ITO, MUMBAI vs. PROGRESS PARTNERS BUSINESS ADVISORY LLP, MUMBAI

The relevant facts in brief are that the Assessee filed return of income for the Assessment Year 2018-2019 offering to tax for internal audit fees of INR.17,59,526/- received from M/s. Advance Computers and Mobile India Pvt. Ltd. as reflected in the Form 26AS. The return filed by the Assessee was processed under Section 143(1) of the Act. Subsequently, on the basis of information received from INSIGHT portal uploaded by Deputy Director Income Tax (Inv.), Unit 5(2),the Assessing Officer observed that Assessee was beneficiary of the accommodation entry of INR.11,70,000/-, and on the basis of the aforesaid, the Assessing Officer formed belief that income had escaped assessment.Therefore, reassessment proceedings were initiated in the case of the Assessee under Section 147 of the Act. The aforesaid reassessment proceedings culminated into passing of Assessment Order, dated 20/02/2024, under Section 147 read with 3 Assessment Year 2018-2019 Section 144B of the Act whereby aforesaid income of INR.17,59,526/- was treated as unexplained cash credit and brought to tax in the hands of the Assessee @ 60% under Section 68 read with Section 115BBE of the Act.

Being aggrieved, Assessee preferred appeal before the CIT(A), the CIT(A) deleted the addition and allowed the appeal preferred by the Assessee holding as under: “……………..In the light of the above facts and discussion and as per information available in the insight portal as uploaded by the DDIT(Inv.) Unit-5(2), Mumbai, it is well established facts that M/s. Advance Computers and Mobiles India Pvt. Ltd had raised issuing/generating/providing fake/bogus invoices and the assessee was one of the beneficiary of accommodation entries. The accommodation entries may be in any form not necessarily related to only purchases or sales. Therefore, the amount of Rs.17,59,526/- received in lieu of Audit fees from M/s. Advance Computers and Mobiles India Pvt. Ltd through banking channel is nothing but fake/bogus in nature which the assessee has brought in its books of account in circular transactions to show it as a legitimate transaction and treated the same as income of the assessee. Therefore the total amount of Rs.17,59,526/- is hereby treated as unexplained cash credit within the meaning of section 68 r.w.s 115BBE of the Act and the same is proppsed to be added back to the total income of the assessee”. I have gone through carefully the assessment order and the submissions of the appellant. In their submissions, the appellant has reiterated that they have provided all the details called for by the AO at the time of assessment proceedings and the appellant also contended that the amount of Rs.17,59,526/- was already offered for taxation, as such, the addition of the amount once again, tantamounts to double taxation. In this connection, it is directed that since the necessary verification with regarding to the claim of the appellant is not possible to be made at this end, the AO is directed to verify the claim of the appellant in accordance with the provisions of law and revise the processed income, if required. Opportunity of being heard to be appellant may also be considered before coming to a conclusion. With these directions, the ground raised

Being aggrieved, the Revenue has preferred the present appeal before the Tribunal.

We have heard both the sides and have perused the material on record.

On perusal of Form 26AS, copy of invoices raised and relevant extract of bank statements filed by the Assessee, it becomes evident that the Assessee had received the internal audit fees of INR.17,59,526/- (INR.15,60,000/- + services tax/GST) from M/s. Advance Computers and Mobile India Pvt. Ltd. during the relevant previous year. It is not disputed by the Revenue that the said income was offered to tax by the Assessee in the return of income.

We find that the Assessing Officer had taken note of the fact that as per information received from the Investigation Wing, M/s. Advance Computers and Mobile India Pvt. Ltd. was alleged to have raised fake/bogus invoices. We find that the Assessing Officer had made following observations while making the addition of INR.17,59,526/- in the hands of the Assessee. …….In the light of the above facts and discussion and as per information available in the insight portal as uploaded by the DDIT(Inv.) Unit-5(2), Mumbai, it is well established facts that M/s. Advance Computers and Mobiles India Pvt. Ltd had raised issuing/generating/providing fake/bogus invoices and the assessee was one of the beneficiary of accommodation entries. The accommodation entries may be in any form not necessarily related to only purchases or sales. Therefore, the amount of Rs.17,59,526/- received in lieu of Audit fees from M/s. Advance Computers and Mobiles India Pvt. Ltd through banking channel is nothing but fake/bogus in nature which the assessee has brought in its books of account in circular transactions to show it as a legitimate transaction and treated the same as income of the assessee. Therefore the total amount of Rs.17,59,526/- is hereby treated as unexplained cash credit within the meaning of section 68 r.w.s 115BBE of the Act and the same is proposed to be added back to the total income of 5 Assessment Year 2018-2019 the assessee. Penalty proceedings u/s 271AAC(1) of the Income Tax Act, 1961 is initiated separately. (Addition: Rs.17,59,526/-) 5. Subject to the above remarks, total income of the assessee is computed as under:- SI No. Description Amount (in INR) 1. Return of Income Rs.3,67,030/- 2. Variation in respect of issue of unexplained cash Rs.17,59,526/- credit u/s 68 r.w.s 115BBE of the Income Tax Act, 1961(as discuss in Para 4.4(i) above) 3. Total Income/Loss determined as per the above Rs.21,26,556/- proposal. Assessed at total income of Rs.21,26,556/- u/s 147 r.w.s 144B of the Income Tax Act, 1961. ………….” (Emphasis Supplied) 9. On perusal of record, we are of the view that the findings returned by the Assessing Officer to the effect that M/s. Advance Computers and Mobiles India Pvt.was engaged in providing accommodation entries of sales is based upon conjuncture and surmises. The documents filed by the Assessee before the Assessing Officer included (i) Computation of income showing tax offered on INR.17,59,526/- (ii) Appointment letter as Internal Auditor and (iii) Bank statement highlighting receipt from M/s. Advance Computers and Mobiles India Pvt.The said documents support submission of the Assessee that the payments received were from M/s. Advance Computers and Mobile India Pvt. Ltd. for internal audit services provided by the Assessee and the same were duly disclosed in the books of accounts and offered to tax as income. Thus, in our view, the Assessee had discharge the onus cast upon the Assessee under Section 68 of the Act to disclose the nature and source of credit of INR.17,59,526/- in the books of accounts for the relevant previous year. On the other hand, we note that there is no material on record to show that M/s. Advance Computers and Mobile India Pvt. Ltd. was providing accommodation entries for bogus income/sales or were booking bogus expenses for services received. In view of the aforesaid, we hold that the finding returned by the 6 Assessment Year 2018-2019 Assessing Officer that INR.17,59,526/- received in lieu of Audit fees from M/s. Advance Computers and Mobiles India Pvt. Ltd. was nothing but fake/bogus in nature is without any basis and therefore, cannot be upheld. The Revenue has failed to controvert the finding returned by the CIT(A) that the addition made by the Assessing Officer would amount to double taxation of the same income in the hands of the Assessee. Accordingly, we do not find any infirmity in the order passed by the Ld. CIT(A). Thus all the three grounds raised by the Revenue are dismissed.

In result, the present appeal preferred by the Revenue is dismissed.