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2024 (8) TMI 621 - AT - Income TaxAddition u/s 68 - addition for director s loan ledger account -transactions are not matching with previous year s financial statements - assessee stated that the transactions did not pertain to this assessment year and it relates to previous assessment year - HELD THAT - We find substance in the submissions of the ld. AR that the previous year s transaction cannot be considered as income in the current assessment year. We note that the transactions pertain to FY 2012-13 to 2013-14 and the AO has passed assessment u/s. 143(3) for AY 2013-14 on 29.01.2016 wherein the AO has accepted the closing balance of the ledger account of director/Sri B. Ravi Kumar Reddy. We note from the ledger account of Sri B. Ravi Kumar Reddy that there is a credit of Rs. 12,40,74,520 and money has been transferred through bank account and only Rs. 9,00,000 has been credited towards director s remuneration. AO has completed the assessment for the current AY 2015-16 by considering the transactions of the assessee made in the previous assessment year. We also note that the AO has passed order u/s. 143(3) for AY 2013-14 on 29.01.2016 considering the transactions pertaining to FY 2012-13 and 2013-14 wherein the AO has considered the closing balance of this ledger account. AO cannot consider the opening balance in the current assessment year for making addition. In this regard, we rely on the judgment of Sridev Enterprises 1991 (1) TMI 52 - KARNATAKA HIGH COURT Therefore, we do not find any infirmity in the order of the CIT(Appeals) deleting the addition - Decided in favour of assessee.
Issues:
Condonation of delay in filing appeal by revenue, Addition of opening balance in current assessment year, Merits of CIT(A) order, Dismissal of appeal by revenue, Barred by limitation assessment order Condonation of Delay: The appeal by the revenue faced a delay of 26 days, attributed to heavy workload and shortage of manpower. The revenue sought condonation of delay, which was granted by the Tribunal citing sufficient cause, referencing the case of Collector, Land Acquisition Vs. MST. Katiji and Others (1987) 167 ITR 471. Addition of Opening Balance: The case involved the addition of Rs. 11,59,30,375 as the opening balance in the current assessment year. The AO made this addition under section 68, based on discrepancies between the ledger account and bank statements of a director. However, the CIT(A) allowed the appeal of the assessee, stating that the addition cannot be made in the current assessment year as the transactions related to the previous year. The Tribunal upheld this decision, emphasizing that previous year transactions cannot be considered as income in the current assessment year. Merits of CIT(A) Order: The CIT(A) considered various arguments presented by the appellant, including the genuineness of transactions and compliance with IT Act provisions. The CIT(A) allowed the appeal based on the grounds that the addition made was the opening balance and no evidence substantiated the claim that the order was dispatched after the limitation period. Dismissal of Appeal by Revenue: Both the revenue and the assessee filed appeals against the CIT(A) order before the Tribunal. The revenue argued that the addition made in the previous year should be reflected in the opening balance of the current year. However, the Tribunal dismissed the revenue's appeal, supporting the CIT(A)'s decision that the transactions of the previous year cannot be added as income in the current year. Barred by Limitation Assessment Order: The assessee raised a ground in the Cross Objection (CO) that the assessment order passed under section 143(3) was barred by limitation. The CO was not adjudicated as the revenue's appeal was dismissed. The Tribunal left this issue open for future consideration. In conclusion, the Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision to delete the addition of the opening balance in the current assessment year. The Tribunal emphasized that transactions from the previous year cannot be considered as income in the current year, in line with legal precedents.
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