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2021 (1) TMI 359 - ITAT HYDERABADAddition u/s 69 - unexplained investment made in purchase of land at Shaikpet - Assessee entitled to claim the credit for the opening balance or not? - HELD THAT:- We are unable to accept the argument of the ld. DR that merely because the case was taken up for limited scrutiny, the AO is barred from verifying the other entries in the cash flow statement. Since the assessee has furnished cash flow statement during the assessment proceedings for the AY 2008-09, the entries in the cash flow statement, which were already reflected in AY 2008-09, cannot be disturbed by revisiting the same statements in later years. For income tax, each year is independent and what is to be examined in the impugned AY is the entries made in the relevant AY i.e. receipts and payments during the year under consideration, but, not the entries that were made in the earlier year. Thus, the closing balance declared by the assessee as at the end of the FY2007- 2008 stands explained and the assessee is entitled to claim the credit for the opening balance in the year under consideration. Hence, we hold that the assessee is permitted to take opening balance as source. Sources for receipts during the year - From the order of CIT(A), it is observed that during the appellate proceedings, G. Balkishna Rao and G. Narayana Rao have confirmed the payment to the assessee u/s 131 of the Act. Therefore, there is no reason to reject the credit. If the AO was not convinced with the explanation offered by the creditors, the same is required to be brought to tax in the hands of the creditors, since, they have confirmed the credit and explained the source, but, not in the hands of the assessee. Thus we hold that there is no case for rejection of opening balance and the loans from G.Balakrishna Rao and G.Narayana Rao and accordingly we direct the AO to accept the same. Amount received from Shri E. Madan Mohan Rao - Creditor has issued the legal notice for recovery of the loan with the dates of amounts lent. Since the legal notice is available the AO should have caused necessary enquiries instead of pressing the assessee to produce the creditor. Having not caused the enquiries and did not bring any material to show that the advance received from E.Madan Mohan Rao was bogus, the AO is not permitted to make the addition in the hands of the assessee. Thus we direct the AO to accept the credit from E.Madan Mohan Rao. Amount received from her husband, the same was reflected in the balance sheet of her husband and he is assessed to tax. Her husband Shri Ram Gopal Rao also filed confirmation having given the loans to the assessee, therefore, there is no reason to suspect the source. Even if it is to be suspected, the same is required to be examined in the AY 2005-06, but, not in the impugned assessment year. From the cash flow statement, we find that the payment of ₹ 97 lakhs on account of advance for land was clearly explained by the assessee and therefore, we hold that there is no case for making the addition, hence, we delete the addition made by the AO on this count and set aside the order of the Ld.CIT(A) and appeal of the assessee is allowed. Receipt as advance from the tenant - HELD THAT:- In the instant case, the assessee has claimed rent advance of ₹ 20 lakhs received from Shri M. Venkata Shiva Prasad for letting out the house at MLA Colony, Banjara Hills. Lease agreement was placed on record. However, the details of date of receipt and mode of payment were not furnished by the assessee. Similarly, the lessee has not responded to the notice issued u/s 133(6) of the Act. However, there was a civil case filed by the assessee in the Civil Court wherein the sum of ₹ 20 lakhs stated to have been adjusted towards monthly rentals. Therefore, the issue needs to be considered after verification of the details and genuineness of the transaction. Both the parties have agreed to remit the issue back to the file of the AO to examine the receipt of ₹ 20 lakhs as advance from the tenant. This issue is treated as allowed for statistical purposes.
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