2020 (5) TMI 260 - AT - Income Tax

Addition of outstanding liabilities u/s 68 - HELD THAT - A.R is able to demonstrate that the payments have been made after 31.3.2012. All these explanations require verification at the end of the assessing officer. We notice that the tax authorities have not examined these finer details - AO has given details of outstanding creditors to the tune of ₹ 2,50,95,000/-, while the amount of sundry creditors is mentioned initially as ₹ 2,99,20,000/-. The addition has been made by taking the figure of ₹ 2,99,20,000/- only. Accordingly, we are of the view that this issue requires fresh examination at the end of the AO. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO for examining it afresh by duly considering the explanations of the assessee. In the set aside proceedings, the AO may examine the above said sellers of land, if it is considered necessary. Addition of loans taken from directors u/s 68 - HELD THAT - Before Ld CIT(A), the assessee has submitted bank statements of directors and also ledger account copies. Before the AO, the assessee has submitted copies of their income tax returns. During the course of hearing before us, the Ld A.R also submitted that the assessee could not furnish all these details, since there was change of counsel appearing before the AO. The fact of change of counsel has been noted by the AO in paragraph 14 of his order. Under these set of facts, in the interest of natural justice, we are of the view that the additional evidences should be admitted and the assessee should be given opportunity to substantiate the loan taken from directors. Accordingly, we admit the additional evidences. Since these evidences require examination at the end of the assessing officer, we set aside the order passed by Ld CIT(A) on this issue and restore this issue for examining it afresh. Addition of Advances received on sale of sites u/s 68 - HELD THAT - There is no dispute that the onus is cast upon the assessee to prove the cash credits received by it. Assessee has furnished certain documents in respect of some of the advances. It has also given explanations with regard to certain other advances. None of these documents and explanations has been examined by the tax authorities. Accordingly, we are of the view that this issue also requires examination at the end of the AO. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO for examining it afresh. - Appeal of the assessee is treated as allowed for statistical purposes.

Summary

Issues involved:
1. Addition of outstanding liabilities u/s 68 of the Act
2. Addition of loans taken from directors u/s 68 of the Act
3. Addition of Advances received on sale of sites u/s 68 of the Act
4. Charging of interest u/s 234B of the Act

Issue 1: Addition of outstanding liabilities u/s 68 of the Act:
The AO added outstanding liabilities of the assessee u/s 68 of the Act due to discrepancies in payments to land sellers. The assessee failed to produce sellers before AO, leading to an addition of &8377; 2,27,20,000 as income. The CIT(A) upheld this decision. The Tribunal observed that finer details were not examined, directing fresh examination by the AO. The AO was instructed to verify explanations and may summon sellers if necessary.

Issue 2: Addition of loans taken from directors u/s 68 of the Act:
The AO added &8377; 1,07,46,510 as unexplained cash credit from directors due to lack of confirmation letters. The CIT(A) confirmed this addition. The Tribunal noted that the directors managed the company and admitted additional evidences submitted by the assessee. The matter was remanded to the AO for further examination with all necessary information.

Issue 3: Addition of Advances received on sale of sites u/s 68 of the Act:
The AO added &8377; 2,25,16,003 as advance received from customers due to lack of confirmation letters. The CIT(A) upheld this addition. The assessee provided documents and explanations post-assessment, which were not examined. The Tribunal directed the AO to re-examine this issue thoroughly.

Issue 4: Charging of interest u/s 234B of the Act:
The issue of charging interest u/s 234B was mentioned as consequential. The appeal of the assessee was treated as allowed for statistical purposes. The Tribunal pronounced the decision on April 28, 2020, directing the AO to take appropriate decisions after affording adequate opportunity to the assessee.

This detailed analysis of the legal judgment from the Appellate Tribunal ITAT Bangalore highlights the issues, proceedings, and decisions made regarding the addition of liabilities, loans from directors, advances received, and interest charges under relevant sections of the Income Tax Act.