DCIT, CORPORATE CIRCLE-1(1), BHUBANESWAR vs. M/S. MAGNUM TELESOFT PVT. LTD., BHUBANESWAR

आयकर अपील�य अ�धकरण, कटक �यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAVAN KUMAR GADALE, JM आयकर अपील सं./ITA No.82/CTK/2016 (�नधा�रण वष� / Assessment Year :2010-2011) DCIT, Corporate Circle-1(1), Vs. M/s Magnum Telesoft Bhubaneswar Pvt. Ltd., 132-A, Sector- A, Zone-A, Mancheswar Industrial Estate, Bhubaneswar-10 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AADCA 1519 L (अपीलाथ� /Appellant) (��यथ� / Respondent) .. राज�व क� ओर से /Revenue by : Shri D.K.Pradhan,CITDR �नधा�रती क� ओर से /Assessee by : Shri P.R.Mohanty & M.Ganesh, AR सुनवाई क� तार�ख / Date of Hearing : 10/08/2017 घोषणा क� तार�ख/Date of Pronouncement 16/08/2017 आदेश / O R D E R Per Shri Pavan Kumar Gadale, JM: The revenue has filed an appeal against the order of CIT(A)-1, Bhubaneswar, passed in ITAppeal No.0542/2014-15, dated 3.12.2015, u/s.143(3) of the Income Tax Act, wherein the revenue has raised the following grounds :- 1 On the facts and in the circumstances of the case, the Ld.CIT(A) is not justified in law as well as on facts in deleting the addition of Rs.48,07,984/- made by the AO u/s.68 on account of unsecured loan. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in not accepting the examination of findings made by the AO on the issue. 2. Brief facts of the case are that the assessee is engaged in the business of Medical Transcription and filed the return of income electronically for the assessment year 2010-2011 on 10.03.2011 with total

2 ITA No.82/CTK/2016 income under the provisions of Section 115JB of the Act of Rs.29,74,482/-

and the return of income was processed u/s.143(1) of the Act on

29.8.2011. Subsequently, the case was selected for scrutiny and the notice u/s.143(2) & 142(1) of the Act were issued. In compliance, the ld.

AR appeared from time to time and produced the books of accounts, cash book, ledger copies and bills and vouchers are test checked. In the

assessment proceedings, the AO on perusal of the balance sheet found that the assessee company has disclosed Loan Fund in Schedule B

Rs.48,07,984/- and called for the explanations. Similarly, the AO issued

letter u/s.133(6) of the Act to the concerned parties for the confirmations.

The unsecured loan creditors have confirmed that there are no

transactions with the company during the period from 2006-07 to 2009-

2010. The ld. AR explained that the loan is very old and is difficult to

arrange the confirmation of the parties, since the assessee could not give

the proper explanations, the AO treated the loan as unsecured cash credit

u/s.68 of the Act and assessed the total income at Rs.48,07,984/- and

passed the order u/s.143(3) of the Act dated 26.3.2013.

with the CIT(A). In the appellate proceedings ld. AR appeared and argued

the grounds and reiterated the submissions made before the AO and

explained that the assessee company is engaged in the business of

medical transcription for clients in USA and has received unsecured loan from the business association of the company and amount was

outstanding as on 1.4.2009 and also no unsecured loan was obtained in

3 ITA No.82/CTK/2016 the financial year 2009-2010 and all these loan creditors are through bank

transaction and was received prior to 31.3.2002. Ld. CIT(A) having

considered the findings of AO and submissions of the assessee and the

written submissions referred at page 2 para 3 of the order and remand

report of the AO, has dealt on the issue and find that the said amount was

received prior to 31.3.2009 and, therefore, the addition cannot be

sustained and deleted the addition and observed at para 4 page 4 of the

order as under :-

before the Tribunal.

the addition and supported the order of AO and prayed for allowing the

appeal. Contra, ld. AR of the assessee relied on the orders of CIT(A).

The sole substantive ground argued by the ld. DR that the CIT(A) has

4 ITA No.82/CTK/2016 erred in deleting the addition made by the AO u/s.68 of the Act. We have

perused the provisions of Section 68 of the Act which reads as under :-

Cash credits. 68. 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 : Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless— (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10. As per the provisions and perusal of the CIT(A)’s order, where the remand

report was discussed by the CIT(A), the amount outstanding in the

balance sheet as on 31.3.2009 is Rs.51,87,934/- and no amount was

received as unsecured loan during the financial year 2009-2010 and loan

transaction has taken place prior to financial year 2006-07. We are of the

opinion that the addition cannot be made under the provisions of Section

68 of the Act on the opening balance and also the revenue has not

controverted the submissions of the ld. AR and the facts on opening

balance. Accordingly, we find that the ld. CIT(A) has dealt on the disputed

issue elaborately and considered the remand report and directed the AO

5 ITA No.82/CTK/2016 to delete the addition as the loan creditors are carried forward balances from the earlier years. Accordingly, we are not inclined to interfere with the order of CIT(A) and upheld the order and dismiss the grounds of appeal of the revenue. 7. In the result, appeal of the revenue is dismissed. Order pronounced in the open court on this 16/08/2017. Sd/- Sd/- (N. S. SAINI) (PAVAN KUMAR GADALE) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER कटक Cuttack; �दनांक Dated 16/08/2017 �.कु.�म/PKM, Senior Private Secretary आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant- 1. DCIT, Corporate Circle-1(1) Bhubaneswar ��यथ� / The Respondent- 2. M/s Magnum Telesoft Pvt. Ltd., 132-A, Sector-A, Zone-A, Mancheswar Industrial Estate, Bhubaneswar-10 आयकर आयु�त(अपील) / The CIT(A), 3. आदेशानुसार/ BY ORDER, आयकर आयु�त / CIT 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, कटक / DR, ITAT, Cuttack 5. गाड� फाईल / Guard file. 6. स�या�पत ��त //True Copy// (Senior Private Secretary) आयकर अपील�य अ�धकरण, कटक / ITAT, Cuttack