Recently, the Kolkata ITAT in Action Tie-up Pvt. Ltd. v. DCIT ruled in favour of the taxpayer and reiterated that additions towards alleged bogus sale transactions cannot be sustained merely on the basis of suspicion, third-party statements, or general allegations of accommodation entries, especially where the taxpayer has furnished complete documentary evidence supporting the transactions.
In the present case, the assessee company had sold investments in
unlisted shares during the relevant assessment years. The tax authorities
alleged that the transactions were accommodation entries and treated the sale
proceeds as unexplained cash credits. The allegation was primarily based on
statements recorded from certain third parties during search proceedings and the
observation that some purchaser entities were subsequently struck off by the
Registrar of Companies. The Assessing Officer further alleged that the assessee
and related entities were merely “pass-through” or “shell” entities
facilitating accommodation entries.
However, the assessee submitted detailed documentary evidence to
substantiate the genuineness of the transactions, including audited financial
statements, bank statements, confirmations, income tax records, details of
investments held over multiple years, and responses received directly from
purchasers in compliance with notices issued by the department. It was also
highlighted that the investments had been acquired in earlier years and
accepted by the department in scrutiny assessments.
The Hon’ble Tribunal, after examining the facts and legal
position, ruled in favour of the assessee and made the following key
observations:
