2017 (7) TMI 66 - AT - Income Tax

Addition u/s 68 - assessee has not complied with the direction given by him to prove the net credit balance as on 31st March 2005 - Held that - It is the submission of the Ld. Counsel for the assessee that the assessee has not received any amount from Shri Prakash Basrani as secured or unsecured loan and infact the assessee has paid the amount to Shri Prakash Basrani and therefore proof of the capacity of the said person does not arise. It is also his alternative submission that the matter be restored to the file of the Assessing Officer with a direction to give one more opportunity to the assessee to produce the said person before the AO to substantiate her case. We find merit in the alternate argument of the Ld. Counsel for the assessee. We deem it fit and proper to restore the issue back to the file of the Assessing Officer with a direction to give one more opportunity to the assessee to substantiate her case and produce Shri Prakash Basrani before the Assessing Officer for his examination. The Assessing Officer shall decide the issue as per law and fact after giving due opportunity of being heard to the assessee.

Summary

Issues:
1. Maintainability of Revenue's appeal due to tax effect below ?10 lakhs.
2. Addition made under Section 68 of the Income Tax Act.
3. CIT(A)'s decision regarding the addition made by the Assessing Officer.
4. Production of Shri Prakash Basrani before the Assessing Officer.
5. Levy of interest under sections 234B and 234D of the Income Tax Act.

Issue 1: Maintainability of Revenue's appeal
The Revenue's appeal was dismissed as the tax effect was below ?10 lakhs, following the CBDT Circular No.21 of 2015. The LD. DR acknowledged the tax effect being less than ?10 lakhs, leading to the dismissal of the Revenue's appeal.

Issue 2: Addition under Section 68
The Assessing Officer made an addition of ?35,00,000 under Section 68 as the assessee failed to prove the creditworthiness of Shri Prakash Basrani. The CIT(A) upheld an addition of ?23,00,000 as the assessee couldn't prove the net credit balance. The CIT(A) noted discrepancies regarding Shri Prakash Basrani's financial position and the genuineness of transactions.

Issue 3: CIT(A)'s decision
The CIT(A) upheld the Assessing Officer's decision due to the assessee's failure to prove the net credit balance. The CIT(A) required confirmation letters or affidavits from Shri Prakash Basrani and his production for verification, which the assessee failed to provide.

Issue 4: Production of Shri Prakash Basrani
The assessee requested to set aside the matter for Shri Prakash Basrani's production before the Assessing Officer. The LD. DR supported this request, leading the Tribunal to direct the assessee to produce Shri Prakash Basrani for examination by the Assessing Officer.

Issue 5: Levy of interest
The Tribunal found the levy of interest under sections 234B and 234D to be mandatory and consequential, resulting in the dismissal of the appeal on this ground.

In conclusion, the Tribunal allowed the assessee's appeal partly for statistical purposes, directing the matter back to the Assessing Officer for further examination and setting aside the levy of interest. The Revenue's appeal was dismissed.