2016 (10) TMI 488 - AT - Income Tax

Addition on account of unexplained cash credit - Held that - The opening balance of cash-in-hand for Rs. 16 lakhs as reflected in the previous year s balance-sheet i.e. 31-03-2006 has been accepted by the Department. Before us Ld. DR has not brought out anything contrary about the opening balance of the cash-in-hand. In our considered view the opening balance alone has been credited in the consolidated cash book of assessee. Therefore the issue of making any addition on account of unexplained cash credit does not arise in the aforesaid facts and circumstances. Ld. AR has also submitted the amalgamated cash book and cash flow statement which are placed on page 8 and 19 respectively of the paper book. We find no defect in the aforesaid documents. Hence we find no reason to interfere in the order of Ld. CIT(A). We hold accordingly and this ground of Revenue s appeal is dismissed. Addition on account of undisclosed investment - Held that - We find that advance shown in the balancesheet as on 31.03.2007 was after adjusting the loan liability from Shri Manuvir Agarwal. We further find that it was a clerical error having no impact on the profitability of the assessee. As such we find that there is no undisclosed investment on account of adjustment of liability with the amount of advances. Before us Ld. DR failed to bring anything contrary to the advance argument of Ld. AR in this regard. In this view of the matter we find no infirmity in the order of Ld. CIT(A) and we uphold the same. This ground of Revenue s appeal is dismissed. Addition on account of undisclosed income - Held that - We find that AO had made the addition for Rs. 13, 01, 631/- on account of payment made to RDB & Co. (HUF) on the ground that this payment was not reflecting in the balance-sheet of assessee. However we find that there was a opening loan liability for Rs. 11, 26, 631/- which was adjusted by Rs. 10 lakh by transferring the same to a new account with the name RDB & CO. (HUF) (housing loan). We find that assessee has shown this amount as housing loan in the current year and thereafter certain amount was also received through banking channel which was shown as housing loan. The old loan amount was repaid by assessee during the current year through banking channel. We further find all the repayment of loan and accepting the fresh loan has been made through banking channel. There was certain other movement of cash through banking channel on personal account of assessee also this was not shown in the loan statement of the party as it was adjusted with the capital account of assessee. The Ld. AR in support of its claim has placed the confirmation from RDB & Co. (HUF) which are placed on pages 25 to 28 of the paper book. Before us Ld. DR failed to bring anything contrary to the confirmation filed by Ld. AR. In view of above facts and circumstances in the present case we uphold the order of Ld. CIT(A). This ground of Revenue is dismissed. Addition on account of undisclosed income - Held that - AO has made the addition on surmise and conjecture. He has not exercised his power by issuing notice u/s. 133(6) of the Act to the broker for ascertaining the nature and source of aforesaid receipts. Before us Ld. AR has submitted that the aforesaid receipts represents the sale proceeds of the said shares and in support of its claim has submitted the copy of the contract notes which are placed on pages from 41 to 45 of the paper book. In this view of the matter we do not find any infirmity in the order of Ld. CIT(A) accordingly we uphold the same. This ground of Revenue s appeal is dismissed.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Deletion of additions made under Section 68 of the Income Tax Act.
3. Deletion of addition on account of undisclosed investment.
4. Deletion of addition on account of undisclosed income.
5. Deletion of addition on account of undisclosed income from sale of shares.

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The appeal by the Revenue was delayed by 11 days. A condonation petition explaining the reasons for the delay, supported by an affidavit, was filed. The assessee's counsel did not oppose the condonation. Considering the reasons provided and the concession by the assessee's counsel, the delay was condoned, and the appeal was admitted.

2. Deletion of Additions Made Under Section 68 of the Income Tax Act:
The Revenue challenged the deletion of additions totaling Rs. 20,08,500 made under Section 68. The assessee argued that the cash entries reflected in the books were from the opening balance of cash-in-hand, shown under different names for administrative convenience. The assessee provided an affidavit, a birth certificate, and a cash flow statement to support the claim. The CIT(A) deleted the addition, noting that the opening cash balance was adequately explained and reflected in the balance sheet. The Tribunal upheld the CIT(A)'s decision, finding no defect in the documents provided by the assessee and dismissing the Revenue's appeal on this ground.

3. Deletion of Addition on Account of Undisclosed Investment:
The Revenue contested the deletion of an addition of Rs. 3.50 lakh on account of undisclosed investment. The assessee explained that a liability of Rs. 3.50 lakh was inadvertently adjusted with advances for land, causing a discrepancy in the balance sheet. The CIT(A) accepted the explanation, noting that the adjustment was a clerical error with no impact on the accounts or revenue. The Tribunal upheld the CIT(A)'s decision, finding no undisclosed investment and dismissing the Revenue's appeal on this ground.

4. Deletion of Addition on Account of Undisclosed Income:
The Revenue appealed against the deletion of an addition of Rs. 13,01,631 on account of undisclosed income. The assessee had made payments to M/s RDB & Co. (HUF) through banking channels, which were not reflected in the loan confirmation or balance sheet. The CIT(A) found that the payments were adjustments of an existing loan and were adequately explained. The Tribunal upheld the CIT(A)'s decision, noting that the transactions were through banking channels and adequately documented, dismissing the Revenue's appeal on this ground.

5. Deletion of Addition on Account of Undisclosed Income from Sale of Shares:
The Revenue challenged the deletion of an addition of Rs. 16,22,427, arguing that the amount did not represent the sale of shares. The assessee provided contract notes and ledger accounts showing that the amount was received from M/s Bakliwal Financial Services for the sale of shares. The CIT(A) accepted the explanation, noting that the AO had not justified treating the amount as undisclosed income. The Tribunal upheld the CIT(A)'s decision, finding no infirmity in the order and dismissing the Revenue's appeal on this ground.

Conclusion:
The Tribunal dismissed the Revenue's appeal on all grounds, upholding the CIT(A)'s deletions of the additions made by the AO. The order was pronounced in open court on 24/08/2016.