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Income Tax Appellate Tribunal, Kolkata Bench, Kolkata
Before: SHRI ABY. T. VARKEY & SHRI M. BALAGANESH
ORDER Per M. BALAGANESH, AM
This appeal is preferred by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals) – XXXII, Kolkata ( in short the ‘CIT(A)’) vide Appeal No.292/XXXII/2013-14/Wd-3/MSD/R&T/Kol dated 19.08.2014. Assessment year framed u/s 143 read with Section 147 of the Income Tax Act 1961 (hereinafter as the said ‘Act’) dated 28.08.2008 for the A.Y 2004-05 by the Income Tax Officer, Ward-3, Murshidabad (in short the Ld. A.O).
2 Assessment Year 2004-05 Smt.Nagina Banu 2. The only issue to be decided in this appeal is as to whether the Ld. CIT(A) was justified in upholding the addition made by the Ld. A.O towards unexplained cash credit u/s 68 of the Act in the sum of Rs.6,20,515/- in the facts and circumstances of the case.
The brief facts of this issue is that the assessee, an individual, started a new business of manufacturing and trading in plastic granules during the financial year 2003-04 relevant to assessment year 2004-05. She filed her return of income for the assessment year 2004-05 on 02.03.2005 disclosing total income of Rs.65,000/- and the same was processed u/s 143(1) of the Act on 30.03.2005. Subsequently, the proceedings u/s 147 of the Act were initiated and assessment was reopened for the A.Y 2004-05. In the assessment proceedings, the Ld. A.O observed that assessee had disclosed capital balance as on 31.03.2004 at Rs.2,45,488/- whereas the said capital balance as on 1st April, 2004 was reflected in the Books at Rs.8,66,003/-. The assessee was called upon to explain the difference in capital account in the sum of Rs.6,20,515/-. The assessee was only taking adjournments from time to time and did not reconcile the said difference before the Ld. A.O. Accordingly, the Ld. A.O proceeded to complete the assessment u/s 143(3) read with Section 147 of the Act by treating the said difference of Rs.6,20,515/- as unexplained cash credit u/s 68 of the Act. Before the Ld. CIT(A) the assessee could not reconcile the difference. The Ld. CIT (A) observed in this order as below:
Under the above circumstances, the sum of Rs.6,20,515/-, which is the difference between the closing capital of Rs.2,45,488/- as on 31.03.2004 and Rs.8,66,003/- which is the opening capital as on 01.04.04 has to be treated as unexplained cash credit u/s 68 of the Act. The only dispute could be of the relevant assessment year of taxation. If the assessee could have adduced evidence before the AO that the additional funds had indeed been obtained only after 01.04.04, the addition should have been made in A.Y
3 Assessment Year 2004-05 Smt.Nagina Banu 2005-06 only but until the assessee adduces such a proof, the AO cannot take a chance. By not committing herself to such a stand the assessee could subsequently produce cash loan receipt for this sum dated any date in F.Y 2003-04 and claim that the addition in A.Y 2005-06 was wrongly made. It is also to be kept in mind that at present the additions cannot be made afresh in a different year because of elapse of time prescribed u/s 149 of the Act.
By not producing the above details, it is held that the assessee has not been able to substantiate her grounds of appeal taken above. Therefore the grounds of appeal are dismissed.
Aggrieved the assessee is in appeal before us on the following grounds:
For that on the facts and in the circumstances of the case the appeal order of the Ld. C.I.T(Appeals)-XXXII, Kolkata was not fair and proper and on the other hand it was made contrary to law, sound and adequate principles.
For that on the facts and in the circumstances of the case, Ld. C.I.T(Appeals) was not at all justified in confirming the addition of Rs.6,20,515.00 & he should have considered all the grounds of appeal and also the written submission as well as the statement of facts submitted by the appellant as against the assessment order of the Ld. A.O and the reasons adduced in confirming the additions are not at all convincing and as such the same is liable to be deleted.
3. For that on the facts and in the circumstances of the case the Ld. C.I.T(Appeals) ought to have verified the case records of the appellant for the Assessment Years 2004-05 and 2005-06 before confirming the addition.
4. For that on the facts and in the circumstances of the case the Ld. C.I.T(Appeals) should have considered that the investment of Rs.6,20,515.00 was made on and after 01.04.2004 and during the period 01.04.2004 to 31.03.2005 which is relevant to the Asst. Yr. 2005-06 and as such the investment of Rs.6,20,515.00 in addition to the closing capital balance of 31.03.2004 for Rs.2,45,488.00 is related to the assessment year 2005-06 and so the sum of Rs.6,20,515.00 is liable for taxation for the assessment year 2005-06 as per books of accounts and audited balance sheet.
6. For that the humble appellant craves leave to take additional grounds& amend grounds at the time of hearing.
The Ld. A.O argued that the revenue erred in invoking the provisions of Section 68 of the Act for making the said addition. He stated that the extra amount of Rs.6,20,515/- (being the difference) was admittedly found credited in the books of accounts of the assessee only on 01.04.2004 which falls in F.Y 2004-05 relevant to A.Y 2005-06. But the addition u/s 68 of the Act has been made by the Ld. A.O for A.Y 2004-05 in which year, no amount of Rs.6,20,515/- was found credited in the books of the assessee. Hence the provisions of Section 68 could not be made applicable for A.Y 2004-05. In response to this, the Ld. DR argued that no evidence has been submitted by the assessee and no reconciliation was even attempted by the assessee to explain the difference of Rs.6,20,515/- and accordingly he relied on the order of the lower authorities.
We heard the rival submissions. We find that the facts stated hereinabove remain undisputed and hence the same are not reiterated for the sake of brevity. We find that the addition has been made by invoking the provisions of Section 68 of the Act for A.Y 2004-05 in the instant case. For the sake of convenience, the provisions of Section 68 are reproduced below:
Cash Credits.
Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.
From the bare reading of the aforesaid provision, it would be clear that unless a particular amount has been found credited in the books of accounts of the assessee for which no satisfactory explanation has been given by the assessee, only then the provisions of Section 68 of the Act could be invoked. Admittedly, in the instant case, the difference of Rs.6,20,515/- in the capital account was found credited in the books of accounts of the assessee only on 01.04.2004 which falls in A.Y 2005- 06. Hence, there is no case made out by the revenue for taxing the difference in capital account amounting to Rs.6,20,515/- as unexplained cash credit u/s 68 of the Act in A.Y 2004-05 (i.e. the year under appeal). Hence we have no hesitation in directing the Ld. A.O to delete the addition made u/s 68 of the Act for the A.Y 2004-05.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Court on 07.07.2017