ITO, WARD-1(4), KOLKATA, KOLKATA vs. M/S SOUND MERCANTILE PRIVATE LTD., KOLKATA

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ITA 2369/KOL/2013Status: DisposedITAT Kolkata28 February 2017AY 2007-083 pages

In favour of the Revenue: the Revenue's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CIT(A) erred in admitting fresh evidence without giving the Assessing Officer an opportunity to examine it. The assessee failed to prove the identity, genuineness, and creditworthiness of the depositors.

What were the facts?

The assessee claimed to be in the business of providing accommodation entries for a commission. A significant sum was deposited into the assessee's bank account, the nature and source of which remained unexplained. The CIT(A) admitted fresh evidence without proper justification.

What were the issues?

Whether the CIT(A) was justified in admitting fresh evidence and deleting the addition made by the AO on account of unexplained cash credit.

Which sections of the Income-tax Act were involved?

Section 68,Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘C’ BENCH, KOLKATA

Before: Shri J. Sudhakar Reddy & Shri S.S.Viswanethra Ravi

Per Shri J. Sudhakar Reddy, A.M. This appeal filed by the Revenue is directed against the order of ld. Commissioner of Income Tax (Appeals)-I, Kolkata dated 13.06.2013 for the assessment year 2007-08.

2.

None appeared on behalf of the assessee at the time of hearing before us despite the service of notice. The case was earlier listed on 10.05.2016, 13.07.2016, 19.09.2016 and today. None of the occasions, the assessee has appeared nor authorized any ld. counsel appeared. The notice of hearing sent to the address mentioned in Form No. 36 (Column ./2013 Assessment year: 2007-2008 Page 2 of 3 20) was returned by the postal authorities with the remark “not known and not claimed”. Under these circumstances, we dispose of the case ex- parte qua the assessee on merits after hearing the ld. D.R.

3.

The grounds of appeal

raised by the Revenue read as follows:-

1.

1. That on the facts and circumstances of the case, the CIT(A) is not justified in admitting fresh evidence in violation of Rule 46A of I.T. Rules.

2. That on the facts and circumstances of the case, the CIT(A) has erred in deleting the addition of Rs.1,99,65,228/- made by the A. O. on account of unexplained cash credit u/s. 68 of the I.T. Act even after concluding that total deposits to bank were actually Rs.3,13,00,000/-.

3. That on the facts and circumstances of the case, the CIT(A) has erred in not appreciating the fact that the case was correctly assessed u/s 144 of he I. T. Act, 1961 by the Assessing Officer because of the peculiar circumstances existing during the scrutiny assessment proceedings.

4. That on the facts and circumstances of the case, the CIT(A) has erred in not bringing any facts etc. on record to substantiate why commission @ 0.25% on deposits made into the bank account is to be applied for determination of additional income.

5. That on the facts and circumstances of the case, the CIT(A) has erred in applying commission @0.25% on deposits into bank placing reliance upon some cases, without mentioning how these cases are similar to the instant case”.

4.

Brief facts of the case are that the assessee claims that it is engaged in the business of providing accommodation or bogus entries for a commission. The undisputed fact is that a sum of Rs.1,99,65,228/- was deposited in the assessee’s Bank account. The nature and source of these deposits was not explained by the assessee before the Assessing Officer or even before the ld. CIT(Appeals). We do not find that the assessee has furnished any evidence in support of this claim, that it was merely a conduit or pass the rough entity. We cannot accept the claim that the ./2013 Assessment year: 2007-2008 Page 3 of 3 assessee is in the business of providing accommodation or bogus entries for a commission. The Company has also not filed any evidence to prove the source of Bank deposits of Rs.1,99,65,228/-. Merely because, the deposits were made in Bank through banking channels it does not take away the burden that lay on the asessee-company, to prove the identity, genuineness and creditworthiness of the persons from whom the credit amounts were received. As rightly argued by the ld. D.R. the ld. CIT(Appeals) has admitted certain additional evidences without recording any reason for admission of the same. He is also right in pointing out that the Assessing Officer was not given any opportunity to examine and comment upon these additional evidences. Under these circumstances, we hold that the order of the first appellate authority is devoid of merit. The ld. CIT(Appeals) has not based his finding on any evidence. Thus we reverse the order of the first appellate authority and restore the order of the Assessing Officer passed under section 144 of the Act on 30.12.2009.

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