PRAMAASK CONGLOBE PVT. LTD.,MUMBAI vs. ITO - 13(1)(4), MUMBAI

We have heard the parties and perused the record. The assessee is engaged in the business of import and export of iron ores. It filed its return of income for the year under consideration declaring a total income of ` 20.01 lakhs. Since the assessee did not respond to the notices issued by the Assessing Officer, the AO completed the assessment to the best of his judgment by making various additions. In the appellate proceedings, the 2 Pramaask Conglobe Pvt. Ltd.

First issue relates to addition made u/s. 68 of the Act. The Assessing Officer assessed unsecured loan of ` 73.33 lakhs u/s. 68 of the Act. The learned CIT(A) granted the relief to the extent of ` 62.33 lakhs and confirmed ` 11 lakhs on the reasoning that the assessee has failed to prove the genuineness of loan taken by it. The Learned AR submitted that the assessee had taken loan of ` 9 lakhs from Shri Jagdish P. Rafal and loan of ` 2 lakhs from Shri M. S. Bhavan. The assessee furnished confirmation letters obtained from both these creditors and has also shown that these loans were received through banking channel. He submitted that during the assessment proceedings, the Assessing Officer accepted these confirmation letters and did not ask for any other material and hence the assessee was of the view that confirmation letters furnished by it would suffice requirement of the Assessing Officer. He submitted that the learned CIT(A), on the contrary, has confirmed the addition without calling for further details, which the assessee could have provided if called for. Accordingly he submitted that the Ld CIT(A) was not justified in confirming the addition of ` 11 lakhs. He submitted that the assessee would be in a position to furnish required details, if an opportunity is given to it.

We have heard learned DR and perused the record. According to Ld A.R, the assessee was under the impression that the confirmation letters filed would suffice the requirements of sec. 68 of the Act, though it is the duty of the assessee to prove the three main ingredients relating to cash credits. Since the assessee is seeking one more opportunity for the reasons quoted by him, in the interest of natural justice, we are of the view that assessee may be provided with one more opportunity to prove the cash credit of ` 11 lakhs. Accordingly, we set aside the order passed by the learned CIT(A) on this issue and restore the same to the file of the Assessing Officer for examining it afresh.

Next issue relates to disallowance made out of freight expenses. The Assessing Officer made adhoc disallowance of 5% of freight expenses on the reasoning that the assessee did not furnish evidence in support of the same. The learned CIT(A) also confirmed the same. The Learned AR submitted that the assessee has incurred huge expenses towards freight charges and sample vouchers were produced before the Assessing Officer in the assessment proceedings. He submitted that the assessee would be in a position to furnish all the required evidences, but it was not called for by AO during remand proceedings. He submitted that these facts were brought to the notice of Ld CIT(A), but still the learned CIT(A) has confirmed the addition. He submitted that the assessee would be in a position to furnish all required details, if an opportunity is given to it.

We have heard learned DR and perused the record. Since the assessee is seeking one more opportunity to furnish the required details, in the interest of natural justice, we are of the view that the assessee may be provided with one more opportunity to produce all required details. Accordingly, we set aside the order passed by the learned CIT(A) on this issue and restore the same to the file of the Assessing Officer for examining it afresh.

The Ld A.R did not press addition relating to disallowance of ` 1.28 lakhs made out of other expenses and hence order passed by the learned CIT(A) on this issue is confirmed.

The last issue relates to addition of cash deposits of ` 34.39 lakhs made into bank account. The case of the assessee is that deposits have been made out of cash balance available in the books of account and hence no addition is called for. He submitted that the tax authorities have made this addition without referring to the books of account.

We have heard learned DR on this issue. We find merit in the contentions of the assessee. If cash deposits have been made into the bank

In the result, the appeal filed by the assessee is treated as allowed for statistical purposes. Order has been pronounced in the Court on 17.7.2018.