued was not properly assessed under section 147 of the Act.Disputed Additions and CIT(A) Decision:The AO made two additions to the assessee's income: Rs. 60,00,000/- as share application money and Rs. 1,80,000/- as commission for arranging a bogus entry. The CIT(A) reduced both additions, noting discrepancies in the credit entries. The main contentions revolved around the assessee's discharge of onus under sections 68 and 69C of the Act, with the assessee arguing that the bank statement supported their claims.Assessment and CIT(A) Findings:The CIT(A) upheld part of the additions, citing insufficient evidence and questionable transactions. Despite the assessee's submissions, the CIT(A) found the explanations unsatisfactory and confirmed the additions based on the lack of credit entries in the bank statement. The CIT(A) restricted the first addition to Rs. 30,00,000/- and the commission payment to Rs. 90,000/-, ruling partly against the appellant.Tribunal Decision:After considering the AO's basis, the assessee's explanations, and the remand reports, the Tribunal upheld the CIT(A)'s decision to restrict the additions under sections 68 and 69C of the Act. The Tribunal found that the CIT(A) correctly evaluated the factual position and granted partial relief to the assessee. Consequently, the Tribunal dismissed the assessee's grounds and upheld the CIT(A)'s findings, resulting in the dismissal of the appeal.Final Outcome:The Tribunal dismissed the appeal, affirming the CIT(A)'s decision to partially uphold the additions made by the AO, emphasizing the importance of discharging onus under relevant sections of the Act. The decision was pronounced in open court on 12.10.2023.