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Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA
Before: DR. MANISH BORAD
order
: September 22nd, 2022 आदेश ORDER
Per Manish Borad, Accountant Member:
This appeal filed by the assessee pertaining to the Assessment Year (in short “AY”) 2012-13 is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the “Act”) by ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [in short ld. “CIT(A)”] dated I.T.A. No.: 425/Kol/2022 Assessment Year: 2012-13 Bibhuti Bhusan Das. 24.05.2022 arising out of the assessment order framed u/s 147/143(3) of the Act dated 18.12.2018.
The assessee is in appeal before this Tribunal raising the following grounds: “
1. That under the facts and circumstances of the case, the Ld. CIT(A) erred in passing order ex-parte.
2. That under the facts and circumstances of the case, the Ld. CIT(A) erred in confirming addition of a sum of Rs.28,00,900/- made by the AO in terms of section 68 of the Income Tax Act, 1961. The addition is unjustified and needs to be deleted.
3. The assessee craves leave to add, alter, amend or withdraw any ground or grounds of appeal before or at the time hearing.”
3. Brief facts of the case are that the assessee is an individual earning income from other sources, return of income for AY 2012- 13 filed on 26.09.2012 declaring income of Rs. 3,81,917/-. Subsequent to issue of notice u/s 148 of the Act, assessment proceedings u/s 147 r.w.s. 143(3) of the Act were carried out wherein the assessee was asked to explain the receipt of Rs. 28,00,900/- and why not the provisions of Section 68 of the Act be invoked thereon. Detailed reply was filed explaining the source of the said sum but ld. AO made the addition u/s 68 of the Act observing that the said sum was the amount receivable by the partnership firm of which the assessee is a partner but since it was shown as liability in the balance sheet which is actually not the liability of the assessee, the same is liable to be added u/s 68 of the Act and accordingly assessed the income at Rs. 31,82,820/-.
4. Aggrieved, the assessee preferred appeal before ld. CIT(A). Various notices were sent on the e-mail ID but the assessee failed I.T.A. No.: 425/Kol/2022 Assessment Year: 2012-13 Bibhuti Bhusan Das. to give any reply. Ld. CIT(A) passed the appellate order dismissing the issue on merit and confirmed the addition made by the ld. AO.
5. Aggrieved, the assessee is now in appeal before this Tribunal. Ld. Counsel for the assessee submitted that the said sum of Rs. 28,00,900/- was the amount received by the assessee in his sole proprietorship concern on behalf of the partnership firm M/s. City Live Construction of which the assessee is also a partner. He has submitted that the business of the partnership firm newly started and bank account was not opened. Certain advances were received for the project “Live Garden” from few buyers and for the time being the same were taken in the proprietorship firm run by the assessee but subsequently, the same was returned back to the firm/adjusted in the account of M/s. City Live Construction and, therefore, the addition u/s 68 of the Act is not called for.
Per contra, ld. D/R vehemently argued supporting the orders of both the lower authorities.
I have heard rival contentions and perused the records placed before me. The assessee is aggrieved with the finding of ld. CIT(A) confirming the addition of Rs. 28,00,900/- made by ld. AO u/s 68 of the Act for unexplained cash credit. I observe that the assessee run a proprietorship concern and is also a partner in M/s. City Live Construction. This partnership firm commenced a project in the name of “Live Garden”. As stated by the ld. Counsel for the assessee that since the firm as well as project was new, the bank account was not opened and just to facilitate the business of the firm, the assessee allowed the buyers to give advance in the bank account of the sole proprietorship concern. I also observe that ld. Page 3 of 5 I.T.A. No.: 425/Kol/2022 Assessment Year: 2012-13 Bibhuti Bhusan Das. AO has thoroughly carried out the enquiry from the persons who have given the alleged amount of Rs. 28,00,900/-. Ld. AO was satisfied on the basis of positive replies received to the notices issued u/s 133(6) of the Act and also successful cross-verification of such transactions and ld. AO has specifically observed that the advances were received for the partnership firm M/s. City Live Construction. So, identity, genuineness and creditworthiness of the persons advancing the said sum is not in dispute. The addition has been made merely for the observation that when the said advance was a liability of the partnership firm why it was standing in the books of the assessee. Even, ld. CIT(A) has also confirmed the addition on the basis of this observation of ld. AO.
I, however, find no merit in the finding of ld. CIT(A) as he failed to appreciate the simple accounting entry that when the assessee’s proprietorship concern received a sum on behalf of the partnership firm then such sum will stand on the liability side of the balance sheet of the sole proprietorship concern and when the said sum is repaid back the credit balance is squared off. There is no other mechanism to reflect such entry in any other way as has been shown by the assessee. Since the assessee has rightly disclosed the said transaction in the books of account as an advance received on behalf of the firm on the liability side of the balance sheet and since genuineness of the sum so received is not in dispute at the end of Revenue parties, I hereby set aside the finding of ld. CIT(A) and delete the addition of Rs. 28,00,900/- made by ld. AO u/s 68 of the Act. Thus, the effective ground no. 2 raised by the assessee is allowed.
I.T.A. No.: 425/Kol/2022 Assessment Year: 2012-13 Bibhuti Bhusan Das.
Ground no. 1 challenging the order of ld. CIT(A) being ex- parte become infructuous as I have already allowed the assessee’s ground on merit and ground no. 3 is general in nature which needs no adjudication.
In the result, the appeal filed by the assessee is allowed. आदेश ददन ांक 22 दितांबर, 2022 को उद्घोदित। Kolkata, the 22nd September, 2022. Sd/- [Manish Borad] Accountant Member Dated: 22.09.2022 Bidhan (P.S.) Copy of the order forwarded to:
1. 1. Bibhuti Bhusan Das, P-42, Block-A, Satabdi Park, Mukundapur, Kolkata-700 099.
2. ITO, Ward-25(2), Kolkata. 3. CIT(A)- NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata.