2018 (11) TMI 1546 - AT - Income Tax

Addition made u/s 68 - unexplained cash deposits - assessee company failed to file the confirmations despite the opportunities - Held that - AO during remand proceedings has not challenged authenticity/veracity of documents filed by assessee, which was verified by him. It is further pertinent to note that assessee declared said sum as its income and there was full disclosure of such sum as has been recorded by Ld. CIT(A). No infirmity in decision of Ld. CIT(A) in respect of cash found deposited in bank account. - Decided against revenue Addition of cash receipts for sale of car - AO admitted purchase of said car thereby allowed depreciation claimed during preceding assessment years - Held that - On deliberating on facts, at this juncture, we do not think, Ld.AO has any right to interfere with genuineness of transaction now. We observe that Ld.AO grossly erred in accepting purchase of car, in the year of purchase thereby granting depreciation on it during preceding years, and it is merely impossible to rectify this error in the year under consideration, when sale occurred. In our considered opinion Ld.A.O. during year under consideration, cannot improve upon error committed by not verifying transaction of purchase of car during financial year 2006-07.- Decided against revenue Addition of advertising services - difference between declared receipt and offered receipt - Held that - AO, has not disputed claim made by assessee, other than to state that no details/explanation was furnished during assessment proceedings. We agree with CIT(A) that this objection is without any merit. From assessment order, it is apparently clear that assessee had explained difference between declared receipt and offered receipt for taxation on account of accrual basis during year under consideration, whereas the bills in respect of these receipts were issued in succeeding assessment year and has been accepted by Ld.AO, while framing assessment for assessment year 2008-09.- Decided against revenue

Summary

Issues Involved:
1. Deletion of addition made under Section 68 of the Income Tax Act, 1961.
2. Deletion of addition made against cash receipts for the sale of a car.
3. Deletion of addition on account of differences in receipts.

Issue-wise Detailed Analysis:

1. Deletion of Addition Made Under Section 68 of the Income Tax Act, 1961:
The revenue appealed against the deletion of an addition of ?2,31,00,000/- made under Section 68 of the Income Tax Act, 1961. The Assessing Officer (AO) observed certain cash transactions amounting to ?2,30,00,000/- in the assessee's bank account and ?2,60,00,000/- in the cash book. The assessee was required to explain these deposits and prove their identity, genuineness, and creditworthiness. The AO concluded that the assessee failed to discharge the onus under Section 68, leading to an addition of ?2,56,00,000/-.

The CIT(A) deleted the addition, noting that the assessee had declared the cash deposits as part of its total income, which the AO did not dispute. The CIT(A) observed that the invoices and addresses of the parties from whom the amounts were received were provided and verified. The AO did not challenge the authenticity of these documents during the remand proceedings. The Tribunal upheld the CIT(A)'s decision, finding no infirmity in the observations and noting full disclosure of the sums as income.

2. Deletion of Addition Made Against Cash Receipts for the Sale of a Car:
The revenue challenged the deletion of an addition of ?25,00,000/- against cash receipts for the sale of a car. The AO contended that the car was not registered in the company's name and questioned the identity of the cash transaction. The assessee argued that the car was purchased for ?34,85,395/- in FY 2006-07, with a written-down value of ?25,02,044/- at the beginning of the relevant financial year. The car was sold during the year for ?25,00,000/-, and the sale was supported by a confirmation copy.

The CIT(A) found that the car's depreciation was allowed in preceding years and that the sale was confirmed by the proprietor of History Logistics. The Tribunal agreed with the CIT(A), stating that the AO could not challenge the genuineness of the transaction after allowing depreciation in prior years. The Tribunal upheld the deletion of the addition, noting that the AO erred in accepting the purchase and granting depreciation but questioning the sale.

3. Deletion of Addition on Account of Differences in Receipts:
The revenue appealed against the deletion of an addition of ?62,52,198/-, representing alleged undisclosed receipts. The AO observed a difference between the gross receipts shown in the P&L account and the billing amount. The assessee explained that the service tax was included in the gross receipts, and provided details. The AO still found an understatement of ?62,52,198/-.

The CIT(A) accepted the reconciliation provided by the assessee, noting that the AO did not dispute the factual claims other than the timing of the explanation. The CIT(A) found that the difference was due to accrued receipts offered as income in the current year but billed in the succeeding year, which was accepted in the assessment for AY 2010-11. The Tribunal upheld the CIT(A)'s decision, noting that the AO's objection was without merit and that the reconciliation was supported by relevant documents.

Conclusion:
The Tribunal dismissed the revenue's appeal on all grounds and found no infirmity in the CIT(A)'s decisions. The cross-objection filed by the assessee was deemed infructuous. The order was pronounced in the Open Court on 27th November 2018.