2017 (9) TMI 634 - AT - Income Tax

Addition u/s 68 - advance against equity capital received - proof of creditworthiness and genuineness of the source - Held that - The contention of the assessee is that the bank statement etc. not made available at the stage of first appellate authority. After considering the totality of facts, we deem it proper to restore the matter to the file of AO to verify the claim of the assessee and decide this issue de novo. The Cross Objection is partly allowed for statistical purposes.

Summary

Issues:
1. Deletion of addition under section 68 of the Income Tax Act made by the AO on account of advance received from M/s. Ratna Commercial Enterprises Pvt. Ltd.
2. Cross objection by the assessee against the addition of unsecured loan and unexplained advance.
3. Penalty appeal by the assessee against the penalty imposed under section 271(1)(c) of the IT Act.

Deletion of Addition under Section 68:
The case involved appeals by both the revenue and the assessee against the orders of the ld. CIT (A) pertaining to assessment year 2009-10. The revenue's appeal focused on the deletion of an addition of ?6.80 crores under section 68 of the Act made by the AO regarding an advance received from M/s. Ratna Commercial Enterprises Pvt. Ltd. The ld. CIT (A) deleted this addition after considering the submissions, as the evidence filed by the appellant was found to be sufficient. The AO and the remand report accepted the creditworthiness and genuineness of the transaction. The Balance Sheet of M/s. Ratna Commercial Enterprises Pvt. Ltd. showed sufficient funds, supporting the transaction. The Tribunal confirmed the deletion of the addition, dismissing the revenue's ground.

Cross Objection by the Assessee:
The assessee's cross objection challenged the addition of an unsecured loan and an unexplained advance. The grounds included the lack of bank statements at the time of appeal and the acceptance of identity and genuineness of the advance by the authorities. The assessee contended that the bank statements were not provided due to non-availability and submitted additional evidence supporting the transactions. The Tribunal, after considering the contentions, partially allowed the cross objection, directing the matter to be verified by the AO for a fresh decision.

Penalty Appeal by the Assessee:
The penalty appeal by the assessee contested the penalty imposed under section 271(1)(c) of the IT Act. The grounds highlighted errors in sustaining the penalty without appreciating material facts and additional evidence furnished during appellate proceedings. Since the quantum proceedings were restored to the AO for fresh decision in the cross objection, the issue of penalty was also directed to be decided de novo. The appeal of the assessee was allowed for statistical purposes.

In conclusion, the Tribunal dismissed the revenue's appeal, partly allowed the cross objection of the assessee for statistical purposes, and allowed the assessee's appeal for statistical purposes. The matters related to the addition under section 68, unsecured loan, unexplained advance, and penalty under section 271(1)(c) were addressed comprehensively, ensuring a fair consideration of all arguments and evidence presented.