ALMEGA PAINTS PVT LTD.,MUMBAI vs. DY CIT 15 (1)(1), MUMBAI

The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in confirming the addition made in the sum of Rs.11,72,434/- on account of unexplained expenditure u/s.68 of the Act in the facts and circumstances of the case.

We have heard rival submissions and perused the materials available on record. We find that assessee is a company engaged in the business of manufacturing of paint and processing raw materials. The ld. AO observed in the assessment order that as per information available on record, it showed that one Shri Sanjeev Kumar Singh is an entry operator and had provided various bogus accommodation entries for commission through his erstwhile companies / partnership firms and proprietorship concerns. The ld. AO observed that assessee had provided accommodation entries of Rs.11,72,434/-. In this background, the case of the assessee was reopened u/s.147 of the Act. During the course of re- assessment proceedings, the assessee had categorically denied having made any transaction with Shri Sanjeev Kumar Singh. The ld. AO did not consider this reply of the assessee and proceeded to make addition of Rs.11,72,434/- on account of unexplained expenditure u/s.68 of the Act on the ground that assessee has provided accommodation entries. This action of the ld. AO was upheld by the ld. CIT(A).

3.1. At the outset, we find that the Revenue had not brought any evidence on record as to who Shri Sanjeev Kumar Singh is and how he is connected with the assessee herein. The primary onus has been duly discharged by the assessee by stating that he does not know who Shri Sanjeev Kumar Singh is and assessee had also specifically stated in writing that there are no business dealings with Shri Sanjeev Kumar Singh. While this is so, the primary onus has been discharged duly by the assessee, the onus shifts back to the ld. AO who is duty bound to provide all the necessary evidences / materials that are available with him vis-à- vis the assessee thereon and confront the assessee with those evidences, if any, linking the asesssee. Admittedly, we also find that addition has been made by the ld. AO towards unexplained expenditure u/s. 68 of the Act. As per the provisions of the Act, the unexplained expenditure will get taxed u/s.69C of the Act and unexplained cash credit will get taxed u/s. 68 of the Act. The requirement of these two sections are totally separate and distinct. Moreover, the ld. AO had also observed in his assessment order that during the course of search and seizure action conducted in the case of Shri Sanjeev Kumar Singh u/s.132(1) of the Act, it was found that he was an entry operator and had provided bogus accommodation entries to various beneficiaries for earning commission income through his entities. Nowhere in the assessment order, the ld. AO had brought on record with supporting evidences that whether the assessee had received any loans or had received any accommodation bills from Shri Sanjeev Kumar Singh. In fact, the nature of transaction to the tune of Rs. 11,72,434/- is also not mentioned in the assessment order ; whether the same is payment or receipt is also not discernible from the assessment order. When all these points were duly pointed out before the ld. CIT(A), we find that the ld. CIT(A) had not even bothered to address any of the issues but merely relied on various case laws that are totally irrelevant to the facts of the issue and proceeded to confirm the addition made thereon.

In the result, appeal of the assessee is allowed.