TMI Blog2016 (1) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... so find from the confirmation placed on record that the mother had not mentioned the loan amount advanced by her to the assessee. But however, she had clearly mentioned the fact of advancing the loan and the purpose of the loan in her confirmation together with the source for advancing the loan. The status of the assessee that she is a retired school teacher and had held a senior position as Shift Incharge in a school run by SAIL at Durgapur is not disputed by the revenue. Hence in these facts and circumstances, we hold that the assessee has also proved the creditworthiness of the transaction and hence no addition u/s 68 of the Act could be made in the hands of the assessee. - Decided in favour of assessee Addition towards introduction to capital account by the assessee and addition made towards difference in opening capital balance in the capital account - Held that:- The contention of the assessee that books contain deficiencies and he is not conversant with the maintenance of accounts and the income tax affairs finds lot of force and is proved beyond doubt. Moreover, it is also found from the remand report dated 16.8.2010 submitted by the Learned AO before the Learned CITA, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dry creditors have been duly reconciled and no adverse comments were recorded by the Learned AO. Accordingly, the Learned CIT(A) sought to give relief to the assessee. We also find that the purchases have not been disputed by the Learned AO. Admittedly, these sundry creditors have emanated only out of purchases of the assessee and hence when purchases (ie debit entry) have been accepted as genuine, there is no scope for treating the credit entry (i.e sundry creditors) as bogus. In view of these facts and circumstances, we do not find any reason to interfere with the order of the Learned CIT(A) in this regard. Decided in favour of assessee - I.T.A No. 2186/Kol/2010, I.T.A No. 2140/Kol/2010 - - - Dated:- 18-11-2015 - Shri M. Balaganesh, Accountant Member, and Shri S.S. Viswanethra Ravi, Judicial Member For The Appellant : Shri Mihir Kr. Bandopadhyay, Retd IRS, ld.AR For The Respondent : Shri Niloy Baran Som, JCIT, ld.Sr.DR ORDER SHRI M.BALAGANESH, AM These appeals of the assessee and revenue arise out of the order of the Learned CIT(A), Durgapur in Appeal No. 51/CIT(A)/DGP/2009-10 dated 28-09- 2010 for the Asst Year 2007-08 passed against the order of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l:- Assessee s appeal in ITA No. 2186 / Kol /2010 1 On the facts and in the circumstances of the case, the ld.CIT(A) Durgapur erred in confirming the addition u/s. 68 of a sum of ₹ 1,50,000/- representing loans taken by the Appellant from his mother who was a senior teacher( rank:- Shift-in- Charge) in a school run by Durgapur Steel Plant under Steel Authority of India Ltd- a Govt. of India undertaking. Revenue s appeal in ITA No. 2140 / Kol /2010 A. That as far as facts and circumstances of the case is concerned, ld. CIT(A) was not justified in allowing relief against addition made in respect of claimed loan amount received from the father of the assessee amounting to ₹ 250000, particularly under the circumstances when the assessee failed to establish corroborating reflection of the impugned transaction in the bank statement maintained by his father as mentioned in the Remand Report. B. That as far as facts and circumstances of the case, ld. CIT(A) was not justified in sustaining the addition of ₹ 150000 in lieu of invoking of penal provision pursuant to Sec. 271D considering the circumstances of the case when accepting of cash loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 4 lacs was received only from his father. But during first appellate proceedings, the assessee changed his stand that ₹ 2,50,000/- was received from father and ₹ 1,50,000/- was received from his mother as loan. In respect of loan received from father, he argued that the bank statement evidencing the receipt of loan was not submitted before the Learned AO even during the remand proceedings but however the Learned CITA sought to give relief based on the evidences available on record. In respect of loan received from mother by the assessee, the same is received only in cash and creditworthiness of the mother is not proved by the assessee eventhough the identity and genuinity is proved by way of confirmation from the mother. He further argued that in the said confirmation, no figure is mentioned by the assessee s mother and hence the same cannot be taken as sacrosanct. Moreover, there is no scope for further verification by the revenue as both the father and mother of the assessee are not income tax assesses and accordingly, he pleaded for confirmation of the order of the Learned AO. 3.3. We have heard the rival submissions and perused the materials available on reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made towards difference in opening capital balance of ₹ 3,76,922/- in the capital account 4. The assessee had raised the following grounds in his appeal :- 2. On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming an addition to income of a sum of ₹ 4,48,000 treating the same as fresh introduction of capital, whereas, in actuality, the matter cropped up due to negligence and mistake of the Appellant s Auditor. 3. On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming an addition of ₹ 3,76,992/- allegedly for being difference between the closing balance of capital a/c in last year and opening balance of capital a/c in this year which also arose due to mistakes of the Auditor of the Appellant. 4.1. The addition of ₹ 4,48,000/- was made towards introduction of fresh capital during the assessment year under appeal which was completely denied by the assessee before the Learned AO . Similarly an addition of ₹ 3,76,922/- was added by the Learned AO based on the difference between the closing capital balance of earlier year and opening capital balance of the current ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght on record and requested to determine his taxable income on presumptive taxation as a percentage of turnover. The Learned AO had not rejected the books of accounts but instead proceeded to make independent addition towards increase in capital account to the tune of ₹ 4,48,000/- and difference in opening balance of capital account to the tune of ₹ 3,76,922/-. Further it is found that the Learned AO had made both the additions only under the head income from business. Here is a case wherein the deficiencies in the audited accounts were duly pointed out by the assessee himself to the Learned AO and in such a scenario, the right course for the Learned AO would be reject the same and determine the profits in accordance with section 145(3) of the Act. We find that the assessee had strongly denied the fact of introduction of any fresh capital to the tune of ₹ 4,48,000/- in the business during the assessment year under appeal. Hence the addition has been made only based on the defective capital account produced before the Learned AO without giving any categorical finding with regard to the income element contained thereon. We also find that the mistake in the audited b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO. The Learned added this sum of ₹ 678/- also in the assessment. On first appeal, the Learned CITA observed that the assessee had a recovery suit pending against a debtor and the figure disclosed in his balance sheet did not match with that obtained by the Learned AO on enquiry. The assessee stated that this mistake, if any, had been committed by his previous CA and hence he cannot be found fault with for the same. The assessee submitted that the turnover in respect of this party had been duly offered to tax in the earlier years by the assessee and it is only outstanding dues recoverable from the party for which a suit has been filed against the debtor and hence there is no case for making any addition in this regard as undisclosed income. The Learned CIT(A) observed that in remand proceedings, the Learned AO had not doubted the information given by the assessee that the sales in question relates to Financial years 2002-03 ; 2003-04 and 2004-05. Hence this goes to prove that the turnover is already reflected in the income side by the assessee in the earlier years and hence deleted the addition. Aggrieved, the revenue is in appeal before us on the following modified ground:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of transaction Amount shown by the assessee Amount as per confirmation Difference Remarks 1 Supani Music Purchase 2,87,823.00 75,062.00 2,12,761.0 Bogus Purchase 2 Berlia Compu System Purchase Return 0.00 9,636.00 [5850.00 + 3786.00 9,636.00 Not shown In the book of the assessee 3 MBT Infosys Purchase 1,07,724.00 1,32,128.00 24,404.00 Undisclosed purchase The Learned AO disbelieved the explanations offered by the assessee and sough to bring to tax the difference in sundry creditors balance as stated above as bogus creditors. On first appeal, the Learned CITA called for a remand report from the Learned AO, wherein the Learned AO submitted that in one of the cases only a copy of the ledger account ahs been submitted without any supporting evidences and in another, copie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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