TaxTMI 
TaxTMI 
2015 (12) TMI 1277
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....erted interest bearing funds to the sister concerns. 2. Further, the Ld. CIT A & AO erred both on facts and in law in disallowing Rs. 8,69,906/- as unexplained loans and advances on the reasoning that figures mentioned by the auditors in the audit report is different from the details provided. 3. The Ld. CIT-A has erred both in facts and in law in treating Rs. 4,20,512/- as unexplained income on the ground that the appellant could not furnish any explanation regarding nature of receipts." 2. Appellant is a private Ltd. Company and filed its return of income showing income of Rs. 1,36,23,491/- and after setting off brought forward loses the income was reduced to NIL. During the course of assessment proceedings AO made some additions ma....
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....t been utilized for the purpose of the business and therefore the disallowance of Rs. 2,31,460/- was confirmed. 4. Before us ld. AR submitted that the company was providing dying and printing Services to the appellant in FY 1998-99 to 2003-04 and therefore the advances were given to that party. She submitted details of transactions entered into with that party from 1998-99 till 2003-04 which shows that almost similar amount of closing advances were outstanding for those years but the transaction value with that company is of approximately 2 crores for each of the year. Therefore, the advances are in the nature of business advances. She further submitted that the advances are outstanding for long period and no disallowances made by the Asse....
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.... remaining of approximately RS 19 lakhs. As the details submitted shows that assessee is engaged in the business transactions with that company as these advances were given for the purpose of Printing and Dying Groups services for the assessee, it cannot be said that the advances are not for the purpose of the business of the assessee company. Further the assessee was having interest bearing fund of Rs. 36,21,707/- and non interest bearing funds of approximately Rs. 13.51 crores in the form of share capital and reserves and surpluses as at 31st March, 2009, therefore there is a considerable force in the arguments of AR that as it has more non-interest bearing funds available with it then the amount of alleged advances given to sister concer....
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....he audit report which is Rs. 1,50,41,688/- and therefore the addition has been made. Ld. CIT(A) did not accept the explanation offered and confirmed the addition of Rs. 8,69,906/-. 8. Before us the ld. AR submitted that the assessee has given an advance of Rs. 141.71 lacs only however, the AO has taken the figure from the audit report as per CARO 2003 where the auditor is required to submit maximum outstanding balance of the specified parties at any during the year. She submitted the details tabulated as under :- "TABLE- 1 MAXIMUM AMOUNT OF LOAN AND ADVANCE OUTSTANDING DURING THE YEAR (A) ROSETTA TEXTILES PRIVATE LTD OPENING BALANCE (Being Maximum Amount O/s) 1,31,12,788 (B) CHRYSALLIS LOANS (OPENING/CLOSING BALANCE) (Opening and C....
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....mounting to Rs. 1,41,71,094/- and the maximum outstanding balance at any time during the year of these two parties in aggregate amounts to Rs. 1,50,41,688/-. Therefore the actual balance outstanding is only Rs. 1,41,71,094. The note no. 6 in schedule no. 19 of the balance sheet as well as the auditor's report clearly describes so. The ld. AO as well as the CIT(A) both erred in reading the audited accounts of the company and making and confirming the addition. According to us and as details furnished there is no difference in the balance sheet of the assessee and therefore we delete the addition of Rs. 8,69,906/- and reverse the order of CIT(A). Ground no. 2 of the appeals is allowed. 11. The 3rd ground of appeal is against the addition....