ITAT Remits Rs. 1.80 Crore Section 68 Addition for Fresh Verification of Accommodation Entries:

The appeal was filed by the assessee, Shweta Manish Jain, against the order of the CIT(A) which had confirmed an addition of Rs.1,79,97,196/- under Section 68 of the Income Tax Act, 1961 for Assessment Year 2019-20. The assessee was carrying on wholesale and retail business of betel nut through her proprietorship concern, Mohit Supari Depot. She had filed her return declaring total income of Rs.35,50,090/-. Subsequently, on the basis of information received from the DDIT (Investigation), Bhavnagar, that M/s Niyati Traders was allegedly providing accommodation entries through its Axis Bank account, the assessment was reopened. The AO treated the entire receipts of Rs.1,79,97,196/- from Niyati Traders as unexplained credits under Section 68.

Before the CIT(A), the assessee argued that the transactions were genuine and supported by documentary evidence. The CIT(A) upheld the addition. 

The Tribunal noted that the addition was primarily based on information from the Investigation Wing alleging that M/s Niyati Traders was an accommodation-entry provider. Although the CIT(A) observed that receipt through banking channels or reflection of transactions in GST filings, by itself, would not establish genuineness where the counter-party had been found to be non-genuine, the assessee had furnished documentary evidence supporting the transactions. 

The Tribunal found that the assessee had recorded the sale of goods to M/s Niyati Traders in her regular books of account, received the consideration from the party, accounted for the receipts as sales, included the sales in her disclosed turnover and offered the resultant profit to tax. According to the Tribunal, in such circumstances, the burden shifted to the Revenue to demonstrate through cogent and tangible material that the transaction recorded as a sale was not actually a sale or that the money received represented something other than sale consideration. 

The Tribunal found that the assessment record did not indicate any independent inquiry or verification by the AO concerning the specific transactions between the assessee and M/s Niyati Traders. It therefore held that the genuineness of the transactions had to be examined on the basis of the entire evidence rather than solely on general information concerning the counter-party.

Accordingly, the Tribunal set aside the order of the CIT(A) and restored the matter to the file of the AO for fresh adjudication in accordance with law, after examining the evidence relating to the impugned transactions. The appeal was consequently allowed for statistical purposes.