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Facts
The assessee, proprietor of M/s. Fiber 2 Fashion, was alleged to have received accommodation entries amounting to Rs.45.50 Lakhs. The transactions were operated by P.P. Sethi, an employee who committed frauds and is imprisoned. The AO added the amount as business income for lack of evidence.
Held
The Tribunal noted that Central agencies had examined the transactions. It directed the AO to verify the IP addresses of the transactions with the Central Agency and the bank. If it's found that all transactions were through P.P. Sethi's system, the addition should not be considered in the assessee's hands.
Key Issues
Whether the addition of Rs. 45,50,000/- as business income is justified without verifying IP addresses and involvement of central agencies in transactions involving an imprisoned employee.
Sections Cited
160
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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, HON’BLE & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE
O R D E R
PER NARENDRA KUMAR BILLAIYA, AM:
This appeal by the assessee is preferred against the order dated 07/05/2024 by NFAC Delhi, [hereinafter ‘the ld. CIT(A)’], pertaining to AY 2011-12.
The solitary grievance of the assessee is that the ld. CIT(A) erred in confirming the assessment thereby confirming the addition of Rs.45,50,000/- as business income of the assessee. 3. Representatives of both sides were heard. Case records carefully perused. 4. Briefly stated the facts of the case are that as per the information received from ADIT, the assessee is one of the beneficiaries of accommodation entries from Shri Pradeep Kumar Jindal, an entry provider. Therefore, the assessee was asked to submit details of the 2 transactions made during FY 2010-11 in M/s. Fiber 2 Fashion. Though the assessee submitted in his reply that he is the proprietor of M/s. Fiber 2 Fashion, but it was only on paper and all the transactions were done by Shri P.P. Sethi. However, no evidence was submitted by the assessee. 4.1. The assessee further explained that the transactions of accommodation entries mentioned amounting to Rs.45.50 Lakhs have happened in the accounts of M/s. Fiber 2 Fashion. The said accounts were operated by Shri P.P. Sethi, who was the employer of the assessee, who has committed several frauds and is currently imprisoned in Kolkata. The assessee further claimed that he has sent detailed accounts of the dubious activity of Shri P.P. Sethi and information about his illegal and fraudulent activities and Shri Pradeep Kumar Jindal was the Chartered Accountant/tax consultant of Shri P.P. Sethi with whose help, Mr. Sethi managed to route transactions through various bank accounts of M/s. Fiber 2 Fashion. The assessee admitted that on good faith, he has signed several documents and papers but was unaware of the illegal activities of Shri P.P. Sethi. 5. Reply of the assessee did not find any favour with the AO. For want of evidence, the AO added the entire transactions of Rs.45.50 Lakhs as income of the assessee. 6. The assessee carried the matter before the ld. CIT(A) but without any success. 7. We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that all the transactions have been done through the bank accounts of M/s. Fiber 2 Fashion, of which the assessee was a proprietor. We further find that even the Central