ITO 24(3)(4), MUMBAI vs. RAMESH L PATEL, MUMBAI

The only issue raised by the Department pertains to deletion of addition of ` 46,94,464.

Brief facts are, the assessee is an individual. For the assessment year under consideration, assessee had filed its return of income on 31st March 2006, declaring total income of ` 2,26,050. In the course of 2 Shri Ramesh L. Patel assessment proceedings for the assessment year 2006–07, the Assessing Officer found that the assessee had shown advances from sundry debtors amounting to ` 57,59,590 out of which an amount of ` 46,94,764 pertained to assessment year 2005–06. Further, on verification of bank statement of the assessee in ICICI Bank, the Assessing Officer found certain cash deposits which were claimed to be advances received from debtors. On the basis of such information, the Assessing Officer re–opened the assessment for the impugned assessment year under section 147. During the re–assessment proceedings, the Assessing Officer conducted enquiry in respect of sundry debtors shown at ` 69,05,805. In response, it was submitted by the assessee, out of the advances shown from debtors amounting to ` 69,05,805, an amount of ` 46,94,764, relating to about eight parties has already being assessed in A.Y. 2006–07 and the rest of the amount of ` 22,11,040, has been converted to sales in assessment year 2006–07 and offered to tax. The Assessing Officer, however, was not convinced with the explanation of the assessee and proceeded to add back an amount of ` 46,94,764, out of the total sundry debtors of ` 57,59,590, shown for A.Y. 2006–07 which according to the Assessing Officer pertains to A.Y. 2005–06. Being aggrieved of such addition, assessee preferred appeal before the learned Commissioner (Appeals).

Before the first appellate authority, the assessee after furnishing necessary details and reconciliation statement showing actual advances received, sales made and opening balance for assessment year 2005–06 and 2006–07 submitted, as the amount in question has already been considered for addition in assessment year 2006–07, no addition is to be made in the impugned assessment year. The learned Commissioner (Appeals) after examining the materials placed before him having found that out of the closing balance of ` 57,59,589 as on 31st March 2006, an amount of ` 33,15,849 was added in assessment year 2006–07, and the balance amount of ` 22,43,736 was offered to tax by the assessee through sales, no further addition is required to be made in the impugned assessment year as the amount has already been taxed in assessment year 2006–07.

Learned Departmental Representative relied upon the observations of the Assessing Officer, whereas, the learned Authorised Representative relied upon the order of the learned Commissioner (Appeals).

We have considered the submissions of the parties and perused the material available on record. As could be seen from the reconciliation statement furnished by the assessee before the first appellate authority and the observations of the learned Commissioner (Appeals), opening balance of debtors as on 1st April 2005 amounting

In the result, Department’s appeal is dismissed.