|COURT:||Bombay High Court|
|CORAM:||Milind D. Jadhav J, Ujjal Bhuyan J|
|CATCH WORDS:||bogus accomodation entries|
|DATE:||June 12, 2020 (Date of pronouncement)|
|DATE:||June 13, 2020 (Date of publication)|
|FILE:||Click here to view full post with file download link|
|S. 68 Bogus Cash Credits: In the case of an assessee engaged in providing 'accommodation entries', the entire deposits cannot be assessed as unexplained cash credits. Only the commission (0.15%) earned in providing the accommodation entries can be assessed as income (PCIT vs. NRA Iron and Steel (2019) 103 Taxmann.com 48 (SC) distinguished)|
In so far the decision of the Supreme Court in NRA Iron and Steel Pvt. Ltd. (supra) is concerned, the same is not attracted in the present case in as much as facts of the present case are clearly distinguishable. Unlike the present case, the assessee in NRA Iron and Steel Pvt. Ltd. (supra) claimed the cash credits as its income. However, it was found that the creditors had meagre or nil income which did not justify investment of such huge sums of money in the assessee. The field enquiry conducted by the Assessing Officer revealed that in several cases the investor companies were non-existent. Thus, it was held that the assessee had failed to discharge the onus which lay on it to establish the identity of the investor companies and the credit worthiness of the investor companies. In such circumstances, the entire transaction was found to be bogus. But as already discussed in the preceding paragraphs, assessee never claimed the cash credits as its income. It admitted its business was to provide accommodation entries. In return for the cash credits it used to issue cheques to the customers / beneficiaries for slightly lesser amounts, the balance being its commission. Moreover, the cash credits had been accounted for in the respective assessment of the beneficiaries.