M/S. BABYLISS CURLES & CURVES (P) LTD.,INDORE vs. THE ITO-5(4), INDORE

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ITA 587/IND/2019Status: DisposedITAT Indore14 October 2022AY 2010-114 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal confirmed the addition of Rs. 15,00,000/- as unexplained unsecured loan. The Tribunal found no infirmity in the orders of the lower authorities, especially in the absence of supporting documents from the assessee.

What were the facts?

During a survey, the assessee company surrendered an additional income of Rs. 15,00,000/- as unexplained unsecured loan, which was not reflected in the return. The assessee later claimed the surrender was under undue influence and the loan was repaid.

What were the issues?

Whether the addition of unexplained unsecured loan is justified when the assessee failed to provide supporting documents and claimed the surrender was under undue influence.

Which sections of the Income-tax Act were involved?

Section 68,Section 133A,Section 131

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: Ms. MADHUMITA ROY & SHRI BHAGIRATH MAL BIYANI

For Appellant: Shri Ashish Porwal, Sr.D.R
Pronounced: 14.10.2022

The instant appeal filed by the assessee is directed against the order dated 20.02.2019 passed by the Ld. Commissioner of Income-Tax (Appeals)- I, Indore (in short ‘CIT(A)’), arising out of the order dated 18.12.2017 passed by the Asstt. Commissioner of Income Tax -1(1), Indore under section 143(3) r.w.s 147 of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) for Assessment Year 2010-11.

2.

None appeared on behalf of the assessee at the time of hearing of the matter. The Ld.DR, on the other hand, relied upon the orders passed by the authorities below.

(M/s. Babyliss Curles & Curves P. Ltd. vs. ITO) Asst.Year.– 2010-11 - 2 - 3. It appears from the records that on a number of occasions the asseessee had not appeared at the time of hearing of the matter and only in two occasions, application for adjournment was filed. Even today, no application for adjournment has been preferred by the assessee. Under these facts and circumstances of the case, we have decided to take up the matter ex parte.

4.

We have heard Ld.DR and also perused the relevant materials available on record. It appears that the addition relates to Section 68 of the Act to the tune of Rs.15,00,000/- made on account of unsecured loan. In fact, the same was accepted by the Director of the assessee company during the course of survey. However, the same was not reflected in the return filed by the assessee. It was the contention of the assessee that the surrender during course of survey proceedings was under undue influence and wrong understanding of facts at the time of survey proceeding that it was a loan taken from one M/s. K. K. Patel Finance Ltd. and the same was also repaid. However, no such document is forthcoming in support of such contention made by the assessee. Finally, the Ld. AO had not accepted the genuineness of the loan obtaining from said M/s. K. K. Finance Ltd. and addition was made. The Ld. CIT(A) confirmed the addition made by the Ld.AO. While doing so, the Ld.CIT(A) observed as follows:

“Both the grounds of appeal have been raised against the addition of Rs.15,00,000/- u/s 68 of the Income Tax Act, 1961. The brief facts of the case are that a survey u/s 133A of the Income Tax Act, 1961 was conducted in the business premises of appellant on 04/05/2010. During the course of survey proceedings, the appellant had surrendered an additional income of Rs.42,00,000 /- which included an amount of Rs.15,00,000/- as unexplained unsecured loan. However, at the time filing ROI, the appellant had not reflected additional income on account of unsecured loan of Rs.15,00,000/-. The AO therefore, after taking into account the facts and circumstances of the case has proceeded to make an addition of Rs.15,00,000/- in the assessment order. During the course of appeal proceedings, the appellant has mainly contended that the surrender during the course of survey proceedings was under undue influence and wrong understanding of facts at the time of survey proceedings that it was a loan taken from M/s K. K. Patel Finance Ltd. which was subsequently repaid to the party. I have gone through the contents of the assessment order, written submissions and various case laws cited by the appellant in support of the contention. It has been observed that Smt. Jyoti Debey, (M/s. Babyliss Curles & Curves P. Ltd. vs. ITO) Asst.Year.– 2010-11 - 3 - Director of Company has given statement, u/s 131 of the Income Tax Act, 1961 and accepted that the amount under consideration was out of unaccounted income. Therefore, the same was surrendered during the course of survey proceedings. Apparently, the surrender was for the reasons that the appellant had failed to explain the credit entry during the course of survey proceedings. Not reflecting the surrendered amount in the ROI cannot be accepted at the time of filing of return because the AO has already been precluded from conducting further inquiries to prove the genuineness of credit and creditworthiness of creditor in terms of section 68 of the Income Tax Act, 1961 during the course of survey. In the case of appellant, it has been found to be an afterthought. Without prejudice to above, the loan obtained from M/s K. K. Patel Finance Ltd, cannot be considered as genuine as it is one of the group companies of Lunkad Group of Indore, which were proved to have been involved in providing entries in lieu of commission. Further, I have also gone through various case laws cited by the appellant and observed that the same are not applicable in the present set of facts in the case under consideration. Therefore, 1 do not find any infirmity in the order of assessment passed by the AO making addition of impugned amount of Rs.15,00,000/-. The same is accordingly confirmed. Both the grounds of appeal are dismissed.”

In the absence of any assistance rendered by the assessee, we do not find any irregularities in the order passed by the Ld.CIT(A). Hence, the same is hereby confirmed. The assessee’s appeal is, therefore, found to be devoid of merit and, thus, dismissed.

5.

In the result, assessee’s appeal is dismissed.

This Order pronounced on 14/10/2022

Sd/- Sd/- (BHAGIRATH MAL BIYANI) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore; Dated 14/10/2022 S. K. Sinha, Sr. PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)- 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Indore 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,

(Sr. Private Secretary) ITAT, Indore (M/s. Babyliss Curles & Curves P. Ltd. vs. ITO) Asst.Year.– 2010-11 - 4 - 1.Date of dictation on 26.09.2022 2.Date on which the typed draft is placed before the Dictating Member .10.2022 3.Date on which the approved draft comes to the Sr.P.S./P.S. 4.Date on which the fair order is placed before the Dictating Member for pronouncement 5.Date on which the fair order comes back to the Sr.P.S./P.S 6.Date on which the file goes to the Bench Clerk 7.Date on which the file goes to the Head Clerk…………. 8.The date on which the file goes to the Asstt. Registrar for signature on the order…………………… 9.Date of Despatch of the Order………Date on which the typed draft is placed before the Dictating Member 19.12.2019Other Member………………Date on which the approved draft comes to

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