Income Tax Addition cannot be Made Merely on Retracted Statement: ITAT [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that Income Tax additions cannot be made merely based on retracted statements.

The AO primarily based on the statements of Sh. Babu Lal Banka (Entry Operator) and the Directors of the investor companies) held, relying on the enquires and the information gathered by the Inspector, that the entities were not existing at the address mentioned and the assessee Surya Global Steel Tubes Ltd had not produce the Directors for examination but only filed all the documentary evidence

Rajat Jain, on behalf of the assessee submitted that, the addition has been made solely on the basis of said retracted statement and no single evidence/material was found during the course of search which could prove that appellant was engaged in taking accommodation entries in the form of share capital.

He further contended that the sole basis of making addition in the hands of the assessee was retracted statements of alleged entry operators and erstwhile directors of investor companies and failed to bring on record any material / evidences which could prove that the assessee company was engaged in taking accommodation entries in the form of share capital and also no single incriminating evidence / material was found during search and seizure action.

H. K. Choudhary,on behalf of the revenue argued that the documents filed by the assessee had not proved the genuineness of the transactions and creditworthiness of the investors.

The two member Bench of B. R. R. Kumar, (Accountant Member) and Yogesh Kumar US, (Judicial Member) allowed the appeal filed by the assessee holding that,  “it is clear that the source of investment made against the share capital/ premium/ warrants, stands explained, as appellant and investor companies, have substantiated the same by furnishing evidences and proved the Identity, genuineness of transactions and creditworthiness of investor companies.”

To Read the full text of the Order CLICK HERE

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