MAHALAKSHMI ENTERPRISES,CHENNAI vs. ITO NCW 9(2), CHENNAI

The assessee has raised the following grounds of appeal:

The order of the learned Commissioner of Income Tax - (Appeals)-10 concurring with the order of the learned assessing officer is against the facts of the case and principle of natural justice.

2. The learned Commissioner of Income Tax-(Appeals) erred in making addition of a sum of Rs.45,35,000/- as unexplained credit in the hands of the appellant. 3. The learned Commissioner of Income Tax-(Appeals) failed in not appreciating the bank statements and explanation of the bank transaction for the relevant assessment year. 4. The learned Commissioner of Income Tax - (Appeals) failed in not appreciating that Rs.45,35,000/- was sum received from Bajaj Promoters Pvt Ltd., which was reflecting in the bank statement also.

The brief facts of the case are that the assessee firm engaged in real estate business filed its return of income for the AY 2009-10 on 19.03.2016 declaring total income of Rs.3,56,630/-. The case has been, subsequently, re-opened u/s.147 of the Act, and assessment has been completed u/s.143(3) r.w.s.147 of the Act, on 30.12.2016 and determined total income at Rs.48,91,630/- by making the additions towards bank deposit amounting to Rs.45,35,000/- on the ground that the assessee could not file any evidences in support of the credit. The relevant findings of the AO are as under:

Being aggrieved by the assessment order, the assessee preferred an appeal before the Ld.CIT(A). Before the Ld.CIT(A), the assessee neither appeared nor filed any details despite four dates of hearing were given to the assessee calling for various details. Therefore, the Ld.CIT(A) left with no choice has dismissed the appeal filed by the assessee and sustained the additions made by the AO towards bank deposit on the ground that the assessee could not file any evidences to prove genuineness of credit found in the bank account. Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before us.

The Ld.AR for the assessee submitted that the Ld.CIT(A) sustained the additions made by the AO without giving proper opportunity of hearing to the assessee to explain its case. Therefore, one more opportunity of hearing may be given to the assessee before the AO to explain its case with necessary evidences.

The Ld.DR, on the other hand, supporting the order of the Ld.CIT(A), submitted that the assessee did not file any evidences including bank statement to prove the credit found in the bank account. Therefore, the AO as well as the Ld.CIT(A) after considering the relevant facts, has rightly made additions and thus, there is no reasons to give one more opportunity to the assessee to explain its case before the AO.

We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. The AO has made additions towards credit found in the HDFC Bank A/c amounting to Rs.45,35,000/- on the ground that the assessee could not explain the credit with necessary evidences. It was the submission of the assessee before us that credit found in Bank A/c, is amount received from M/s.Bajaj Promoters Pvt. Ltd., by account transfer and further, the same has been re-paid during the impugned assessment year on subsequent dates through cheques. The assessee further claimed that it has filed bank statement along with confirmation letter from M/s.Bajaj Promoters Pvt. Ltd., with their financials to prove the identity and genuineness of the transactions. We find that the AO has made additions on the ground that the assessee could not file any evidences to prove the credit, whereas, the assessee claims to have filed various details including confirmation letter from the party. We further noted that the assessee has filed copy of bank statement, financial statement of creditor and confirmation letter from the party, which is placed on record. From the bank statement what we could notice is that credit is transfer of fund from M/s.Bajaj Promoters Pvt. Ltd. We further noted that the assessee has re-paid the said amount in subsequent dates through bank transfers. From the details filed by the assessee, it appears that the assessee has filed evidences to prove the credit. But, fact needs to be verified. The case of the AO was that no details were filed by the assessee to establish genuineness of transactions and hence, we are of the considered view that the issue needs to go back to the file of the AO for further verification. Hence, we set aside the issue to the file of the AO and direct the AO to re-examine the claim of the assessee in light of various evidences including the confirmation letter filed by the assessee to decide the issue in accordance with law.

In the result, the appeal filed by the assessee is allowed for statistical purposes.