GEETA BHASIN,NOIDA vs. JCIT, RANGE- 32, NEW DELHI

On appeal before the learned CIT – A appeal of the assessee was allowed in part. Therefore the assessee is aggrieved with the amount of additions confirmed by the learned CIT – A. On those issues, assessee has preferred this appeal.

The assessee has raised the following grounds of appeal in Assessment Year 2011-12:-

That the Ld. CIT(A) has erred on facts and under the law in sustaining the addition of Rs. 80,000/- out of total addition of Rs. 1,29,125/- as made by the AO on account of notional rental income.

The learned authorised representative submitted that the ground number 1 and 2 are specifically dealt with in the other grounds, even otherwise they are general in nature. As the other grounds are required to be adjudicated on its merits, ground number 1 and 2 are not specific on an issue, therefore, those are dismissed.

Ground number 3 is with respect to the confirmation of the addition of ₹ 66 lakhs and ₹ 50 lakhs on account of unexplained credits received from one Mr. N S Bhangoo u/s 68 of the income tax act. During the course of assessment proceedings, the learned assessing officer noted that assessee has received ₹ 66 lakhs from one Mr. NS Bhangoo for purchase of property. The learned assessing officer doubted the identity as well as the creditworthiness of this party. Assessee has also received a sum of ₹ 50 lakhs from the same person, which has been returned to the particular person back , however, the assessee has not filed any evidence such as confirmation from that particular party establishing the fact that the said amount was given and received back by him. Therefore, learned assessing officer treated the above sum as an unexplained credit as the assessee has failed to establish the identity of creditor and the creditworthiness of the creditor and the genuineness of the transaction. The learned assessing officer further noted that while making an attempt for explaining the missing debited credit of ₹ 50 lakhs the assessee stated that the transactions can be confirmed from that particular party by exercising power conferred u/s 133 (6) of the act. The learned assessing officer did not do so and stated that it is the primary onus of the assessee to prove the identity and creditworthiness of the party as well as the genuineness of the transaction and as assessee has failed to discharge that particular onus, he made the addition of ₹ 50 lakhs and ₹ 66 lakhs as unexplained credit. 8. Assessee contested addition before the learned CIT – A. With respect to the addition of ₹ 66 lakhs, it was stated that assessee on account of Mr. Bhangoo has purchased a piece of land from one Mr. Anil Chaddha. The consideration of ₹ 66 lakhs was paid by Mr. Bhangoo to the appellant vide Punjab National Bank cheque number 667742-dated 28/8/2010 and in turn, the appellant made the above payment to Mr. Anil by various cheques. In registered sale deed, Mr. Anil and Mr. Bhangoo have been shown as a seller and buyer respectively and the appellant has been shown as a confirming party. With respect to the sum of ₹ 50 lakhs, it was stated that it is received from Mr. Bhangoo, for which the confirmation was never insisted by the learned assessing officer. The assessee also stated that if the AO wanted to verify the same, he has the powers u/s 133 (6) of the act and having the knowledge of the permanent account number of that party, ld AO could have verified the correctness of the claim. It was stated that the amount of ₹ 50 lakhs has been received from that particular party for purchase of land by cheque number 315393-dated 3/4/2010 and returned by cheque number 268413-dated 11/2/2011. In view of this, the assessee submitted that the addition is uncalled for. with respect to ₹ 66 lakhs assessee substantiated argument by submitting sale deed dated 6/10/2010 and the copies of the account of Mr. Anil along with the bank statement For Rs 50 lakhs assessee submitted the copy of account showing that the above amount has been repaid to that particular party. The learned CIT – A in respect to a sum of ₹ 50 lakhs held that that the assessee has not submitted the bank account copy of Mr. Bhangoo nor any copy of the correspondence in this regard. With respect to the sum of ₹, 66 lakhs he held that the genuineness of this transaction is in doubt as assessee has also not produced the confirmation of the account of Mr. Bhangoo and therefore the action of the learned assessing officer was upheld.

The learned authorised representative with respect to Rs 50 lakhs submitted that Shri Nirmal Singh bhangoo, was the Chairman of PACL Ltd and is presently behind bars and to substantiate facts, he submitted the various newspaper articles. Therefore assessee could not submit the confirmation.

With respect to the transaction of Rs 66 lakhs, he submitted copy of sale deed dated 6/10/2010 between Sri Anil Chaddha and Mr. Bhangoo and the assessee as a confirming party for purchase of immovable property known as Nauxim at Goa for a sum of ₹ 66 lakh. It was further shown that the purchaser has issued cheques number 667742 of ₹ 66 lakhs drawn from Punjab National Bank New Delhi for purchase of the above-mentioned property . The cheque was issued in the name of confirming party and the receipt of which the seller and the confirming party have been given in the sale deed itself. The assessee also submitted the photocopy of the cheque issued by buyer in favour of the assessee. He further referred to an another transaction of assessee with Mr. Bhangoo . He submitted a copy of an agreement dated 12/3/2010 between the assessee and Mr. Bhangoo for construction of at Goa for ₹ 62 lakhs. It was further stated that an identical facts and circumstances from the same person an addition of ₹ 62 lakhs was made by the learned assessing officer on account of receipt of the sum from Mr. Bhangoo, however , same has been deleted by the learned CIT – A and on appeal filed before the ITAT by the revenue, appeal of the revenue was dismissed. Therefore, he submitted that in case of the same person the identity, creditworthiness and the genuineness of the transaction with respect to a sum of ₹ 62 lakhs has been accepted by the revenue, which is confirmed up to the level of ITAT, therefore, it cannot be said that the identity and creditworthiness of such person is doubted with respect to the above two transactions of Rs 66 lakhs and Rs 50 lakhs. Even otherwise, it was stated that it was not a cash credit but a business transaction, which is also supported by the sale deed. It was further stated that assessee has submitted a copy of the account of Mr. Anil, which shows that the sum of ₹ 66 lakhs received from Mr. Bhangoo, was credited in the books of Sri Anil on 18/8/2010. This cheque was cleared on 4/9/2010. Merely because the cheque has been cleared later on, the transaction has been doubted by the lower authorities. The above cheque has subsequently been cleared on 7/9/2010. He further submitted that the above evidence placed before the lower authorities are not controverted and therefore the addition of ₹ 66 lakhs deserves to be deleted.

With respect to the addition of ₹ 50 lakhs, he submitted that assessee has submitted copy of Ledger account, which shows that the assessee has received a sum of ₹ 50 lakhs on 3/4/2010 by cheque number 319353, which was refunded back to the party on 11/2/2011. These entries are duly reflected in the bank account of the assessee with Axis bank. It was stated that the person who deposited the sum is still behind the bars and therefore assessee is prevented by sufficient cause in filing confirmation of the above party. It was submitted that with respect to this addition of ₹ 50 lakhs the same deserves to be restored back to the file of the learned assessing officer as the assessee has been prevented by sufficient cause in filing the confirmation of the above party.

The learned departmental representative vehemently supported the orders of the lower authorities.

We have carefully considered the rival contention and perused the orders of the lower authorities. We have also considered the paper book filed by the learned authorised representative. The learned assessing officer has made two additions, which are contested by this ground. Addition, of ₹ 66 lakhs and ₹ 50 lakhs because of unexplained credits received from one Mr. N S Bhangoo u/s 68 of the act. a. The facts of the addition of ₹ 66 lakh show that the claim of the assessee, that Mr. Bhangoo has purchased a piece of land from one Mr. Anil Chaddha for a consideration of 66 lakhs. Shri N S Bhangoo paid the above sum to the assessee vide Punjab National Bank cheque number 667742-dated 28/8/2010 and in turn, the appellant made the above payment to Mr. Anil Chaddha by various cheques. The assessee produced a registered sale deed where Mr. Anil Chaddha and Mr. Bhangoo have been shown as seller and buyer respectively and the appellant is shown as a confirming party. This amount was added in the hands of the assessee u/s 68 of The Income Tax Act. The addition has been made for the reason that prior to the sum of ₹ 66 lakhs received from Mr. N S Bhangoo , assessee has already paid Rs. 22 lakhs to Mr. Anil Chaddha. Therefore it was held to be a strange transaction where the confirming party has paid some of ₹ 2,200,000/- for purchase of property in the name of other party from whom sum was received later on. For this reason, the addition has been confirmed. We find that in that particular case it is not in dispute that the buyer and seller have agreed to deal with a property for ₹ 66 lakhs, the assessee is merely a confirming party, the trail of the funds received from the buyer and paid to the seller are from the account of the assessee. Merely because confirming party assessee has invested some sum by paying to the seller , before the sum is received from the purchaser, the whole amount of the sum received

Accordingly, ground number 3 of the appeal of the assessee is partly allowed with above direction.

The ground number 4 is with respect to the disallowance of ₹ 510,000 paid by the assessee to M/s Calm construction Co for construction of boundary wall. The learned assessing officer disallowed the same stating that the assessee could not prove that expenses were incurred on construction of boundary wall. The learned CIT – A confirmed the same. 16. Agitating above ground the learned authorised representative submitted that assessee has offered a receipt of Rs 2.37 crs as contract income from construction, assessee has subcontracted the work of construction of compound wall to this party. Assessee submitted the copy of Ledger account of the party in the books of the appellant for the year under consideration along with the copy of bill dated 18/8/2010 issued by that party in the name of the assessee. Assessee also produced the copy of the tax deduction certificate issued by the appellant in the name of the above party and submitted that this addition has been made by the learned assessing officer without confronting the assessee. It was stated that when the assessee has given the complete details with respect to the above party as well as the copy of the bill, which has not been controverted by the lower authorities, the addition deserves to be deleted. 17. The learned departmental representative vehemently supported the order of the lower authorities. 18. We have carefully considered the rival contention and perused the orders of the lower authorities. The assessee has paid the sum of ₹ 510,000 to Messer’s Calm construction Co for the construction of the compound wall , to substantiate it assessee submitted the copy of the bill dated 18/8/2010, which is placed at page number 115 of the paper book. The assessee has also deducted the tax at source on the above sum. The details produced by the assessee remain uncontroverted by the lower authorities. Further assessee has paid above sum as part of the contract receipt and construction of compound wall was subcontracted to the Calm Construction. In view of this we direct the learned assessing officer to delete the above addition of ₹ 510,000/–. Accordingly, ground number 4 of the appeal of the assessee is allowed.

Ground number 5 is with respect to the confirmation of the addition of Rs 1.85 cr made by the learned assessing officer on account of unexplained credit received from PACL Ltd u/s 68 of the income tax act. During the course of the assessment proceedings, the learned assessing officer noted that assessee has received payment of Rs 1,44,00,000/- in her bank account number 200301 in Nainital bank. AO further noted that above sum was transferred to another account of assessee after the receipt of the above sum. Therefore, the learned assessing officer questioned the assessee to show the nature of transaction. Assessee submitted that the above company is a debtor of the assessee and the amount realized was towards the contract work undertaken at Goa in earlier years. It was stated that the total value of the contract was Rs 237,95,918 and the same has been shown as income of the assessee. The copy of the account of the above party from the books of the assessee was also submitted. According to the copy of the account there was an opening outstanding debit balance of Rs 135,57,959 for financial year 2010 – 11. Assessee also submitted the copy of the computation of income and tax deduction at source certificate issued for assessment year 2010 – 11. It was further stated that the work was subcontracted to another parties and the account of those parties were filed along with the confirmation from the above parties. The learned AO noted that the appellant has received payment in bank account number 200301 from PACL India the amount so received being ₹ 50 lakhs on 2/4/2010 and another ₹ 5,000,000 on 16/4/2010 and ₹ 44 lakhs on 29/9/2010. These payments were transferred to the other bank account of assessee in current account number CA1001853 on 6/4/2010, 21/4/2010 and 7/10/2010 respectively. The AO raised a query as to the source of the payment received by the assessee, which was explained that the Messer’s PACL India Ltd is a Sundry debtor of the assessee and the amount so received was towards contract work undertaken at Goa. The AO noted that there are two types of transactions involving PACL Ltd. One is advance of Rs 2.34 crore received, which was received over a period of two years prior to the assessment year. The learned AO found that such payment for purchase of land is unusual as in any deal for purchase of land advances are paid just prior to 1 or two months before the final payment and purchases and not a series of payment over a period of two years before the so-called deal was eventually called off. AO noted that neither the confirmation nor a copy of agreement was submitted and therefore he held that the assessee has introduced her own money in the name of a bogus and sham transaction. Another transaction is receipt of contractual sum of Rs 237,95,818/–. The AO noted that the first payment of advance was received on 18th of March 2010 and on 13th of March 2010 just before the repayment by the assessee of RS 2.37 crore of almost equal amount of the advances was raised against the same company. The AO doubted the entire transaction was not believable on the ground that when the appellant had already failed in the deal for land it is against normal conduct that same party has entrusted the construction work to the assessee. He further held that this transaction is also sham and bogus. The learned AO also doubted the sanction plan stating that there is no name of the assessee mentioned therein. He further held that assessee received the payment only on 13/3/2010 wherein the assessee has substantially payments have been spent by the assessee on construction activities. He further noted that against the contract payment of Rs 237,95,918/- profits of around Rs 5.70 lakhs is shown which is very less. Therefore, it was concluded that the payment in the bank has no relation with the contract payment for construction work. Accordingly he made the addition of ₹ 1.84 crores in the hands of the assessee applying the provisions of Section 68 of the income tax act with respect to following four sums:- a. ₹ 40 lakhs appearing in the account of PACL India in the books of the assessee b. ₹ 50 lakhs credited on 2 April 2010 c. ₹ 50 lakhs credited on 16 April 2010 d. ₹ 44 lakhs credited on 29/9/2010 20. Assessee challenged the above addition before the learned CIT – A. The assessee showed that a contract sum of Rs. 2.37 crores on which tax is also deducted is already shown as an income in financial year 2009 – 10 when the bills were raised and part payment of ₹ 1.02 crore was received and outstanding balance of ₹ 1.35 crores was shown as receivable. It was stated that during the next year the appellant received a further sum of ₹ 94 lakhs and the balance of ₹ 40 lakhs was adjusted by passing a general entry since the assessee was already demanding ₹ 40 lakhs from that party in earlier year. Thus the total amount was adjusted. Assessee also produced a reconciliation statement assessee also stated that she has not spent the amount of construction work out of her own funds but she received a sum of ₹ 1.55 core during financial year 2007 – 08 and another sum of ₹ 79 lakhs during 08-09. The copies of the accounts were also submitted to show the above fact. With respect to the sanction plan, it was stated that the name of architect is mentioned therein but the name of the contractor is not usually mentioned in the sanction plan. There is no such requirement. Assessee also submitted that she has shown a gross profit of 2.4% on the total contract value as the work was subcontracted. Assessee also submitted the confirmation of PACL Ltd. With respect to the error in the bank account, it was submitted that it is because of wrong printout command, however, all the entries recorded in the books of accounts of the assessee. Therefore, it was stated that the omission of such entries in the first printout was bona fide error and there is no suppression of income. Assessee also submitted the account of the party in the books of the assessee shown as debtor and advance against land account. With respect to the construction activity, assessee also submitted a completion certificate dated 13/3/2010 along with the Ledger account. With advance against land account, complete Ledger accounts were submitted. Assessee also submitted the copy of agreement dated 16 February 2007 between PACL India Ltd and the assessee for construction of a villa and compound wall for Rs 237,95,918/–. Therefore, it was contended that despite above facts, the learned assessing officer has made the addition u/s 68 of the act. The learned CIT – A dealt with issue in paragraph number 5.6.3 holding that it is not disputed that the directors of PAC-I Ltd are closely associated with the appellant and it is not difficult to obtain confirmation or other requisite material to the mutual benefit of both. He because of the low profit, nonproduction of agreement for purchase and sales and because of the wrong printout as well as proximity between assessee and Directors of PACL Limited held that it cannot be a mere coincidence accordingly he upheld the addition of ₹ 1.84 crores u/s 68 of the income tax act made by the learned AO.

The learned authorised representative vehemently assailed the order passed by the learned AO and confirmed by the learned CIT – A by producing and referring extensively to the submission dated 26/5/2016, 15/7/2016, 23/9/2016 and 29/05/2017 placed before the various authorities. The assessee also referred to the copy of agreement dated 16/2/2007 and the completion certificate dated 13/3/2010. Assessee also produced and referred documents dated 13/3/2010 for Rs 197,95,918 and ₹ 40 lakhs aggregating to Rs 237,95,918 which is shown by the assessee as income of the assessee for this year. Learned authorised representative also referred to the various Ledger accounts showing contract receipt and the copy of the tax deduction certificate issued by the principal. The learned authorised representative also referred to the copy of income tax return, computation of total income, annual balance sheet and profit and loss account along with details of other liabilities and sundry debtors of the assessee for the assessment year 2010 – 11 and stated that the contract income has been shown on the credit side of the profit and loss account and further also referred that the party was shown as a debtor. It also referred to the various Ledger account in her books along with the copies of the cheques and the relevant bank statements of the assessee. He further referred to the annual accounts of PACL Ltd and the profit and loss account for the respective financial year of the principal to show that there is no doubt about the identity, creditworthiness and the genuineness of the transaction. In view of this, he submitted that the addition of ₹ 1.84 crores made by the learned assessing officer and confirmed by the learned CIT – A of the sum received from PAC-I Ltd u/s 68 of the act deserves to be deleted.

The learned departmental representative vehemently supported the orders of the learned assessing officer.

We have carefully considered the rival contention and perused the orders of the lower authorities. With respect to the construction receipt of Rs 237,95,918/– raised by the assessee on PACL Ltd which has been shown by the assessee as income for assessment year 2010 – 11, supported by the agreement dated 16/2/2007 for construction of a villa and compound wall at Goa. Merely because in the sanction plan the name of the assessee is not mentioned cannot go against the assessee in absence of any provision of law shown by the revenue authorities that it should necessarily have the reference of the contractors name in that plan. Assessee has also produced the completion certificate of the above property and stated that she has subcontracted the work to the other parties. There is no doubt about the subcontract work given by the assessee to other parties who have been paid by proper cheques based on supporting evidences of invoices. Further sum received by the assessee from PACL Ltd was also through account payee cheques. Assessee has also produced a. the copy of the agreement, b. copies of the invoices, c. annual accounts of PAC-I Ltd, and d. the proof with respect to the construction activity carried out through assessee as a contractor and e. accounts and the details of subcontracted work f. TDS Certificates g. Subsequent sum received in next years h. Completion certificates i. Income tax Return j. Copies of accounts Above evidences clearly shows that assessee has on the above sum which has been shown in the profit and loss account for this year has paid due tax s income. Assessee has also produced confirmation and the reconciliation of any printing error in the bank account. Even otherwise, it is not the case of the revenue authorities that the sum received by the assessee in the bank account has not been shown by the assessee in her books of account. Further, merely because the learned CIT – A and AO held that assessee is closely related to the directors of the principal company, the above amount cannot be added u/s 68 of the income tax act in absence of any evidence that there is collusion between the assessee and the directors of the principal company. Assessee has clearly denied any proximity. Revenue authorities have also not shown what kind of proximity exits between them and how it affects the above transaction. There is no Page | 14 evidences that transaction is sham or bogus except mere assumptions. The fact is also clear that when there was an outstanding amount receivable from the principal , against which the work was carried out by the assessee mere adjustment of that work and amount outstanding in earlier years cannot be added in this year u/s 68 of the act for the simple reason that sum to that extent is not received during the year i.e. not credited in the books during the year. The sum received by the assessee from PAC-I Ltd during the year is ₹ 1.84 crores whereas the assessee has shown income out of the above contract of Rs 2 .37 crores, which are higher than the sum, received. Thus, the assessee has already shown the income higher than the amount of credit added by the learned assessing officer. So far as the issue of low profit is concerned, we find that learned assessing officer should have rejected the books of accounts of the assessee and determine the profit on the above sum of contract receipt, however, same has not been done but the total contract sum received despite shown as income, has been added u/s 68 of the act. We hold that ld AO could have made addition u/s 68 as well as could have made addition on account of profit also separately. The complete explanation of the assessee made before the learned CIT – A which has been reproduced in paragraph number 5 – 6 – 2 of the act clearly shows that the addition has been made by the learned assessing officer merely on conjectures and surmises and the learned CIT – A is confirmed the same merely holding that it is not difficult for the assessee to obtain confirmation or other requisition for the mutual benefit of the assessee as well as the principal. The learned CIT – A also held that it could not be a mere coincidence. Thus, the whole addition made by the learned assessing officer and confirmed by the learned CIT – A is merely on assumption. In view of this the addition made by the learned assessing officer of ₹ 1.84 crores in the hands of the assessee on account of unexplained credits u/s 68 of the income tax act deserves to be deleted. Accordingly, ground number 5 of the appeal of the assessee is allowed.

Ground number 6 of the appeal of the assessee is with respect to the sustained the disallowance/addition of Rs 933,817 out of the total addition made by the learned assessing officer of Rs 1,633,817 because of commission received from Mr. Ritesh Chodankar. Facts of the case shows Page | 15 that assessee has provided services to this party by raising bills dated 13/7/2010 of ₹ 30 lakhs and on 31/3/2011 of ₹ 70 lakhs. Therefore, the total commission income was shown at Rs. 1 Crore. The above billing was inclusive of service tax against which the assessee has deposited a service tax of ₹ 280,145/– and ₹ 653,672/–. The assessee has also been given a certificate of tax deduction at source on the above sum. The assessee also submitted the copy of the Ledger account of the party from the books of the assessee as well as the copy of the Ledger account of the assessee from the books of the third party to show that the actual commission income received is only Rs 1 crore including of service tax. However the copy of the bank statement of the assessee shows a sum of ₹ 7 lakhs received from Mr. Ritesh on 23/9/2011 therefore the learned assessing officer made the addition of ₹ 7 lakhs including service tax amounting to ₹ 1,633,817/–. On appeal before the learned CIT – A the addition to the extent of ₹ 933,817 was confirmed for the reason that the assessee has shown the gross commission received from the appellant of Rs 1 crore on which ₹ 7 lakhs TDS has been made. The learned CIT – capital and dismiss the explanation of the assessee that assessee has returned the above sum of ₹ 7 lakhs in the next financial year on 23/9/2011. The learned CIT – A the above party was witnessing the deal of sale between Mr. Anil Chaddha and Mr. Bhangoo therefore both the parties are having more than normal transactional relationship. Therefore the learned CIT – A agreed that the gross commission offered should have been Rs 1 crore and thus affirming the addition of the balance over that shown by the assessee of ₹ 9,066,183/- i.e. ₹ 933,817. Against this, the assessee is in appeal before us.

The learned authorised representative referred to the copies of the bills including the service tax raised by the assessee on account of commission charges for sale of land. The confirmation of the party as well as the proof of payment of the service tax was also produced. The confirmation of the parties showing the Ledger account of the assessee from the books of the commission payer was also submitted it was submitted that the balance sum of ₹ 7 lakhs was advance against sale of plot in the books of the assessee for the year Under consideration along with the conformity certificate dated 13/2/2014 and is subsequently the above sum of ₹ 7 lakhs was paid back on 23/9/2011. Therefore it was the contention that the addition sustained by the learned CIT – A of ₹ 933,817 out of the total addition of ₹ 1,633,817/– on account of the commission received deserves to be deleted.

The learned departmental representative vehemently supported the orders of the lower authorities.

We have carefully considered the rival contention and perused the orders of the lower authorities. The only grievance in this case is an addition of ₹ 7 lakh sustained by the learned CIT – A which has been returned by the assessee to the party on 23/9/2011, which is supported by the copies of the bank statement of the assessee showing the repayment of the above amount. The assessee has shown the commission income by raising two bills. The respective service tax amount was paid by the assessee and it was demonstrated by production of the service tax challan and the copies of the bank statement of the assessee. Further, the impugned amount of Rs 7 lakhs , which has been confirmed by the learned CIT – A is not on account of the commission but was advance against the sale of land, which was returned by the assessee in subsequent years, which is also proved by the copy of the bank statement. The learned lower authorities did not support any material to show that the amount of ₹ 7 lakhs, which is received by the assessee during the year and subsequently returned by the assessee, was part of the commission income of the assessee. Merely because assessee has a dealing with the other party for provision of services, it cannot be said that assessee cannot have any other transaction with that party and whatever is received which is for other transaction should also be considered as service income even without any evidence. In view of the documents produced by the assessee with respect to the repayment of ₹ 7 lakhs, it cannot be said that assessee has also received the above 7 lakhs as a commission during the year. Accordingly we reverse the order of the learned CIT – A confirming the addition of ₹ 7 lakhs as commission income in the hence of the assessee and allow ground number 6 of the appeal.

Ground number 7 is with respect to the addition of Rs. 4 lakhs on account of unexplained credit received from one Shri Anil Kumar added by the learned assessing officer u/s 68 of the income tax act. This amount was shown by the assessee is an advance against the sale of property. The assessee filed the confirmation letter of the party but other details were not produced therefore the learned assessing officer made the addition. On appeal before the learned CIT – A assessee submitted the permanent account number, confirmation filed by the assessee of the above party. The learned CIT – A noted that except the confirmation from that party regarding the liability and containing the permanent account number of the credit and nothing more has been submitted and therefore he confirmed the addition.

The learned authorised representative submitted that that assessee has submitted the confirmation dated 6/3/2014 of Mr. Anil Kumar wherein the permanent account number of that particular party was submitted. Against this, the learned assessing officer did not make any enquiry but made the addition. He submitted that the learned assessing officer could have enquired or investigated the matter further if there is any doubt or should have confronted the assessee against any adverse material available with the learned assessing officer. He submitted that the learned assessing officer did not have any adverse material and therefore the addition deserves to be deleted.

The learned departmental representative vehemently supported the order of the lower authorities.

We have carefully perused the orders of the lower authority as well as the rival contentions. In that particular case the assessee has received a sum of Rs. 4 lakhs from one Mr. Anil Kumar . The assessee submitted the confirmation letter along with the PAN of that party. The learned assessing officer without making enquiry made the addition of the above sum and also did not confront assessee with any other adverse material. In fact assessee has discharged initial onus cast upon him with respect to the about transaction. Once the assessee has submitted the confirmation letter, if the assessing officer has any doubt about that, he either should have made enquiry himself or should have asked the assessee to further substantiate the transaction. In absence of this enquiry, the addition u/s 68 of the act cannot be sustained. Accordingly, we direct the learned assessing officer to delete the addition u/s 68 of the sum of Rs. 4 lakhs. Accordingly, ground number 7 of the appeal is allowed.

Ground number 8 is with respect to the addition sustained by the learned CIT – A of ₹ 80,000 out of the total addition of ₹ 129,125/– on account of notional rental income. This ground was not pressed hence dismissed.

Ground number 9 is with respect to the sustaining of the disallowance of ₹ 298,620/- out of the total disallowance of ₹ 337,097 made by the learned assessing officer on account of vehicle running and maintenance expenditure. The learned AO found that against ₹ 165,682/– claimed in the immediately preceding year the appellant this year has claimed a sum of ₹ 537,097/– for this year on account of motorcar vehicle running and maintenance expenditure. The learned assessing officer made the disallowance of ₹ 337,097 on account of nonproduction of bills and vouchers. On appeal before the learned CIT – A it was stated that since the books of accounts and bills and vouchers are produced before the learned assessing officer, which are audited, no disallowance should have been made and AO could have verified the expenditure on his own. It was further stated that to claim the expenditure on vehicle running expenditure assessee should not be the owner of the vehicles. It was further stated that in fact the assessee has claimed such expenditure only of ₹ 298,620/– and therefore the disallowance could not have been 3,37,097/–. The learned CIT – A agreed with the contention of the learned assessing officer however held that as assessee has claimed expenditure of only ₹ 298,620/– directed the learned assessing officer to examine the claim of the assessee that it has claimed only such expenditure and further he directed the learned assessing officer to verify the same and to restrict the disallowance to the extent of expenditure claimed in the return of income. 34. The learned authorised representative submitted that the above disallowance has been made by the learned assessing officer without giving any opportunity of hearing to the assessee. He submitted that in fact the assessee has incurred only expenditure of ₹ 298,620/– whereas the learned assessing officer disallowed a sum of ₹ 337,097/–. 35. The learned departmental representative submitted that when the assessee did not get any opportunity of hearing before the learned assessing officer and there is a serious dispute with respect to the amount of expenditure claimed, the above ground of appeal

The learned authorised representative reiterated the same facts. He further stated that above is a business transaction as stated in the board resolution dated 24/1/2011 of the company from which the loan was received. It was further stated that assessee has immediately paid back the sum to the above company the movement the project was not carried forward. The assessee also submitted that she has not received any benefit of the about transaction and therefore there cannot be taxability of any deemed dividend in the hands of the assessee. He relied upon the following judicial precedents:-