DCIT Circle 1, Noida vs. Dinesh Singh – Appeal on Addition of Unexplained Cash Credits for AY 2015-16

Final Tribunal Order: DCIT Circle 1, Noida vs. Dinesh Singh

Case Number: ITA 6572/DEL/2019

Appellant: DCIT Circle-1, Noida

Respondent: Dinesh Singh, Noida

Assessment Year: 2015-16

Date of Order: November 10, 2022

Order Type: Final Tribunal Order

Introduction

This article provides a comprehensive overview of the case between the DCIT Circle-1, Noida, and Dinesh Singh, Noida, concerning the assessment year 2015-16. The case was heard by the Income Tax Appellate Tribunal (ITAT), Delhi Bench ‘H’, on November 10, 2022, with Shri N.K. Billaiya, Accountant Member, and Shri Kul Bharat, Judicial Member, presiding. The primary issue in this appeal was the deletion of additions made by the Assessing Officer (AO) regarding unexplained cash credits and related expenses.

Background of the Case

The case originated from an investigation by the Income Tax Department’s Kolkata wing, which identified suspicious activities involving certain shares, including those of M/s CCL International Ltd. The investigation revealed that these shares were allegedly used as tools to provide accommodation entries, allowing unaccounted money to be converted into accounted money without tax payments.

The AO, relying on the findings of the investigation, made additions under Sections 68 and 69C of the Income Tax Act, 1961. The AO concluded that the sale proceeds of the shares, amounting to Rs. 93,29,500, were unexplained cash credits. Additionally, the AO added Rs. 2,79,885 as unexplained expenses related to commission payments.

Appellant’s Grounds for Appeal

The Revenue challenged the order of the Commissioner of Income Tax (Appeals) [CIT(A)] on the following grounds:

• The CIT(A) erred in deleting the addition of Rs. 93,29,500 and Rs. 2,79,885, ignoring the findings of the Investigation Wing, which indicated that the shares of M/s CCL International Ltd. were used for accommodation entries.
• The CIT(A) failed to appreciate that the AO had conducted rigorous inquiries and a detailed analysis of the evidence, establishing that the transactions related to the shares were bogus in nature.
• The CIT(A) incorrectly held that the AO’s findings were based on conjecture and surmise, despite the evidence presented by the Revenue.

CIT(A)’s Findings

The CIT(A) reviewed the evidence and concluded that the assessee had discharged the primary onus by providing the identity, genuineness, and creditworthiness of the parties involved in the transactions. The CIT(A) further held that the AO had not provided sufficient evidence to counter the assessee’s claims, leading to the deletion of the additions.

Tribunal’s Findings

During the hearing before the Tribunal, the counsel for the assessee informed the bench that the assessee had opted to settle the dispute under the Vivad Se Vishwas (VSV) Scheme, 2020. The counsel presented the requisite forms issued by the department, indicating that the dispute had been settled through the payment of taxes under the scheme. The Tribunal noted that the CIT(A) had already decided the case in favor of the assessee, and the settlement under the VSV Scheme further resolved the dispute.

Conclusion of the Case

In light of the settlement under the VSV Scheme and the payment of the requisite taxes by the assessee, the Tribunal dismissed the Revenue’s appeal as infructuous. The decision was pronounced in the open court on November 10, 2022, marking the conclusion of the case.

Implications

This case underscores the significance of the VSV Scheme in resolving long-pending tax disputes. The Tribunal’s decision to dismiss the appeal as infructuous reflects the effectiveness of the scheme in providing a mechanism for taxpayers to settle disputes with finality. It also highlights the importance of thorough and credible evidence in tax assessments, particularly in cases involving alleged accommodation entries and unexplained cash credits.

The case of DCIT Circle-1, Noida vs. Dinesh Singh serves as a valuable reference for both taxpayers and tax authorities in understanding the procedures and outcomes associated with the VSV Scheme and the handling of appeals related to unexplained cash credits.

DCIT Circle 1, Noida vs. Dinesh Singh – Appeal on Addition of Unexplained Cash Credits for AY 2015-16