ITO, NEW DELHI vs. M/S. MUKESH JOSHI, NOIDA

Revenue by : N O N E; Assessee by: Shri Sanjeev Kumar Bindal, C.A. Date of Hearing 06/11/2019 Date of pronouncement 03/02/2020 O R D E R PER PRASHANT MAHARISHI, A. M. :

This appeal is filed by the Revenue against the order of the Commissioner of Income Tax (Appeals), Meerut, dated 03.11.2015 for assessment year 2011-12 wherein the learned Commissioner of Income Tax (Appeals) has deleted the addition of Rs.3.50 crores made by the learned Assessing Officer under Section 68 of the Income Tax Act, 1961 (the Act). The further addition of Rs.7 lakhs is also deleted on account of un-explained cash credit. The learned Assessing Officer has raised following two grounds of appeal:- “

1. On the facts and under the circumstances of the case, the ld. CIT (Appeals) has erred in deleting the addition of Rs.3.50 crore made by AO u/s 68 of the Income Tax Act, 1961, without appreciating the facts that the assessee has failed to submit the details material with evidence;

2. On the facts and under the circumstances of the case, the ld. CIT (Appeals) has erred in deleting the addition of Rs.7,00,000/- made by AO u/s 68 of the Income Tax Act, 1961, without appreciating the facts that the assessee has failed to submit the details material with evidence.” Page | 1

2. The brief facts of the case shows that assessee is an individual who filed his return of income on 23.11.2013 declaring total income of Rs.1,60,768/-. The assessment u/s 144 of the Act was made on 31.03.2014 wherein an addition of Rs.3.50 crores and Rs.7 lakhs so made u/s 68 of the Act and total income of the assessee was determined at Rs.3,57,60,768/-. The assessee preferred appeal before the ld. CIT (Appeals) who deleted both these additions after obtaining the remand report from the Assessing Officer. Therefore, Assessing Officer in in appeal before us.

2.1 The learned Departmental Representative filed an adjournment application. However, neither the Senior Departmental Representative appeared before us to seek the adjournment as well as the learned [CIT] – DR present did not have any idea of his whereabouts. The adjournment application states that a further time is required by him for going through the records and repercussion of the case. The above case was fixed for hearing on 11.12.2018, 27.02.2019, 22.05.2019 and 4.09.2019. As the case has already been listed on four occasions, we do not find any merit in the adjournment petition of the Revenue. Hence the same is dismissed.

3.1 The first ground of appeal is with respect to the addition of Rs.3.50 crores made by the Assessing Officer, but deleted by the learned CIT (Appeals). The fact Page | 2 shows that assessee received the above sum from M/s. Sanraj Health Services Pvt. Ltd. during financial year 2005-06 where assessee was to purchase land on behalf of the company. For assessment year 2006-07 the learned Assessing Officer examined the details of above credit and did not make any addition u/s 68 of the Act. Even in assessment order dated 23.01.2009 passed u/s 143(3) of the Act. For assessment year 2009-10 assessee was once again asked to confirmation of loans from the above party which was submitted by the assessee and further the assessment was completed u/s 143(3) of the Act on 27.12.2011. In the current year i.e. financial year 2010-11 relevant to assessment year 2011-12 the above sum is an outstanding liability continued without any change. In the remand report it is admitted by the Assessing Officer that said amount has been received in A.Y. 2005-06 and not during the relevant previous year. The learned CIT (Appeals) further noted in para No. 4.5 relevant that the loan transaction with the above company was pertaining to financial year 2005-06 and same was not received during the year. As the same was not received during the year but in assessment year 2005-06, he deleted the addition. We also find that as the above sum was not received during the year, the provisions of Section 68 of the Act cannot be applied to the above loan. In view of this we dismiss ground No. 1 of the appeal of the Assessing Officer holding that sum of Rs.3.50 crores received in assessment year 2006-07 cannot be added under section 68 of the Act in assessment year 2011-12. Thus, the order of the learned CIT (Appeals) is confirmed.

4. Ground No. 2 of the appeal is with respect to the addition under section 68 of the Act of Rs.7,00,000/-. The above sum was received from M/s. Ganesh Agency in 2009-10. The Assessing Officer made the addition of the above sum under section 68 of the Act as assessee failed to prove the Income Tax Return or any other documentary evidence to show the creditworthiness and genuineness of transaction.

4.1 On appeal before the learned CIT (Appeals) the assessee submitted that the above sum of Rs.7 lakhs has been paid on 17.08.2009 and the same was returned during financial year 2010-11 for non-supply of goods. It was stated that it was an advance paid by assessee against sale of goods. The learned CIT (Appeals) Page | 3 deleted the above addition. As the above sum was paid on 17.08.2009 pertaining to assessment year 2010-11 naturally the addition under section 68 of the Act could not have been made in assessment year 2011-12. Even otherwise it is not the assessee who has received the above sum from M/s. Ganesh Agency, but in fact has paid the above sum to M/s. Ganesh Agency on 17.08.2009 which was returned during the year. Therefore the above party is not a creditor, but advance received against sale of goods by the assessee. To the above transaction provisions of Section 68 of the Act does not apply. We do not find any infirmity in the order of the learned CIT (Appeals). Accordingly ground No. 2 of the appeal is dismissed.

Order pronounced in the open court on : 03/02//2020.