ONKARA INFRATECH PVT. LTD.,KOLKATQA vs. ITO,WARD-6(1), KOLKATA

I have heard the rival contentions and gone through the relevant material placed before me. From the record, I notice that the assessee is a Private Limited Company and filed its return of income for the relevant assessment year on 14.12.2013 declaring total income at Rs.12,500/-. During the course of scrutiny proceeding under section 143(3) of the Act, the ld. Assessing Officer while examining the summary of the loans and advances account noted that there is a decrease in loans and advances but it was less than the deposit appearing the Bank account. He thus calculated the excess deposit appearing in Bank account at Rs.34,45,820/- and thereafter treating it as a business receipt estimated profit @ 21% and made the addition of Rs.7,20,000/-. The assessee preferred appeal before the ld. CIT(Appeals), but in the meantime revisionary proceedings were carried out by the ld. PCIT and vide order dated 13.03.2018 passed under section 263 of the Act, directions were given to ld. Assessing Officer to recompute the income without estimating the profit and make the total addition of the alleged difference. In compliance, ld. Assessing Officer framed the assessment under section 143(3) read with section 263 of the Act and made the addition. The assessee further failed to get relief from the ld. CIT(Appeals) on account of non- appearance.

However, against the order passed under section 143(3) of the Act on 22.02.2016, the issue of estimation of income on the alleged

From the above it shall be noted that there were credits to the tune of Rs.90,00,000/- on account of refund of loans & advances and not Rs.59,01,827/- as wrongly presumed by the AO. The AO had grossly erred in simply assuming that the net decrease in the Head ‘Loans & Advances’ as appearing in the Balance Sheet as on 31.03.2013 i.e. Rs.59,01,827/- [2,08,95,086 - 1,49,93,259] [Refer Page 14 of Paper Book] represented the credits / receipts in bank statement. The appellant has enclosed the relevant ledger summary of the Head ‘Loans & Advances’ at Page 52 of Paper Book from which is evidently clear that the gross receipts / refunds inclusive of interest and TDS was Rs.90,78,974/- out of which again fresh loans were advanced by the appellant leading to net decrease of only Rs.. In support of the same, the relevant party-wise ledgers along with balance confirmations is also enclosed at Pages 53 - 64 of Paper Book which clearly shows that the gross receipts / refunds out of loans & advances was Rs.90,00,000/- and not Rs.59,01,827/-. To further substantiate the foregoing, the appellant has also enclosed the relevant audited financial statements as on 31.03.2012 along with party-wise ledgers of ‘Loans & Advances’ at Pages 72 - 84 of Paper Book to substantiate the receipt of refund of loans which were granted in earlier year/s. 11. Apart from the above, there was receipt of Rs.26,635/- by way of income-tax refund which is discernible from the entry in the bank statement available at Page 67 of Paper Book. This is also corroborated by Form 26AS which is enclosed at Pages 69 - 71 of Paper Book. Further, the appellant had deposited cash of Rs.20,000/- in the bank account out of the cash available in the books of accounts. This fact is also verifiable from the entry in the bank statement available at Page 68 of Paper Book. 12. Out of the interest of Rs. 1,17,414/- credited in P&L A/c, the appellant had only received / realized interest of Rs.7,500/- from M/s Llyod Commercial Pvt. Ltd. and that the balance interest was outstanding and receivable. The AO however wrongly assumed that the entire interest was realized which is ex-facie erroneous. 13. In view of the above details and facts, it shall thus be noted that the receipts as per books of accounts was Rs.90,54,135/- viz., (a) refund of loans & advances of Rs.90,00,000/-, (b) income tax refund of Rs.26,635/-, (c) deposit out of cash balance of Rs.20,000/- and (d) receipt of interest income of Rs.7,500/-. Hence, the receipts as per books of accounts fully tallied with the credits appearing in the bank statement and that there was

I, on perusal of the submissions filed by the assessee and the finding of the ld. CIT(Appeals) in the first round of proceeding dealing with the factual aspect of the alleged difference, find that the basis of alleged difference arises from the group summary of loans and advances, where total opening balance shows at Rs.2,09,77,079/-. The total debit transaction during the year shown in the loans and advances is at Rs.31,29,155/-, whereas the total credit transaction shows at Rs.90,78,974/-. The closing balance of loans and advances shows at Rs.1,50,27,260/-. Ld. Assessing Officer took the difference between the opening and closing balance of loans and advances, which is Rs.59,49,419/- and then the ld. Assessing Officer on the basis of his knowledge and understanding compared this figure of reduction in loans and advances during the year with the total deposits in the Bank account for the period from 11.05.2012 to 28.03.2013, which comes to Rs.94,54,135/- and calculated the alleged difference. This exercise of the assessee is untenable and is based on merely surmises and conjectures. Bank account does not have the only transaction relating to the amount of receipt and payment under the head ‘loans and advances’, but there are other transactions also, which has been duly reflected in the reconciliation statement.

After going through the relevant documents, I am of the view that ld. Assessing Officer has grossly erred in simply matching the net decrease under the head “loans and advances” appearing in the balance sheet with the credits or receipts of Bank statement. 6

In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 22/07/2024.