M/S. VEERA FRAGNANCES PVT. LTD.,NEW DELHI vs. ITO, NEW DELHI

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ITA 110/DEL/2015Status: DisposedITAT Delhi12 July 2016AY 2006-073 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the AO failed to appreciate the facts of the case, specifically that certain unsecured loans had been repaid during the year. Consequently, these repaid loans were correctly not included in the closing balance for the subsequent year. The addition made by the AO was therefore set aside.

What were the facts?

The Assessing Officer (AO) made an addition of Rs. 6,31,866/- under Section 69C by invoking Section 154, citing a difference in unsecured loans between two financial year-ends. The assessee's explanation regarding the repayment of certain loans during the year was not properly appreciated by the AO and CIT(A).

What were the issues?

Whether the AO correctly invoked Section 154 to make an addition under Section 69C based on a perceived discrepancy in unsecured loan balances without properly considering repayments made by the assessee.

Which sections of the Income-tax Act were involved?

Section 69C,Section 154

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “SMC-I”: NEW DELHI

Before: SHRI P.K.BANSAL

For Appellant: Shri Rajesh Jain, FCA
For Respondent: Shri Sandeep Kumar Mishra
Hearing: 12/07/2016Pronounced: 12/07/2016

Assessee by : Shri Rajesh Jain, FCA Department by : Shri Sandeep Kumar Mishra, Sr. DR Date of Hearing 12/07/2016 Date of pronouncement 12/07/2016 O R D E R

This appeal has been filed by the assessee against the order of the Ld. CIT(A) dated 29.10.2014.

2.

The only issue involved in this appeal by the assesee relates to the sustenance of the addition of Rs. 6,31,866/- made by the AO u/s 69C of the Income Tax Act by invoking the provision of section 154 of the Income Tax Act.

3.

I have heard the rival submissions and carefully considered the same alongwith the order of the tax authorities below . I noted that in this case the AO made the addition of Rs. 6,31,866/- while taking action u/s 154 of the Income Tax Act on the basis of the schedule of the unsecured loan filed by the assesee . The AO on the basis of the schedule of the unsecured loan was of the view that the assesee has shown unsecured loan as on 31st March, 2005 at Rs. 2,49,27,180/- while opening balance as on 1st April, 2005 was taken at Rs. 2,42,95,314/-.

Therefore, the AO not being satisfied with the explanation of the assesee made the addition u/s 69C of the difference amount of Rs. 6,31,866/- which was confirmed by the Ld. CIT(A). I noted from page 8 and 9 of the paper book which were filed before me that the assessee has submitted the details of the unsecured loan as on 31.3.2006 and as on 31.3.2005. As on 31.3.2005 in the detail the assessee has not included two items of Rs. 5,50,000/-and Rs. 81,966/- relating to Sunita Jain and Vaibhav Jain and the assessee has made the re-payment during the impugned assessment year which is apparent from page 9 of the paper book. Once the payment of these parties have been made during the year the assessee therefore in the details of the unsecured loan as on 31.3.2006 has not taken unsecured loan which were squared up during the assessment year 2005-06. The AO in my opinion could not 2 appreciate the facts of the case properly. In view of this fact I set aside the order of the Ld. CIT(A) as this is not a mistake apparent on record and delete the addition.

4.

In the result, appeal filed by the assessee is allowed.

Order pronounced in the open court on 12/07/2016.

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