The Income Tax Appellate Tribunal (ITAT), Pune Bench validated re assessment on the ground that there was tangible information to form belief of escapement of income.
The appellant, M/s. Minakshi Builders is an individual engaged in the business of Builders, Promoters and Real Estate. No Return of Income was filed for the assessment years 2007-08 to 2012-13. Based on the above information, a notice under Section 148 of the Income Tax Act, 1961 was issued and the case was taken for scrutiny assessment.
Despite several notices of hearing, the appellant only provided a bald explanation stating that the loans and advances were booking advance of the flats and filed copies of Balance Sheet, Deed of Partnership of appellant and confirmation letters of closing balance as in his books of account.
The assessee had not discharged the onus of proving the genuineness of the transactions, identity of creditors and creditworthiness of the investors to make the investment in question to the satisfaction of the Assessing Officer. Therefore, the Assessing Officer had brought to tax the accommodation entries and completed the assessment passed under Section 144 read with Section 147 of the Income Tax Act.
The CIT(A) dismissed the appeal by holding that mere receipt of the loans by crossed account payee cheques is not sacrosanct to prove the genuineness of the credit in the books of accounts.
The Assessing Officer, on receipt of the information from the DIT that the appellant is beneficiary of the accommodation entries of bogus loans and advances from Bhawarlal Jain Group formed an opinion that the income had escaped assessment to tax and issued a notice u/s 148 as the appellant had not filed any return of income.
A Bench comprising Inturi Rama Rao, Accountant Member and SS Viswanethra Ravi, Judicial Member observed that “The information constitutes a tangible information enabling the Assessing Officer to form a belief that the income chargeable to tax had escaped assessment and the proceedings of the re-assessments are justified and valid in law.”
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