KARNAVATI POLYBLENDS PVT. LTD.,AHMEDABAD vs. ACIT, CIRCLE-2(1)(2), AHMEDABAD
What did the Tribunal hold?
The Tribunal found it appropriate to grant the assessee a further opportunity to present a reconciliation statement and evidence to the AO. The AO was directed to decide the issue afresh after considering all evidence.
What were the facts?
The assessee declared unsecured loans of Rs. 31,54,027/-. However, the lender confirmed only Rs. 25,00,000/- as received and repaid. The difference of Rs. 5,54,027/- was added as unexplained cash credit.
What were the issues?
Whether the addition of Rs. 5,54,027/- as unexplained cash credit under Section 68 was justified, considering the discrepancy in the loan amount confirmed by the lender.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI AMARJIT SINGH&
The instant appeal filed by the assessee is directed against the order dated 20.07.2018 passed by the Commissioner of Income Tax (Appeals) –2, Ahmedabad arising out of the order dated 27.11.2017 passed by the ACIT, Circle-2(1)(2), Ahmedabad under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) for Assessment Year 2015-16.
The brief facts leading to the case is this that the assessee company filed its return of income through electronic media on 30.09.2015 declaring total income of Rs. 31,93,250/- which was ultimately finalized under Section 143(3) of the Act inter alia making addition of Rs. 5,54,027/- under Karnavati Polyblends Pvt. Ltd. vs. ACIT Asst.Year –2015-16 - 2 - Section 68 of the Act which was in turn confirmed by the Ld. CIT(A). Hence, the instant appeal before us.
During the course of assessment proceeding it was found that the assessee was received of unsecured loan of Rs. 31,54,027/- from one Mahesh Tax Fab during the year under consideration; the same was reflected from the annual accounts and the Tax Audit Report in Form 3CD of the assessee. However, the said company Mahesh Tax Fab accepted only 25 lakhs of such unsecured loan which was also repaid by the assessee. In response to the show-cause issued to the assessee it was submitted that the assessee filed incorrect ledger extract of the said party from the books of assessee showing opening balance at Rs. 5 lakhs and closing balance of Rs. 1,38,624/-. The accountant of the assessee namely Mr. Rajkumar Sharma might have mixed up ledger extract and inadvertently produced the incomplete ledger account; the said Rajkumar Sharma was a science graduate and not an expert in accounts, rather has been conventionally writing books of account by experience and practice as of the plea of the assessee. In fact, the ledger extract of the party from the books of the assessee together with Form 16A (r.w.s. 194A) evidencing that the assessee has accepted and repaid in aggregate Rs. 25 lakhs with the loan creditor.
However, such plea of the assessee was not found acceptable by the Ld. AO and the difference of unsecured loans of Rs. 5,54,027/- (as per Form 3CD Rs. 31,54,027/- less as per confirmation of Rs. 25,00,000/-) allegedly received during the year under consideration by the assessee was held to be unaccounted income and added under Section 68 of the Act as unexplained
Karnavati Polyblends Pvt. Ltd. vs. ACIT Asst.Year –2015-16 - 3 - cash credit reported in the books of accounts of the assessee, which was in turn, confirmed by the First Appellate Authority.
At the time of the hearing of the instant appeal, the Ld. Counsel appearing for the assessee submitted before us that though the assessee has been able to prove the nature and source of amount credited in the books of accounts of the assessee and submitted the ledger extract of this party from its books of accounts alongwith Form 16A, the same was not taken into consideration in its proper perspective by the Revenue. The assessee has filed the reconciliation of amount shown in Tax Audit Report. He, therefore, prays for an opportunity to place his case again before the Ld. AO upon filing of the reconciliation statement for proper adjudication of the matter.
However, the Ld. DR relied upon the order passed by the authorities below.
We have heard the respective parties, we have also perused the relevant material available on records including balance sheet filed by the assessee as on 31.03.2015 togetherwith ledger account of the said Mahesh Tax Fab alongwith the Form 16A of the proprietor of the said company which shows that the assessee has been given unsecured loan of Rs. 25 lakhs and Rs. 1,54,027/- was the interest for such loan amount. The reconciliation statement of amount shown in Tax Audit Report is also on record before us. We, therefore, taking into consideration the entire aspect of the matter we find it fit and proper to provide a further opportunity of being heard to the assessee by the Ld. AO afresh when the assessee would
Karnavati Polyblends Pvt. Ltd. vs. ACIT Asst.Year –2015-16 - 4 - be filing the reconciliation statement as indicated above. The Ld. AO is further directed to decide the issue upon granting an opportunity of being heard to the assessee and also upon taking into consideration the evidence on record or any other evidence which the assessee may choose to file at the time of hearing of the matter. Hence, assessessee’s appeal is allowed for statistical purposes.
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