The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) remanded the matter to the Assessing Officer (AO) for reverification of a ₹3.28 Crore Short-Term Capital Gain ( STCG ) addition due to insufficient documentation to prove that the transaction did not belong to the assessee.
Silicon Infracon Pvt. Ltd,appellant-assessee,acknowledged being an entry provider, as stated by Mr. Sumit Sharma, the company’s director, before the AO. The main issue is the Rs. 3,28,51,000/- added as STCG by the AO, a decision that was later confirmed by the Commissioner of Income Tax(Appeals)[CIT(A)].
The assessee’s counsel argued that since it was accepted by the authorities that the assessee was just an entry provider, facilitating transactions for small commissions, income should only be assessed based on the commission received. The counsel submitted a paper book and referenced several authorities.
It was explained that the transaction in immovable property was simply aimed at artificially increasing the asset’s price by routing money through the assessee company. There was no real transaction, and at most, the assessee should only be assessed for commission income from this alleged property deal.
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The revenue counsel, on the other hand, pointed to sections of the AO’s and CIT(A)’s orders, arguing that there was clear documentation showing that a real sale or purchase of immovable property took place, with the assessee being involved. The revenue counsel also tried to distinguish this transaction from the assessee’s other entry providing activities.
The two member bench comprising Sonjoy Sarma (Judicial Member) and Sanjay Awasthi(Accountant Member) reviewed the arguments and documents. It found that the Sub-Registrar in Nagpur reported a property sale of Rs. 91,16,666/- on 02.04.2012 involving the assessee. The AO noticed that the assessee did not show any capital gains in their return, and the property was not listed in their balance sheet. The AO then calculated a STCG of Rs. 3,28,51,000/-.
The order also mentioned that the assessee tried to disguise the transaction as just providing an entry, and there was no evidence to support the claim that the money was routed back to another company.
The appellate tribunal noted there was enough evidence showing the assessee was involved in the transaction. It said that if the assessee wanted to prove they were only a name lender, they should have shown the transaction didn’t belong to them. The responsibility to prove this was on the assessee, not the AO.
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Because of these points, and given that the assessee is known as an entry provider, the tribunal sent the matter back to the AO for further review. The assessee was given another chance to provide evidence that the transaction was not theirs.
In short,the appeal filed by the assessee was allowed for statistical purposes.
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