HAR NARAIN AGARWAL TH, L/H PREM CHAND GARG,NEW DELHI vs. ACIT, CIRCLE-41(1), NEW DELHI

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ITA 8189/DEL/2019Status: DisposedITAT Delhi12 September 2023AY 2013-14Bench: SH. N.K.BILLAIYA, ACCOUNTANT MEMBER AND SH. ANUBHAV SHARMA (Judicial Member)3 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 upheld the addition made by the AO and sustained by the CIT(A). The addition was justified under Section 41 of the Act as the assessee could not satisfy the nature of the trade credits which had remained outstanding for years.

What were the facts?

The assessee, engaged in food grain trading and storage, received a business advance of Rs. 2,94,43,513/- from Japan Corporation which remained unaltered over the years. The assessee failed to provide a satisfactory explanation for this unutilized advance.

What were the issues?

Whether the unexplained outstanding business advance, remaining unaltered for years, can be treated as income of the assessee under Section 41 of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 41

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI

Before: SH. N.K.BILLAIYA & SH. ANUBHAV SHARMA

Hearing: 12.09.2023Pronounced: 12.09.2023

The appeal has been preferred by the Assessee against the order dated 26.08.2019 of CIT (A)-14, New Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) arising out of an appeal before it against the order dated 30.03.2016 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the ACIT, Circle-41(1), New Delhi (hereinafter referred as the Ld. AO).

2.

Heard and perused the record.

3.

As the case was called for hearing, non-appeared for assessee and the record shows notices have been repeatedly issued to the assessee including e- mail. No more opportunity is justified. Arguments of ld. DR were heard who supported the findings of Ld. Tax Authorities below.

4.

It can be appreciated that the assessee is engaged in the business of trading and export of food grains and also in the business of storage of food grains with two firms M/s. Kannu Exports and M/s. Gulmarg Ice Factory & Cold storage. The case of assessee was selected to examine introduction of capital in the year and Ld. AO observed that assessee had received business advance of Rs. 2,94,43,513/- from Japan Corporation which is lying unaltered over the years. Assessee was unable to give a satisfactory reply as to why this amount stands in the book and has not been paid. Ld. AO considered the amount to be income of the assessee and made the addition which is sustained by Ld. CIT(A) on the basis that assessee was unable to satisfy what was the nature of receipts and considering the facts arrived a conclusion that if there standing as trade credits for year’s addition u/s 41of the Act is justified. The grounds raised by assessee are primarily questioning the justification of addition u/s 41 of the Act without there being any material on record to show the nature of receipt. The findings of ld. Tax Authorities require no interference. Grounds have no substance and consequently the appeal of assessee is dismissed.

Order pronounced in the open court on 12th September, 2023.

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