BASU'S POLYFAB PVT. LTD., ,KOLKATA vs. DCIT, CIRCLE - 14(1), KOLKATA

This appeal is preferred by the assessee against the order of Ld. CIT (Appeals) , 5, Kolkata dated 23-08-2018 for the assessment year 2015-16.

At the outset, it is noted that there is delay of 8 days in filing the appeal. After going through the reasons given by the assessee in the application for condonation of delay, we are of the opinion that there is reasonable cause for not filing the appeal within the due date. Therefore, we are inclined to condone the delay and proceed to dispose off the appeal on merits.

The main grievance of the assessee is against the action of the ld. CIT(A) in confirming the addition of Rs. 6 lakhs made u/s. 68 of the Income-tax Act, 1961 ( in short, hereinafter, the ‘Act’). 4. Brief facts as noted by the AO are that on perusal of Note No. 5 of the Balance sheet, it was noticed by him that the assessee company had taken unsecured loan from M/s. Basu Industrial Oil and Mrs. Swastika Basu (Director of the assessee company). According to the AO, the assessee company took unsecured loan amount of Rs. 15 lakhs from Mrs. Swastika Basu ( director of the assessee company). When asked by the AO, Mrs. Swastika Basu submitted the documents and bank statements from which, it revealed that she had issued only two cheques dated 27-11-2014 and 24-02-2015 of Rs. 4,00,000/- and Rs. 5,00,000/- respectively and balance amount of Rs. 6,00,000/- out of the Rs. 15 lakhs was shown as her remuneration as director, which she ought to have received from the said assessee company, which was shown as “ unsecured loan” from the assessee company. This the assessee company admitted before the AO that it was mistakenly reflected as “unsecured loan” whereas it was a liability. According to the AO, the entry was shown as debit- director’s remuneration payable to Mrs. Swastika Basu for the AY 2015-16 in the P & L accounts as loan. Therefore, the AO treating the same as unexplained sum added u/s. 68 of the Act and made the addition. On appeal, the ld. CIT(A) confirmed the same. Aggrieved, the assessee is before us.

After having heard both the parties and perusal of the records, we note that the assessee company was suffering from loss for the past few years and because of that the assessee company was not in position to pay the creditor(s). Taking note of the shortage of fund, the director of the assessee company Mrs. Swastika Basu had infused fund of Rs. 4 lakhs (27-11-2014) and Rs. 5 lakhs (24-02-2015) from her bank account, which was shown under the accounting head “short term borrowings” of the company and since the director, Mrs. Swastika Basu had actively taken part in the running business of the assessee her remuneration of Rs. 6 lakhs was due to her and because of financial constraints of the company, the said amount of Rs. 6 kahs was not paid to her, so was shown as “unsecured loan”. Moreover, it was brought to the notice of the authorities below that the remuneration (of Rs. 6 lakhs) which she ought to have received from the assessee company was duly shown by her [Mrs. Swastika Basu] in her personal Income Tax Returns and the copy of the returns was filed before the ld. CIT(A) [ ITR/ Balance Sheet]. However, the ld. CIT(A) did not give any credence to this fact and did not give any relief to the assessee though the fact remains that the amount in question of Rs. 6 lakhs has been already shown as income in the hands of the assessee’s director, Mrs. Swastika Basu and the tax on it was duly levied/paid. So if it is again added i.e Rs. 6 lakhs in the assessee’s hand, then it will amount to double taxation of the same amount, which is not permissible. Therefore, we set aside the impugned order of the ld. CIT(A) and remand the issue back to the file of the AO for the limited purpose to verify the issue as to whether the amount in question has been shown by Mrs. Swastika Basu in her return of income as her Basu’s Polyfab P.Ltd. remuneration/income and tax on it has been paid on it by her. If so, no addition of Rs. 6 lakhs is warranted in the hands of the assessee. With this observation, we dispose of the appeal accordingly.

In the result, the appeal of assessee is allowed for statistical purpose.