DELHI KIRANA CO.,NEW DELHI vs. ITO, NEW DELHI

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ITA 5653/DEL/2011Status: DisposedITAT Delhi15 January 2016AY 2007-085 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the chart provided by the Assessing Officer did not clearly distinguish opening balances from current year's income. Therefore, the matter was remitted back to the Assessing Officer for verification.

What were the facts?

The assessee, a kirana store, declared low income and claimed unsecured cash loans of Rs. 11,31,550 from 59 persons, each below Rs. 20,000. The Assessing Officer added this amount as cash credits, which the CIT(A) partially confirmed.

What were the issues?

Whether cash credits from multiple small lenders, some of which might be opening balances, are genuine and properly treated as income under Section 68.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Before: SHRI INTURI RAMA RAO & SMT SUCHITRA KAMBLE

Pronounced: 15.01.2016

ORDER PER SUCHITRA KAMBLE, JM

This appeal is filed by the assessee against the order dated 12/10/2011 passed by Ld. CIT(A) XV, New Delhi. 2. The grounds of appeal are as under:-

“1. The Ld. Income Tax Officer, Ward-28 (1), New Delhi (hereinafter referred to as Ld. ITO) as well as the Ld.CIT(A) XXV, Delhi (hereinafter referred o as Ld.CIT(Appeals), both, have erred in law vis-à-vis the facts & features of the subject matters of the case of the assessee-Firm (Appellant): (1) While assessing by making addition of Rs.11,31,550/= vide e Order u/s 143(3) dated 29/12/2009 alleging Cash Loans from 59 persons (less than Rs.20,000/= each) as Cash-Credits u/s 68 despite:-

(1.1) the admitted, cogent & established fact that Rs.11,31,550/= comprise of Rs.7,99,000/= from 42 persons which were Not Received during the year under appeal, But were Received during the preceding Assessment Year; and (1.2) Confirmations of lenders of such sum(s) were furnished during the course of assessment proceedings as also during the first appellate proceedings before the Ld.CIT(A) who was partially & whimsically judicious to admit the alleged Cash-Credits as genuine to the extent of Rs.6,31,515/= while upholding the Addition to the tune of Rs.5,00,000/= i.e. on ad hoc basis in the impugned Order u/s 250 (6) dated 12/10/2011 (served on 20/10/2011 to the Appellant)’ (2) While making unwarranted comments involving allegations about:- (a) the funds introduced by the Partners of the assessee-Firm/Appellant as Capital-Additions during the year; (b) the alleged low GP-rate of 9% on Turnover of Rs.23.62 lakhs; and (c) the alleged low Net-Profit & Total income Returned vide ITR filed; whereas neither such subject matter(s) were adversely commented by the Ld. ITO nor forming part of the Grounds of Appeal before the Ld.CIT(A) even after detailed assessment proceedings as well as Remand-Report proceedings by the Ld. ITO.;

3. The assessee is engaged in the business of Kirana Stores etc. having two partners namely, Md. Wasesem and Md. Fahim. The assessee declared the total turnover of Rs.23,62,024/- the GP @ 9% of Rs.2,12,595/- and the assessee filed the nominal return income of Rs.14,828/- only. The assessee claimed the unsecured loans of Rs.22,21,118/- out of which there were cash loans of Rs.11,31,550/- which were below Rs.20,000/- each from 59 parties. The case was taken up for scrutiny and the A.O was not satisfied regarding the identity, creditworthiness and genuineness of the cash loans and made the addition of the same amount of Rs.11,31,550/-.

4.

The assessee filed appeal against the order of the A.O before the CIT(A). The assessee submitted before the CIT(A) that the cash loans were taken and the confirmations were submitted for some of the parties which was not accepted by the A.O. The assessee also submitted further confirmations during the course of appellate proceedings which was remanded to the A.O and a remand report dated 19/8/2011 was forwarded by the JCIT, Range 28, New Delhi vide the letter dated 23/8/2011 and a copy of which was forwarded to the assessee. The main submission of the assessee was that the cash loans below Rs.20,000/- were received from 59 parties and the confirmations were submitted. The Ld. CIT(A) confirmed the addition to the extent of Rs. 5 lac.

5.

The AR submitted that the cash credit of 59 people were received which was less than 20,000/- and the chart given in the assessment order itself shows that the amount shown on the date on 1/4/2006 amounts to opening balance and cannot be treated as the income of the assessee. The summons which were given to the parties was also received and the confirmation of the parties was produced before the Assessing Officer .

6.

The DR submitted that the chart shown in the Assessing Officer ’s order does not give any clear picture as to which is the opening balance and needs to be remanded back for verification.

7.

We have perused all the records and submission of both the parties and though the confirmation of 39 parties has been submitted the chart given by the Assessing Officer has not given any clear idea as to which has to be considered as opening balance. Therefore, this needs to be verified by the Assessing Officer. The Ld. CIT(A) also silent on this part. This needs clarification and hence the matter is remitted back before the Assessing Officer in the interest of justice. Needless to say both the parties should be heard.

8.

In the result, the appeal is partly allowed for statistical purpose.

The order is pronounced in the open court on 15th of January, 2016.

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