TMI Blog2022 (8) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement given during the remand proceedings. We find that the same is also not factually correct. The assessee, in its reconciliation statement given to Ld. CIT(A), has reversed contract receipts of Rs.312.50 Lacs and added drawings - The net difference. In the statement given on 08.01.2020, the amount shown is Rs.275 Lacs and Rs.2 Lacs which totals to Rs.277 Lacs. Therefore, there is difference in presentation only but the net impact is the same. - ITA No.982/Chny/2020 - - - Dated:- 12-8-2022 - Hon ble Shri V. Durga Rao, Judicial Member And Hon ble Shri Manoj Kumar Aggarwal, AM For the Assessee : Shri. Y. Sridhar (CA) Ld. AR For the Revenue : Shri AR V Sreenivasan (Addl. CIT) Ld. DR ORDER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. Aforesaid appeal by Revenue for Assessment Year (AY) 2016-17 arises out of the order of learned Commissioner of Income Tax (Appeals)-1, Trichy [CIT(A)] dated 20.07.2020 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 12.12.2018.The grounds taken by the revenue read as under: 1. The order of the ld.CIT(A) is not acceptable with respect to the deletion of additions made towar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee reflected creditor of Rs.224.12 Lacs in the name of M/s Chendur Earth Movers (CEM) in the Balance Sheet as filed during the course of assessment proceedings. However, this amount was not reflected in the return of income. The assessee did not furnish proof and confirmation letter for having received such amount with supportive evidences. The assessee s name did not figure in debtors list reflected by that entity. Accordingly, this amount was added to the income of the assessee. 4.3 Unexplained Investments On analysis of financial statements, it was noted that the assessee s expenses / investments were more than the income and receipts. There was difference of Rs.316.46 Lacs as under: - Opening debtors 15873830 Taxes paid 33276906 Opening cash balance 202600 Closing Bank Balance 7577511 Opening bank balance 4781969 Closing Cash Balance 13393687 Current year income 93727964 Closing debtors 698040 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of the appellant and subsequently rectified. Similarly profit for the year less taxes Rs.38,85,947/- in M/s. Chendur earth Movers were not entered in the books of the appellant and also a wrong entry of Rs.35,50,000/- made in the books of M/s. Chendur Earth Movers were rectified in the subsequent years The contract amount of Rs.3,12,50,000/- has been added to the income of M/s. Chendur Earth Mover sand brought to tax in the assessment completed (copy submitted). It is submitted that there was only some wrong entries made in both the books which has lead to the confusion.The transactions are genuine and hence it is prayed that the addition made on this account may be directed to be deleted as the same has been taxed in the hands of the firm. 5.3 The explanation of the assessee qua unexplained investment was as under: - Addition as un-explained investment: Rs. 3,16,46.929/- The learned Assessing officer has held that the appellant failed to prove the identity, genuineness and credit worthiness of the debtors, creditors and also explain the source of the investments made and has made an addition of Rs.3,16,46,929/- holding that the expenses/investments are more than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 18,42,19,781 Less: addition to fixed Assets before depreciation A2 Rs. 16,32,48,583 Closing cash and bank balances Rs. 2,09,71,198 A2 = Addition to fixed assets which is explained by increase in capital As per para 6 of AO the addition to fixed assets is only Rs.1294.20 lakhs. It is submitted that the above cash flow proves that the appellant had adequate funds to meet the expenses and also make investments. In view of the facts of the case as explained, it is prayed that the additions of Rs.3,16,46,929/- made in the assessment order may kindly be directed to be deleted. 5.4 The aforesaid submissions found favor with Ld. CIT(A). The Ld. CIT(A) noted that AO ignored the opening balances in the assessee s personal capital account. The contract receipts of Rs.312.50 Lacs was wrongly credited by CEM to assessee s account which was rectified later on. As a result, the balance of assessee with CEM would be Rs.220.71 Lacs as against Rs.224.12 Lacs as reflected by the assessee. It was further noted by Ld. CIT(A) that in double entry book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adequate funds were available with the assessee for investments. Further, the figures picked up by AO were from declared accounts and there was no case that any undisclosed asset has been found. Finally, the addition on account of unexplained investment was deleted. 5.6 Regarding unexplained credit of CEM, it was held that the same was merely due to mismatch in account but the same would not lead to conclusion of escapement of income. Finally, except retaining the addition to the extent of unreconciled amount of Rs.3.91 Lacs, the balance addition was deleted. 5.7 Aggrieved, as aforesaid the revenue is in further appeal before us. Our findings and Adjudication 6. So far as the addition of unexplained cash credit is concerned, we find that the same arises out of reconciliation difference in assessee s capital account with CEM wherein the assessee is a partner. For the said reason, the assessee would not be figured as debtors in the books of that firm. We find that the assessee reflected balance of Rs.224.12 Lacs in the name of M/s CEM whereas this balance is Rs.91.73 Lacs in the books of the firm. The same has been reconciled by the assessee as under: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : income tax and wealth tax Rs. 3,20,43,070 LIP and Mutual Funds Rs. 9,93,836 Drawings Rs. 2,40,000 Rs. 3,32,76,906 Rs. 8,40,34,331 Add : increase in Unsecured loans Rs. 2,37,67,200 Increase in Secured Loans Rs. 2,87,17,460 Amount withdrawn from Chendur Earth Movers Rs. 3,20,00,000 Amount withdrawn from Gokulam Chits Rs. 5,25,000 Reduction in sundry debtors Rs. 1,51,75,790 A1 Rs. 18,42,19,781 Less: addition to fixed Assets before depreciation A2 Rs. 16,32,48,583 Closing cash and bank balances Rs. 2,09,71,198 A2 = Addition to fixed assets w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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