What did the Tribunal hold?

The Tribunal restored the issue to the AO, directing the assessee to furnish evidence of non-recoverability of the amount due to the payer company's liquidation. The AO was asked to re-examine the issue after considering the new evidence.

The assessee received Rs. 37.60 lacs from M/s. Sunil Mantri Realty Ltd., but recorded Rs. 25.60 lacs in its books. The Assessing Officer (AO) added the difference of Rs. 12 lacs as income.

What were the issues?

Whether the un-reconciled amount of Rs. 12 lacs, purportedly interest income, is taxable when the payer company has gone into liquidation and recovery is unlikely.

M/S. Ashok J Thapar HUF, New Delhi vs ACIT | ITAT Delhi 2020

Income Tax Appellate Tribunal, DELHI ‘A’ BENCH,

Before: SHRI H. S. SIDHUSHRI N.K. BILLAIYA

For Appellant: Shri T. R. Talwar, Adv

Hearing: 02.03.2020Pronounced: 02.03.2020

PER N.K. BILLAIYA, ACCOUNTANT MEMBER,

This appeal by the assessee is preferred against the order of the Commissioner of Income Tax (Appeals)-20, New Delhi dated 28.02.2017 pertaining to the Assessment Year 2012-13.

The assessee has raised two substantive grounds of appeal. However, at the outset, the Counsel stated that he has not pressing Ground No.1 and the same is dismissed as not pressed.

3. The second grievance relates to addition of Rs.12 lacs.

4. Briefly stated facts of the case are that during the course of the scrutiny assessment proceedings, the AO asked the assessee to reconcile the details in respect of M/s Sunil Mantri Realty Ltd. as the details furnished by the assessee show that he has received Rs.37.60 lacs but the same is entered in the books of accounts as Rs.25.60 lacs. In its reply the assessee stated that the deductor has revised the TDS return after the filing of the income tax return by the assessee. This reply was not convincing and hence the AO made the addition of Rs.12 lacs.

5. The assessee carried the matter before the CIT(A) and strongly contended that the assessee has shown income from Sunil Mantri Realty Ltd. at Rs.25.60 lacs but Sunil Mantri Realty Ltd has shown the payment of interest which was never received by the assessee and there was no hope to recover the said amount as the company has gone into liquidation and there is no hope of recovery.

6. The CIT(A) did not find the reply convincing and confirmed the addition of Rs.12 lacs.

Before us, the Counsel for the assessee vehemently stated that since the payer company has gone into liquidation there is no hope of recovery and since the assessee has not received any interest, therefore, the same cannot be taxed in the hands of the assessee. The Counsel placed strong reliance on the complaint filed before the Court of Judicial Magistrate, Gurgaon.

We find that the documents which now the counsel is relying upon were not available before the Assessing Officer. Therefore, in the interest of justice and fair play we deem it fit to restore this entire issue to the file of the AO. The assessee is directed to furnish all the documentary evidences in support of his contention that there is no hope of recovery of interest from the company. The AO is directed to examine the same and decide the issue afresh after giving a reasonable opportunity of being heard to the assessee.

In the result, appeal of the assessee is allowed in part for statistical purposes. The order is pronounced in the open court on 02.03.2020.

M/S. ASHOK J THAPAR HUF,NEW DELHI vs. ACIT, NEW DELHI

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