PRESIDENCY FINANCE LIMITED ,CHENNAI vs. DCIT,CORPORATE CIRCLE-5(2), CHENNAI

Brief facts of the case are that the assessee filed its return of income for the assessment year 2017-18 on 11.10.2017 admitting a total income of ₹.80,45,362/- under normal provisions and book profit of ₹.44,41,615/-. The case was selected for scrutiny through CASS and

Further, the assessee has claimed total expenses to the tune of ₹.1,51,00,862/- incurred during the year. After perusal of the claim and in the absence of documentary evidences or proof, the Assessing Officer has disallowed 60% of the total expenses claimed by the assessee and

The assessee carried the matter in appeal before the ld. CIT(A). After considering the submissions of the assessee, the ld. CIT(A) confirmed the addition of ₹.17,50,000/- under section 68 of the Act and with regard to the claim of expenses, the ld. CIT(A) restricted the disallowance of expenses to the extent of 30% of the total unexplained expenditure and partly allowed the appeal.

On being aggrieved, the assessee is in appeal before the Tribunal. With regard to the addition made under section 68 of the Act, by filing various details in the form of paper book, the ld. counsel for the assessee has submitted that the assessee issued the shares to an existing shareholder company and adequately disclosed the details in the balance sheet schedules, which are further mandatorily filed before various regulatory authorities for statutory compliances. It was further submission that without affording adequate opportunities, the Assessing Officer has hurriedly concluded the assessment and prayed for affording one more opportunity of being heard to substantiate the claim of the assessee. So far as restriction of expenses at 30%, the ld. counsel has submitted that the assessee has complete details of expenses incurred and the expenses have to be fully allowed. Thus, it was prayed for one more

On the other hand, the ld. DR supported the order passed by the ld. CIT(A).

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including paper book filed by the assessee. Since the assessee could not file any details as to whom the shares have been issued and mode of receipt for the amount, the Assessing Officer treated the same as unexplained cash credits in the books of the assessee under section 68 of the Act, which was confirmed by the ld. CIT(A) as no details were furnished even before the ld. CIT(A). However, by filing various details such as RBI Registration Certificate, PAN copy of investor, ITR-V of the investor, balance sheet schedule of investor, etc., the assessee has prayed for an opportunity to substantiate its case before the Department.

With regard to the restriction of disallowance of expenses, the assessee has claimed expenses to the tune of ₹.1,51,00,862/-. Since the claim was not supported by documentary evidences, the Assessing Officer disallowed 60% of the total expenses incurred and brought to tax. On appeal, after considering the submissions of the assessee, ld. CIT(A)

In view of the above facts and circumstances, we are of the opinion that to meet the ends of natural justice, the assessee shall be afforded one more opportunity of being heard to substantiate its case by furnishing complete details before the Assessing Officer as was furnished before the Tribunal. Accordingly, we set aside the order of the authorities below and remit the matter back to the file of the Assessing Officer to afford an opportunity to the assessee for furnishing complete details and after examining the details/evidences, the Assessing Officer shall decide both the issues afresh in accordance with law. The assessee is also directed to furnish complete details on both issues before the Assessing Officer for deciding the issues on merits.

In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 27th March, 2024 at Chennai.