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Facts
The assessee, a transporter, declared a total income of Rs.28.90 lacs. The Assessing Officer (AO) made an addition of Rs.51.39 lacs as unexplained cash credit under section 68 and disallowed expenses for various categories due to lack of evidence. The CIT(A) confirmed Rs.15.00 lacs of the cash credit addition and deleted the rest, while upholding the disallowances of expenses.
Held
The Tribunal held that the Rs.15.00 lacs cash credit was received from the sale of a property, not a loan, and thus the classification in the balance sheet as a loan was an error, not a ground to reject its genuineness. Regarding expense disallowances, the Tribunal granted the assessee another opportunity to furnish evidence.
Key Issues
Whether the Rs.15.00 lacs treated as cash credit under Section 68 is to be deleted, and whether the disallowance of expenses requires further examination after providing an opportunity to the assessee.
Sections Cited
68
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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: SHRI B.R. BASKARAN & SHRI SANDEEP SINGH KARHAIL
PER B.R. BASKARAN, ACCOUNTANT MEMBER :
The assessee has filed this appeal challenging the order dated 20/11/2023 passed by Ld CIT(A), NFAC, New Delhi for assessment year 2013-14. The grounds of appeal urged by the assessee relate to the following two issues:
(A) Addition of Rs.15.00 lacs u/s. 68 of the Act. (B) Adhoc disallowance of 10% of the expenses claimed by the assessee.
The facts relating to the case are stated in brief. The assessee is a transporter and fleet owner. The assessee filed his return of income declaring a total income of Rs.28.90 lacs for the year under consideration. The same was taken up for scrutiny.
Assessment Year : 2013-14 The Assessing Officer notice that the assessee has received unsecured loan of Rs.51.39 lacs. Since the assessee did not furnish necessary details to prove the loans, the Assessing Officer assessed the same as unexplained cash credit u/s. 68 of the Act. The Assessing Officer also asked the assessee to furnish evidences in respect of various expenses claimed by the assessee. Since, the assessee did not furnish them, the Assessing Officer disallowed 20% of diesels expenses and 10% of salary expenses, spare parts expenses, vehicle registration expenses and repair and maintenance expenses.
Before Ld.CIT(A), the assessee furnished relevant details relating to cash credits. The ld.CIT(A) confirmed the addition to the extent of Rs.15.00 lacs and deleted the remaining addition relating to cash credits. With regard to the disallowance made out of expenses, the Ld.CIT(A) took the view that the assessee has failed to furnish necessary evidences and hence, the Assessing Officer was right in making disallowances. However, he directed the Assessing Officer to correct the computational error pointed out by the assessee in respect of disallowance made out of diesel expenses. Still aggrieved, the assessee has filed this appeal before the Tribunal.
We have heard the parties and perused the record. With regard to the cash credit of Rs.15.00 lacs confirmed by the Ld.CIT(A), the Ld.A.R submitted that the assessee had agreed to sell a property and above said amount of Rs.15.00 lacs was received from the buyer of the property. In this regard the Ld.A.R invited out attention to the paper book wherein copy of Assessment Year : 2013-14 agreement for sale of property is given. He further invited our attention to page 30 of the paper book, which contains payment schedule of the agreement. A perusal of the agreement would show that the assessee has received Rs.15.00 lacs from the buyer towards the transfer of property. We notice that the Ld CIT(A) has confirmed the addition only for the reason that the assessee has shown the amount of Rs.15.00 lakhs as loans, while it was claimed as advance. However, the fact would remain that the assessee has received the above said amount towards sale of a property, which is proved by the agreement. Hence wrong classification of the receipt in the Balance sheet should not be a ground to reject the genuineness of the receipt. Accordingly, we are of the view that the Ld.CIT(A) was not justified in sustaining the addition of Rs.15.00 lacs u/s. 68 of the Act. Accordingly, we modify the order passed by Ld.CIT(A) on this issue and direct the Assessing Officer to delete the addition of Rs.15.00 lacs made u/s. 68 of the Act.
With regard to disallowances made by the Assessing Officer from various expenses claimed by the assessee, we notice that the Assessing Officer was constrained to make disallowances, since the assessee has failed to furnish evidences in support of the claim. The Ld. A.R prayed that the assessee may be provided with one more opportunity to furnish various evidences to the Assessing Officer. In the interest of natural justice, we agree with the aforesaid plea of Ld.A.R. Accordingly we set-aside the order passed by Ld.CIT(A) on this issue and restore the same to the file of Assessing Officer for examining it afresh. We also direct the Assessment Year : 2013-14 assessee to furnish all the details that may be called for by the Assessing Officer. After affording adequate opportunity of being heard to the assessee, the Assessing Officer may take appropriate decision in accordance with law.
In the result, the appeal filed by the assessee is treated as allowed. Order pronounced in the open court on 27th May, 2024.