2013 (4) TMI 346 - AT - Income Tax

Unexplained cash credits - Addition made u/s 68 - CIT(A) deleted the addition - Held that - No addition u/s 68 can be made during the year as the amount has not been received in the assessment years under consideration as the amount as is apparent is received by the assessee in the financial years 1992-93 and 1997-98 much prior to the impugned assessment year. During the year the assessee has transferred the amount to the share application account from advance for flats. Thus no fresh amount has been received by the assessee during the year u/s 68. The amount held to be added in the year in which the amount is credited in the books of accounts of the assessee where the assessee has offered an explanation about the nature of the concern of the amount or explanation offered by the assessee before the AO is not satisfactory. Since the amount was not credited in the books of accounts during the year, therefore, CIT(A) has rightly deleted the addition. Unexplained investments - Addition u/s 69 - CIT(A) deleted the addition - Held that - The finding of the fact that from the audited balance sheets for the year ending 31.03.2004 and 31.3.2003, it is seen that balance of Rs.21,33,299/- representing the advance for flats in those years and during the year after that if a sum of Rs.5 lakhs was transferred to the share application money which has already been dealt with in ground no.1 and a sum of Rs4,85,500/- was refunded by the assessee to the parties. Under these facts, it is not a case where the provision of section 69 will be applicable - the order of the CIT(A) confirmed and delete the additions. Advance for construction of the flat - assessee has shown advance for construction of the flat at Rs.2,93,000/- and similarly a sum of Rs.2,28,577/- was shown by the assessee as receivable in cash &in the absence of any explanation being offered the AO added a sum of Rs.5,21,577/- - Held that - As assessee has not submitted any books of account before the AO even the CIT(A) has also not examined the books of accounts so that it may be ascertained that these advances were duly recorded in the books of the assessee. The assessment has been framed u/s 144 of the IT Act and the copy of the ledger account along with the details of the party were also filed by the assessee for the first time before the CIT(A). Under these facts and circumstances of the case the assessee has not discharged his onus fully and the AO could not examine the books of accounts of the assessee whereas this information are reflected in the books of assessee. Therefore, in the interest of both the parties restore this issue to the file of the AO with the direction that the AO shall re-examine this issue.

Summary

Issues:
1. Deletion of addition made under section 68 of the IT Act.
2. Deletion of addition made under section 69 of the IT Act.
3. Addition of Rs. 5,21,577 under section 69 of the IT Act.

Issue 1: Deletion of addition made under section 68 of the IT Act:
The Revenue challenged the deletion of an addition of Rs. 4,65,000 made by the Assessing Officer (AO) under section 68 of the IT Act. The Appellate Tribunal noted that the amount in question was received by the assessee in financial years 1992-93 and 1997-98, much prior to the assessment year under consideration. The Tribunal observed that since the amount was not credited in the books of accounts during the relevant year, the deletion by the CIT(A) was justified. The Tribunal emphasized that no fresh amount was received by the assessee during the year under section 68 of the IT Act, leading to the affirmation of the CIT(A)'s decision to delete the addition.

Issue 2: Deletion of addition made under section 69 of the IT Act:
The Revenue contested the deletion of an addition of Rs. 9,84,500 under section 69 of the IT Act. The AO had treated this amount as undisclosed investment of the assessee. However, the CIT(A) examined the balance sheets and found that the amount was not a fresh investment but a repayment from a previous balance. The Tribunal concurred with the CIT(A) that there was no unexplained investment in the current year, as the amount was part of a previous balance and had been properly accounted for. Consequently, the Tribunal upheld the deletion of the addition under section 69 of the IT Act.

Issue 3: Addition of Rs. 5,21,577 under section 69 of the IT Act:
The AO added Rs. 5,21,577 to the income of the assessee under section 69 of the IT Act, as the assessee failed to provide sufficient explanations for advances and receivables. The CIT(A) deleted this addition, but the Tribunal found that the assessee did not fully discharge the onus of proving the legitimacy of these transactions. As the books of accounts were not examined and necessary evidence was not submitted, the Tribunal set aside the CIT(A)'s decision and directed the AO to re-examine the issue with all necessary evidences. Therefore, the Tribunal allowed ground no. 3 for statistical purposes.

In conclusion, the Appellate Tribunal partially allowed the appeal filed by the Revenue for statistical purposes, addressing the issues of deletion of additions under sections 68 and 69 of the IT Act and directing further examination of the addition made under section 69.