ITAT deletes Addition on account of Expenditure made by Assessee Company to receive Accommodation Entries [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal (ITAT)  deleted the addition on account of expenditure made by assessee company to receive Accommodation Entries.

During the course of assessment proceedings the A.O. called for information under section 133(6) from all the parties from whom the assessee-company, M/s. More Credit has received accommodation entries in shape of share application money and share premium fixing the date for hearing on 07.03.2014. However, no reply was filed. He further noted that in the case of 03 companies namely Attractive Fin Lease Pvt. Ltd., Edoptica Developers (India) Ltd., and Twinkle Mercantile and Credit Pvt. Ltd. letters were returned unserved by the Postal Authorities with the remarks “no such company” in the case of Attractive Fin Lease Pvt. Ltd., and “left” in the case of other two companies. Subsequently, the assessee requested for reasons for reopening of the assessment which were provided to the assessee.

Thereafter, the A.O. issued notice asking the assessee-company to submit the complete details, confirmation, nature of transaction, bank statements, Income Tax particulars, bank statements of the persons/parties from whom share application money including share premium/unsecured loans were received during the year.

The coram of Judicial Member, Sanjay Garg and Accountant Member, R.K.Panda noted that the A.O. made addition of Rs.8,75,005/- on the ground that assessee has incurred the expenditure for obtaining the accommodation entry of Rs.9,37,50,244/-.

“We find the CIT(A) deleted the addition, the reasons of which, have already been reproduced in the preceding paragraph. We do not find any infirmity in the order of the CIT(A) on this issue. The grounds raised by the Revenue challenging the order of the CIT(A) in deleting the addition of Rs.9,37,50,244/- has already been dismissed in the preceding paragraph. Therefore, the addition made by the A.O. is not sustainable and, therefore, the order of the CIT(A) on this issue is upheld,” the ITAT ruled.

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