DCIT CENTRAL CIRCLE-26, NEW DELHI vs. SHIVJI GARMENTS PVT LTD, NEW DELHI

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ITA 9640/DEL/2019Status: DisposedITAT Delhi06 February 2024AY 2014-15Bench: Shri Challa Nagendra Prasad, Judicial Member Dr. B. R. R. Kumar (Accountant Member)17 pages

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Facts

The Revenue and the assessee filed appeals against the CIT(A)'s orders for Assessment Years 2013-14 to 2016-17, primarily concerning protective additions for unexplained bank credit entries totaling Rs. 2,25,47,365/- and an addition for unaccounted commission of Rs. 56,368/-. The additions stemmed from a search action which identified the assessee as a shell company acting as a conduit for providing accommodation entries. The assessee challenged the jurisdiction of the assessment under Section 153C and argued that the additions were not justified in its hands as it was merely a facilitator.

Held

The Tribunal held that the assessee was indeed a conduit company for accommodation entries, and as the actual beneficiaries were identified, the substantive addition for unexplained credits should be made in their hands, not protectively in the assessee's. Furthermore, it was determined that no commission income was attributable to the assessee, as the identified entry operators were responsible for managing such transactions. Consequently, the protective addition for unexplained credits and the addition for commission income in the assessee's hands were directed to be deleted.

Key Issues

1. Whether protective additions for unexplained bank credits and commission income can be sustained in the hands of an assessee acting as a mere conduit for accommodation entries. 2. Whether the assessment under Section 153C was valid without incriminating material belonging to the assessee.

Sections Cited

153C, 143(3), 68, 132

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI

Before: Shri Challa Nagendra PrasadDr. B. R. R. Kumar

For Appellant: Ms. Shilpi Jain, Adv

For Respondent: Ms. Amisha Gupt, CIT-DR

Hearing: 31.01.2024Pronounced: 06.02.2024

ORDER Per Bench:- The present appeals have been filed by the Revenue and the assessee against the orders of ld. CIT(A)-29, New Delhi dated 17.10.2019. Since, the issue involved in all these appeals are similar, they were heard together and being adjudicated by a common order.

On the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and on facts in deleting the protective addition of Rs. 2,25,47,365/- made by AO on account of unexplained credit entries appearing in the bank account.

On the facts and in the circumstance of the case, the Ld.CIT (A) has erred in law and on facts in deleting the addition of Rs. 56,368/- on account of unaccounted commission @ 0.25 % of total unexplained credit entries appearing in the bank account of Rs. 2,25,47,365/- 3. That the grounds of appeal are with prejudice to each other.

The assessee has raised the following grounds of appeal in CO No. 91/Del/2022:-

1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts.

2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that assessment was against the non existing company which is invalid in the eyes of law. 3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the order passed by the learned Assessing Officer (AO) under Section 143(3) read with section 153C is without jurisdiction. 4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the additions made under Section 153C are bad in law in the absence of any incriminating material belonging to the assessee being found during the course of the search. 5. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the explanations brought on record by the assessee to explain the nature of credit of the transactions. (ii) That the abovesaid addition has been confirmed ignoring the fact that the addition has been made by the AO based on suspicion only.