Mistaken Identity Allegation in Accommodation Entry Requires Factual Verification: ITAT Remands Matter [Read Order]

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) restored a matter to the Assessing Officer for the Assessment Year 2015-16 and directed a factual verification of whether the assessee actually entered into transactions with alleged entry providers.

Bansal Industries (assessee) challenged an addition of ₹38,75,000 made by the Assessing Officer, which alleged that the assessee had obtained accommodation entries.

For the Assessment Year 2015-16, the AO reopened the assessment based on a report from the Investigation Wing in Chandigarh. The report suggested that individuals named Anil Kumar Soni and Vipin Garg provided accommodation entries through various companies to several parties, including the assessee.

Aggrieved by the AO’s addition, the assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) upheld the AO’s order. Aggrieved by the CIT(A)’s order, the assessee filed appeals before ITAT.

The counsel for the assessee argued that the reopening was based on the "mistaken identity" and that it had never entered into any transactions with the parties mentioned in the AO's reasons.

The counsel of the assessee further stated that no such entries existed in the assessee's bank account or books of account for the relevant period.

The Single Member bench comprising C.N. Prasad (Judicial Member), examined the grounds of appeal regarding the lack of enquiry before framing the assessment.

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The tribunal observed that the assessment was reopened solely based on an investigation report without independent enquiry by the AO. The tribunal noted that the assessee categorically denied any relationship or transaction with the alleged entry providers.

The tribunal noted that verification was required to see if the alleged accommodation entries are recorded in the bank statements or books of account. The tribunal directed that If no such entries are found upon verification, the AO is directed to delete the addition.

The tribunal concluded that the matter should be verified in light of the assessee's submissions. It restored the issue to the file of the AO for passing an appropriate order after proper verification. The appeal of the assessee for A.Y. 2015-16 was allowed for statistical purposes.

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