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Facts
The assessee, Ganesh Builders Private Limited, was subjected to reassessment proceedings for A.Y. 2012-13, based on information alleging receipt of an accommodation entry of Rs. 19,00,000/- from M/s Shubh Supplier Ltd. Despite the assessee's denial and submission of bank statements, the AO treated the sum as unexplained cash credit under Section 68 of the Act, an action confirmed by an ex-parte order from the Ld. CIT(A).
Held
The Tribunal found that the bank statements furnished by the assessee for the relevant period did not show any credit of Rs. 19,00,000/-. It concluded that the basic prerequisite for an addition under Section 68, i.e., a sum being credited in the books of account, was not met. Therefore, the addition made was based on surmise and conjecture and was directed to be deleted. The ground challenging the validity of re-assessment proceedings was not adjudicated, as relief was granted on merits.
Key Issues
Whether the addition of Rs. 19,00,000/- as unexplained cash credit under Section 68 of the Income Tax Act was legally and factually justified; and the validity of reassessment proceedings.
Sections Cited
143(1), 143(3), 147, 68
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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’: NEW DELHI
ORDER This appeal of the Assessee arises out of the order of the Learned Commissioner of Income Tax (Appeals)-National Faceless
Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘Ld.
CIT(A)’] in DIN & Order No. ITBA/NFAC/S/250/2023-
24/1055401824(1) dated 24/08/2023 against the order passed by Income Tax Officer, Ward-10(1), New Delhi (hereinafter referred to as the ‘Ld. AO’) u/s 143(3)/147 of the Income Tax Act, 1961
(hereinafter referred to as ‘the Act’) on 15/12/2019. Page 1 of 5 Ganesh Builders Private Limited vs. ITO 2. The only issue to be decided in this appeal on merits is as to whether the addition could be illegally and factually made in the hands of the assessee u/s 68 of the Act in respect of alleged receipt on sum of money Rs.19,00,000/- in the facts and circumstances of the instant case. Apart from this, the assessee has challenged the validity of the reassessment proceedings.
I have heard the rival submissions and perused the materials available on record. The assessee is a Private Limited Company and had filed its regular return of income on 27/06/2019 for the A.Y.2012-13 declaring total income of Rs.13,75,052/-. The return was duly processed u/s 143(1) of the Act. The Ld. AO received information from the Dy. Director of Income Tax (Inv.), Wing, Unit- 1(2), Kolkata on 08/03/2019 that the assessee has received accommodation entry of Rs.19,00,000/- from M/s Shubh Supplier Ltd.. The said information did not contain the date of receipt of money by the assessee and did not contain the bank account in which such sums were found credited in the books of the assessee.
The assessee vehemently pleaded before the Ld. AO that it had not received any such sum of Rs. 19,00,000/- from M/s Shubh Ganesh Builders Private Limited vs. ITO Supplier Ltd. or any other company controlled by Sh. Beni Prasad Lahotia. In respect of this contention, the assessee also enclosed the complete bank statements for the perusal of the Ld. AO. The Ld. AO, however did not heed to this factual contention of the assessee and proceeded to treat the sum of Rs.19,00,000/- as unexplained cash credits u/s 68 of the Act in the hands of the assessee.
4. Before the Ld. CIT(A), no compliance was made by the assessee and ex-parte order was passed by the Ld. CIT(A) confirming the action of the Ld. AO. It is a fact that assessee has furnished the entire bank statements of Bank of India and the Axis Bank for the period of 01/04/2011 to 31/03/2012 before the Lower Authorities and the same were also placed on record before me. From the perusal of the said bank statements of both the banks, there was no receipt of money to the tune of Rs.19,00,000/- which was found credited in the bank accounts of the assessee. Hence, the basic pre- requisite of any sum found credited in the books of account to warrant an addition u/s 68 of the Act miserably fails in the instant case. Hence, I hold that no addition per se could be made u/s 68 of the Act and that the entire addition has been made merely on Page 3 of 5 Ganesh Builders Private Limited vs. ITO surmise and conjecture without referring to the factual position and the materials available on record. Hence, the addition made u/s 68 of the Act is hereby directed to be deleted.
Since, relief is granted to the assessee on merits, the other ground challenging the validity of re-assessment proceedings is not being adjudicated and the same is hereby left open.
In the result, the appeal filed by the Assessee is allowed Order pronounced in the open court on 17th January, 2024.