INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Assessee helped various beneficiaries in providing accommodation entries in relation to capital and expenses -

AO reopened assessment based on information received from Investigation Wing. The information pertained to entry operators who were involved in giving accommodation entries. AO held that assessee received credits into its bank account and made additions under section 68 on account of amount routed through for giving accommodation entries and on account of amounts received in cash as well as cheque on account of share capital. Held: AO alleged that assessee was utilized to provide entries to other companies. However, AO treated assessee as a conduit but also treated assessee as owner of amount. AO mentioned that assessee was helping various beneficiaries in providing accommodation entries in relation to capital and expenses. On merits, AO did not make any primary, independent enquiry to arrive at a conclusion to tax amount under section 68. Since method and modus of entries being forwarded by assessee company and not accounting commission received thereof was established, addition made on account of commission income earned by assessee on amount of entries provided was confirmed. However, as assessee was proven to be a conduit/pass through entity without any business of its own, no other addition in hands of assessee company was warranted.

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. : 2004-05

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