NISHRAJ HOLDING PVT. LTD,AHMEDABAD vs. THE ITO, WARD-3(1)(1), AHMEDABAD

The assessee has raised the following grounds of appeal :-

The assessee did not file the original return of income under Section 139(1) of the Income Tax Act, 1961 on or before 30.09.2011 or even upto 31.03.2013 i.e. within the time allowed under Section 139(4) of the Act. The assessment was reopened under Section 147 of the Act after recording reasons. Thereafter, notice under Section 148 of the Act was issued and served to the assessee. In response to the notices, the assessee company filed return of income on 08.08.2018 declaring the returned income at Rs. Nil without claiming current year’s loss. The Assessing Officer after taking cognisance held that no confirmation of cash deposit from the cash provided by Vatsal Parikh has been furnished and hence made addition of Rs.5,60,000/- as cash deposit under Section 68 of the Act. Further, the Assessing Officer observed that the business loss available after inter-head adjustment against dividend income is also not set off against the income taxed under Section 68 of the Act as the same is not falling under any of the heads prescribed under Chapter IV of the Act but falling in Chapter VI of the Act.

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

The Ld. AR submitted that the reasons for reopening the assessment were not supplied to the assessee. The Ld. AR further submitted that the Director has paid to the assessee certain amount of cash to overcome liquidity problem. As the matter being eight years old, the Director of the assessee company is unable to find the Page 3 of 4 details. The Ld. AR further submitted that Shri Vatsal N. Parikh has categorically confirmed that he has paid cash to the company and confirmed his accounts in the books of the company as correct. The assessee thus discharged his obligation by bringing the confirmation from Vatsal Parikh who was assessed to tax and he has declared income of Rs.3,30,39,680/- in the A.Y. 2015-16. Thus, the capacity of Vatsal Parikh cannot be doubted. The Ld. A.R. further submitted, the onus related to cash deposits were established by the assessee through the evidences and the source of the source should have not been called upon by the Assessing Officer which was also taken into account while making the addition by the Assessing Officer.

The Ld. DR submitted that the genuineness of the cash deposits were not established by the assessee as well as purpose of funds were also not explained by the assessee. Hence, the Assessing Officer as well as the CIT(A) has rightly confirmed the addition.

Heard both the parties and perused all the relevant material available on record. From the perusal of the response to notice under Section 133(6) of the Act, Vatsal Parikh has confirmed the amount of cash saying that the same was related to liquidity problem which was also appearing in the books of the company and therefore, the genuineness, identity and the credit worthiness was already established by the assessee before the Assessing Officer thereby filing the books of the company, confirmation as well the capacity of the person to pay the said amount. Thus, the assessee has established the onus and, therefore, the Assessing Officer has not rightly made the addition. Hence, appeal of the assessee is allowed.

In the result, appeal of the assessee is allowed.