SHRI SHIV SHANKER GUPTA,LUCKNOW vs. INCOME TAX OFFICER- IV(4), LUCKNOW

At the outset, Learned A. R. invited our attention to the fact that there has occurred a delay of 11 days in filing the appeal and in this respect our attention was invited to the affidavit duly signed by the advocate of the assessee wherein he has stated that due to ill health of his wife, the filing of appeal got delayed. Learned A. R. stated that in view of these facts and circumstances, the delay may be condoned and the appeal of the assessee may be heard on merits. Learned D. R. had no objection to condonation of delay. I, having found the reason for delay in filing the appeal reasonable, condoned the delay and asked Learned A. R. to proceed with his arguments.

Learned A. R. submitted that he has taken an additional ground of appeal, which is purely a legal issue and which is coming out of the facts of the case. The additional ground taken by the assessee reads as under:

Learned A. R. stated that it is undisputed that the assessee was not maintaining any books of account and Assessing Officer has made an addition of Rs.4,21,100/- on the basis of entries found in the bank statements of the assessee u/s 68 of the Act, which is not permissible as the provision of section 68 clearly states that any amount credited in the books of account can only be added as per the provisions of section 68 of the Act. Learned A. R. further stated that assessee had received all unsecured loans through cheques and in this respect filed copy of bank statement highlighting the entries of receipt of cheques. The learned A.R. placed his reliance on the order of Hon'ble Patna High Court in the case of CIT Bihar vs. Bihari Bros (P) Ltd for the proposition that once the assessee had received unsecured loans through cheques and assessee submitted the details of creditors, the assessee is deemed to have discharged its onus.

Learned D. R., on the other hand, placed his reliance on the orders of the authorities below.

I have heard the rival parties and have gone through the material placed on record. I find that assessee had filed return of income declaring income of Rs.71,530/-. The assessee is engaged in dealing of batteries of motor vehicle and had declared a turnover of Rs.17,95,807/- on which profit of Rs.1,48,154/- was offered to tax. The return was filed under the provisions of section 44AF of the Act, which establishes that the assessee was not maintaining books of account. I further find that the Assessing Officer has made an addition of Rs.4,21,100/- out of various cheques credited in the bank account of the assessee. The assessee during the course of assessment proceedings had filed confirmations regarding receipt of unsecured loans from these persons. I further find that these additions were made on the basis of entries in the bank statement as the assessee was not maintaining any books of account. The addition u/s 68 can only be made if any unexplained sum is found credited in the books of account of the assessee. Here is a case where the sum was not found credited in the books of account and therefore, the addition made u/s 68 is not sustainable and hence the order of learned CIT(A) is reversed and the appeal of the assessee is allowed. Since we have adjudicated the additional ground taken by the assessee, the remaining grounds do not call for any adjudication.

In the result, the appeal of the assessee stands allowed.