SHRI BOGHA NARAN DHREVADA,JAMNAGAR vs. THE ITO, WARD-1(5), JAMNAGAR

This assessee’s appeal for A.Y. 2016-17, arises from order of the CIT(A), Jamnagar dated 12-07-2019, in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”.

The assessee has raised the following grounds of appeal:-

Appellant craves for to add, alter, delete or modify any grounds either before or in the course of hearing of the appeal.”

The brief facts of the case are that the assessee filed its return of income for assessment year 2016-17 declaring total income of � 5,04,820/-. During the year under consideration, the assessee was engaged in business of mining contract with primarily two entities- Ashapura Minechem Ltd and Bombay Minerals Ltd. The assessee did not maintain the books of accounts and offered his business income under section 44AD of the Act in his return of income. During the course of assessment, the AO observed that as per Form 26AS, the assessee has gross receipts of � 1,29,61,187/-whereas as per the return of income, the receipt of the assessee are � 91,25,610/-. The AO asked the assessee to explain the difference between the same amounting to � 38,35,577/- and to provide supporting documents in support of the same. In response, the assessee filed written submission regarding the difference of � 38,35,577/-and submitted that this difference was on account of the fact that this amount of � 38,35,577/- represented advance received by the assessee from Bombay Minerals Ltd and hence the same was not Page No. 3 Shri Bogha Naran Dhrevada vs. ITO shown as income of the assessee during the year under consideration. To verify the details submitted by the assessee, the AO issued notice under section 133(6) to Bombay Minerals Ltd, who also filed a response to the AO in respect of the aforesaid notice issued to it. However, the AO was not convinced with the explanation provided by Bombay Minerals Ltd and also the replies filed by the assessee on the ground that the assessee has not been able to furnish the necessary evidences/proof in support of its claim that the aforesaid amount constituted advance and hence the AO added a sum of � 38, 35,577/-as income of the assessee during the year under consideration.

In appeal before ld. CIT(A), the assessee produced a certificate from Bombay Minerals Ltd stating that it had advanced a sum of � 1,29,29,300/- in financial year 2015-16 and had again given advance of � 1,04,04,044/- in financial year 2016-17 to the assessee against mining work. However, Ld. CIT(Appeals) dismissed the appeal of the assessee on the ground that the amount mentioned in the certificate issued by Bombay minerals Ltd is not matching with the difference of � 38,35,577/- which has been subject to tax in the hands of the assessee on account of the difference arising in Form 26AS and the ITR filed by the assessee.

The assessee is in appeal before us against the aforesaid additions confirmed by Ld. CIT(Appeals). From the facts placed before us, we observe that when the assessee was asked to explain the difference of � 38,35,577/- during the course of assessment proceedings, it filed several details before the AO viz. Income tax return for assessment year 2016-17, Form 26AS, profit and loss account and balance sheet for year ended 31-03- Page No. 4 Shri Bogha Naran Dhrevada vs. ITO 2015 and 31-03-2016, bank statement and bank passbook for the relevant period, details of income statement in comparison to Form 26AS for assessment year 2015-16 and 2016-17, ledger account of Bombay Minerals Ltd for assessment year 2016-17 and 2017-18. Further, the AO also issued notice under section 133(6) of the Act to Bombay minerals Ltd to verify whether the said party had advanced any amount to the assessee during the course of assessment proceedings. The AO also made an observation at para 4 of his order that Bombay Minerals Ltd also filed reply in response to the notice under section 133(6) issued to it. Further, in appellate proceedings before Ld. CIT(Appeals), the assessee also furnished a certificate from Bombay Minerals Ltd stating that it had given an advance of � 1,29,29,300/-in financial year 2015-16 and had again given advance of � 1,04,04,044/-in financial year 2016-17 to the assessee against mining work. However, the Ld. CIT(Appeals) overlooked the certificate furnished by the assessee from Bombay Minerals Ltd on the ground that the amounts mentioned in the certificates are not matching with the difference which has been added by the AO in the hands of the assessee. In our considered view, looking into the facts of the case and documents furnished by the assessee during the course of assessment proceedings and appellate proceedings, the replies provided by the assessee to explain the difference between the amount coming in the Form 26 AS and that appearing in the return of income filed by the assessee, reply of Bombay Minerals Ltd to the AO in response to notice issued under section 133(6) of the Act and further the certificate issued by Bombay Minerals Ltd certifying that it had made advances to the assessee against mining work in financial years 2015-16 and 2016-17 which were produced by the assessee before Ld. CIT(Appeals), we Page No. 5 Shri Bogha Naran Dhrevada vs. ITO are of the view that the assessee has been able to able to explain the difference between the amount coming in Form 26AS and the amount declared in the return of income. The assessee has time and again furnished details to the AO/CIT (Appeals) which were not appreciated by them. In view of the above observations, the appeal of the assessee is allowed since, in our view, the assessee has been able to explain the difference with the help of supporting documents and certificate issued by Bombay Minerals Ltd certifying that the party had advanced amounts the assessee against mining work in financial years 2015-16 and 2016-17.