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2013 (5) TMI 522 - AT - Income TaxDifference in cash deposit in bank account and cash sales - CIT(A) deleted the addition - Held that - Addition was made by AO observing that the assessee s sale proceeds in cash from software are less than the cash deposits in bank for which the assessee has given satisfactory explanation about there being other receipts which are duly incorporated in the account books. In view of these facts no infirmity in the order of CIT(A) on this issue. Against revenue. Unexplained share application money - CIT(A) deleted the addition - Held that - When the department itself, on earlier occasion, has accepted the identity and existence of the party, primary onus to prove creditworthiness to purchase shares of Rs. 4,09,000 is discharged no justification in assuming that ITSL was not a genuine party and does not have capacity. Assessee has duly demonstrated that an amount of Rs. 4 lacs was credited to share application money account and Rs. 5 lacs were credited to ITSL other running account. The allotment of shares has been duly intimated by the assessee to ROC. Thus relying on Oasis Hospitality case (2011 (1) TMI 194 - DELHI HIGH COURT ) the assessee has discharged its onus approving the share application money u/s 68. For remaining two minor share applications in respect of Davendra Kumar and Mool Chand, assessee has filed their confirmatory letters along with PAN numbers. This is further supported by the returns of past several years and statement of affairs - Against revenue. Addition on account of credits from M/s Integra Telecommunication & Software Ltd. (ITSL) - CIT(A) deleted the addition - Held that - As already held that the identity and creditworthiness of this party is established, transactions are through bank a/c. The assessee has received an amount of Rs. 5 lacs by a/c payee cheque no. 128813 dated 12-10-2004 and Rs. 1 lac by a/c payee cheque no. 128812 on 12-10-2004. the debit of these amounts is reflected in ITSL a/c and credited in the assessee s bank account. Copy of reciprocal accounts are also on the record. Thus no infirmity in the order of CIT(A) in deleting the addition. Against revenue Interest accrued but not declared as income - CIT(A) deleted the addition - Held that - There is no enabling provision by which notional income can be added in the hands of the assessee. It is undisputed that assessee neither charged interest from this party nor showed it on accrual basis in the books of a/c. The assessee has not paid any interest on borrowed capital, therefore, there is no interest expenditure also. Thus, it is not a case of diversion of interest bearing funds as the advance to GISL is out of the interest free funds available at the disposal of the assessee. Against revenue. Sale of non-existing fixed assets - CIT(A) deleted the addition - Held that - Since the assessee has demonstrated it to be an inadvertent mistake, merely an accounting entry which is subsequently corrected and explained cannot fasten the assessee with tax liability by assuming it to be an income whereas in realty the amount was by way of advance/ deposit. A mistaken entry cannot convert a receipt on account of deposit loan or advance as income of the assessee. Reliance placed on Kedarnath Jute Mills (1971 (8) TMI 10 - SUPREME Court), by assessee, is well placed. Against revenue. Unexplained cash credits received from M/s Global Info System Ltd. - CIT(A) deleted the addition - Held that - AO made the addition only relying on the mistaken certificate issued by Axis bank ignoring the proper explanation of the assessee that confusion was created by assessee depositing two cheques by one paying slip into Axis Bank by which the cheque of Rs. 4,07,000/- received from GISL and cheque of Rs. 3,99,000/- received from TSR Financial services were deposited in Axis Bank which issued a transaction slip mistakenly writing it to be from Global Infosis which was corroborated by the banks revised certificate. Against revenue.
Issues Involved:
1. Deletion of addition on account of difference in cash deposit in bank account and cash sales. 2. Deletion of addition on account of unexplained share application money. 3. Deletion of addition on account of credits from M/s Integra Telecommunication & Software Ltd. (ITSL). 4. Deletion of addition on account of interest accrued but not declared as income. 5. Deletion of addition on account of amount received from M/s Global Info System Ltd. for the sale of non-existing fixed assets. 6. Deletion of addition on account of unexplained cash credits received from M/s Global Info System Ltd. Issue-wise Detailed Analysis: 1. Difference in Cash Deposit in Bank Account and Cash Sales: The assessing officer made an addition of Rs. 1,93,660/- based on the suspicion that cash deposits in the bank exceeded cash sales. The assessee provided a reconciliation and cash flow statement showing other receipts apart from software sales, incorporated in the books of accounts. The CIT(A) verified these facts and deleted the addition. 2. Unexplained Share Application Money: The assessing officer added Rs. 4,48,000/- (actual figure Rs. 4,80,000/-) due to the assessee's failure to prove the sources of share application money. The assessee provided confirmations from ITSL and other parties, including bank statements and income tax returns. The CIT(A) verified the documents and deleted the addition, concluding that the assessee had discharged its onus under section 68. 3. Credits from M/s Integra Telecommunication & Software Ltd. (ITSL): The assessing officer added Rs. 6,00,000/- due to discrepancies between the assessee's account and ITSL's confirmation. The assessee demonstrated that the transactions were genuine, supported by account statements and bank records. The CIT(A) verified the evidence and deleted the addition. 4. Interest Accrued but Not Declared as Income: The assessing officer added Rs. 73,000/- as notional interest. The assessee argued there was no enabling provision to add notional income, and no interest was charged or shown on an accrual basis. The CIT(A) agreed, stating that notional income cannot be added without an enabling provision and deleted the addition. 5. Amount Received from M/s Global Info System Ltd. for Sale of Non-Existing Fixed Assets: The assessing officer added Rs. 4,76,000/- based on a mistaken entry in the assessee's books. The assessee clarified the mistake and provided an affidavit. The CIT(A) accepted the explanation, concluding that a mistaken entry cannot convert a receipt into income, and deleted the addition. 6. Unexplained Cash Credits from M/s Global Info System Ltd.: The assessing officer added Rs. 4,06,000/- due to discrepancies in the bank statement and confirmation from GISL. The assessee demonstrated that the amount was received through account payee cheques, supported by bank statements and confirmations. The CIT(A) verified the evidence and deleted the addition. Conclusion: The tribunal upheld the CIT(A)'s order, dismissing the revenue's appeal on all grounds. The tribunal found that the assessee had provided satisfactory explanations and evidence for all the additions made by the assessing officer. The CIT(A)'s decision to delete the additions was based on proper verification of facts and documents.
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