In a recent ruling, the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ), denied re-adjudication, stating that remanding decades-old assessment appeals to the Assessing Officer ( AO ) would be impractical due to the unavailability of documents and personal verifications.
In this case, the assessee, M/s Buniyad Chemicals Ltd., a company managed by Mukesh Chokshi and associates, was searched on 25.11.2009. During this search, it was revealed that Mukesh Chokshi and the assessee, along with other group companies, were involved in providing accommodation entries to beneficiaries.
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The assessee’s business involved customers depositing cash in exchange for cheques of slightly lesser amounts, with the difference being the commission, often paid in cash, and the prevalent commission rate was around 0.15%.
The assessee requested the AO to treat 0.15% of the bank credits as its income.
Although it was submitted by the assessee that the amount deposited in bank accounts does not belong to the assessee and thus it should not be taxed, the Assessing Officer ( AO ) was of the opinion that the assessee was engaged in unlawful activities with large deposits in its bank account. As per Section 68 of the Income Tax Act, 1961, the assessee was required to explain these credit entries. The addition was made in respect of entire credit entries in the bank account of the assessee as unexplained under Section 68 of the Act.
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Although the assessee appealed before the Commissioner of Income Tax Appeals [ CIT(A) ], it did not yield favorable results and thus approached the ITAT for relief.
After going through the facts of the case, the bench was of the opinion that since the appeals belong to very old assessment years, remanding them to the AO would be impractical, as many documents and personal verifications may no longer be available.
The ITAT bench, comprising of Renu Jauhari ( Accountant Member ) and Beena Pillai ( Judicial Mmeber ) restricted the addition to 0.15% of the deposits made in the bank account of the assessee and thus partly allowed the appeal.
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The appellant was represented by Mr. Mukesh Choksi, and the department was represented by Mr. Kailash C. Kanojiya and Mr. Paresh Deshpande.
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