PATTON WAREHOUSING PVT LTD,VARANSI vs. ITO WARD - 19(3), NEW DELHI

The only ground raised by the assessee is that ld. CIT (Appeals) has erred in law and on facts in confirming the addition of Rs.18,60,820/- made under Section 68 of the Act.

Brief facts of the case are that, the assessee had filed return of income on 31.10.2015 showing loss of Rs.27,95,310/-. Case of the assessee was selected for scrutiny under CASS for a limited category and one of the reasons for scrutiny was un-secured loans from the persons who have not filed the return of income. The ld. Assessing Officer noted that assessee had shown to have received loans aggregating to Rs.1,23,70,820/- from Shri Sachin Kumar, who is the Director of the company. Assessing Officer also noted that the assessee has filed the details of loans taken from Shri Sachin Kumar along with his ITRs and bank statements etc. However, the Assessing Officer noted on perusal of the bank statements that increase of the loan appeared in the confirmation were not verifiable from the bank statement of Shri Sachin Kumar filed by the assessee. He observed that amount of Rs.18,60,820/- which has been shown by the assessee to have been received on 31.03.2015 had not credited to the bank account of the assessee. Based on this, he has made the addition under Section 68 of the Act after observing and holding as under:-

Before the CIT (Appeals), the appellant had given copy of account of Shri Sachin Kumar, in the books of accounts of the assessee and also the bank details which has been incorporated from page Nos. 3 to 6. It was stated that the cheque was received on 31.10.2015 for an amount of Rs.18,60,820/-. However, the amount was transferred to the account of the assessee on 27.06.2015 only in the next financial year. Even after calling of the remand report and the assessee’s explanation in this regard the ld. CIT (Appeals) has confirmed the said addition after observing as under:- “It is seen that the said transaction was credited in appellant’s books of account on 31.03.2015 through book entry. However, the actual transaction of the said transaction had taken place on 27.06.2015 which clearly showed that Mr. Sachin Kumar had transferred the amount of Rs.18,60,820/- to the assessee company only on 27.05.2015. The assessee had not received loan amount of Rs.18,60,820/- from the Director, Shri Sachin Kumar, as on 31.03.2015. In its rejoinder, the assessee has claimed that it was “missed from memory”. This explanation cannot be accepted as it is merely an after-thought devised by the appellant to cover up its mistake. Therefore, I am inclined to agree with the Assessing Officer and confirm the addition made. “

I have heard both the parties and on perusal of the impugned order as well as the material on record placed before me, it is seen that, it is an undisputed fact that the assessee company had received loan from its Director, Shri Sachin Kumar, for sums aggregating to Rs.1,23,70,820/-. The Assessing Officer has accepted the genuineness of the loan as well as creditworthiness of Shri Sachin Kumar. However, the only dispute is that, one amount of loan received on 31st March, 2015 for a sum of Rs.18,60,820/-, which has been shown in the balance sheet 3as at 1st March, 2015 and in the books of accounts, has not been credited in the bank account of the assessee as same was transferred only on 27th June, 2015. It is very surprising that the Assessing Officer has made the addition under Section 68 of the Act only on the ground that sum of Rs.18,60,820/- has come in the account of the assessee in the next financial year and, therefore, this loan has been treated as non-genuine in this year which has been taxed under the deeming provisions of Section 68 of the Act. If the amount is credited in the bank account of the assessee in this year and has been shown as a loan in the books this year; and when the Assessing Officer is not doubting the identity, genuineness and creditworthiness of the transaction, then I do not find any reason as to why the addition under Section 68 of the Act can be made. Just because, the cheque has been cleared in the next financial year, it does not mean the amount credited in books when cheque was received on 31st March is unexplained income of this year. If Assessing Officer is treating that it is not the amount received during the year, ostensibly then the addition under Section 68 could not have been made in this year. Thus, I do not find any reason for making addition of Rs.18,60,820/- under Section 68 of the Act in this year when the assessee had shown to have received amount of Rs.18,60,820/- in its books on 31st March, 2015 and nothing has been questioned about the nature and source of the credit. Again it is reiterated that Identity, genuineness and creditworthiness for the loan received has not been doubted, albeit the credit appearing in books has been taxed just because amount credited in the bank account in the next financial year. Accordingly, the addition of Rs.18,60,820/- is deleted.

In the result, the appeal of the assessee is allowed. Order pronounced in the open court on : 05/04/2022.