Assessee filed appeal against the addition made under section 68 on the ground of loan creditors engaged in providing accommodation entries contending that AO himself did not carry out any investigation and only relied on the material provided by the investigation wing and therefore, the addition sustained by CIT(A) only on the basis of statements of third parties who were not cross examined by assessees, was not maintainable. Held: It was noticed that as assessee had fulfilled its part of proving its onus which is required to be fulfilled by the assessee as the identity of the lender companies was not in doubt, creditworthiness of the companies was not in doubt as these companies had sufficient funds to advance the loans which was apparent from the amount of share capital and the reserves they were carrying in their balance sheets, the addition under section 68 could not be made unless the submissions in this regard made by the assessee were proved wrong. The only reason for making such additions was a report of the investigation wing wherein it had been held that the loan creditors were engaged in providing accommodation entries only. AO himself did not carry out any investigation and only relied on the material provided by the investigation wing and therefore, the addition sustained only on the basis of statements of third parties who were not cross examined by assessees, was not maintainable.
IN THE ITAT, LUCKNOW BENCH
A.D. JAIN, V.P. & T.S. KAPOOR, A.M.
Shri Balaji Betal Nuts (P) Ltd. v. Dy. CIT
I.T.(SS)A. Nos. 105 to 108/Lkw/2019, I.T.(SS)A. Nos. 110 to 112/Lkw/2019, I.T.(SS)A. No. 114/Lkw/2019, I.T.(SS)A. Nos. 116 & 117/Lkw/2019
14 September, 2021
In favour of assessee.
Appellant by: P.K. Kapoor, C.A.
Respondent by: Abha Kala Chanda, Commissioner, (Departmental Representative)
T.S. Kapoor, A.M.
These are ten appeals filed by different assessees against the separate orders of learned Commissioner (Appeals), all, dated 29-11-2018. These appeals were earlier physically heard on 18-3-2021 but due to long gap between the date of hearing and dictation, the cases were re-fixed for hearing and were finally heard through virtual hearing on 12-8-2021. Common issues are involved in these appeals which were heard together and therefore, for the sake of convenience a common and consolidated order is being passed. The grounds of appeal taken by the assessee in all the appeals are similar therefore, for the sake of completeness, the grounds of appeal in I.T.A. No. 114/Lkw/2019 are reproduced below :--
'1. BECAUSE the Learned Commissioner (Appeals) was wrong in law & on facts in confirming the assessment order passed by assessing officer under section 153A of the Act as the same was not in consonance with the settled position of law vis-a-vis search cases.
2. BECAUSE the learned Commissioner (Appeals) has erred in law and on facts in upholding the assessment ignoring the settled position of law that provisions of section 153A, in case where proceedings are not pending, could not be applied in absence of any incriminating material.
3. BECAUSE the reliance on 'reports of investigation wing' etc. did not constitute 'material' relevant for the purpose of assessment in this case, as the 'appellant' had never been confronted with the same in right perspective and as such the addition made on the basis of such an ex-parte information and reports etc. is wholly vitiated.