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

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ITA 9641/DEL/2019Status: DisposedITAT Delhi06 February 2024AY 2015-16Bench: Shri Challa Nagendra Prasad, Judicial Member Dr. B. R. R. Kumar (Accountant Member)17 pages

AI SummaryDismissed

Facts

The Revenue appealed against the CIT(A)'s deletion of protective additions made under Section 68 for unexplained credit entries (Rs. 2,25,47,365/-) and commission income (Rs. 56,368/-) from the assessee, M/s Shivji Garments Pvt. Ltd. These additions stemmed from a search action against Sh. Anand Kumar Jain and Sh. Naresh Kumar Jain, which revealed the assessee acted as a conduit for providing accommodation entries.

Held

The Tribunal upheld the CIT(A)'s decision to delete both the protective addition for unexplained credit entries and the addition for commission income. It ruled that the assessee was merely a conduit, and thus the substantive addition should be made in the hands of the actual beneficiaries/entry operators (Sh. Anand Jain and Sh. Naresh Jain). As the entry operators were managing shell concerns for commission, no commission income could be charged to the appellant company.

Key Issues

Whether protective additions for unexplained credit entries and commission income made under Section 68 are valid against an assessee acting merely as a conduit for accommodation entries.

Sections Cited

Section 68, Section 153C, Section 143(3), Section 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.