Tribunal overturns tax assessment, rules in favor of assessee

The Tribunal concluded that the lower authorities failed to establish conclusively that the assessee had advanced Rs. 50 lakhs to Sh. Vikas Sharma. The Tribunal directed the deletion of the addition made and sustained by the lower authorities. The appeal of the assessee was allowed, and the order was pronounced in the open court on 31 March 2022.

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Issues Involved:
1. Addition of Rs. 50 lakhs under Section 69 on account of alleged unaccounted advances.
2. Validity of the cancellation receipt.
3. Reliance on the statement of Sh. Vikas Sharma.
4. Consideration of Rs. 30 lakhs received back from Sh. Ram Gopal Surolia.

Detailed Analysis:

1. Addition of Rs. 50 lakhs under Section 69 on account of alleged unaccounted advances:

The assessee contested the addition of Rs. 50 lakhs made by the Assessing Officer (AO) based on blank receipts found during a search operation. The AO presumed that the assessee had advanced a cash loan of Rs. 50 lakhs to Sh. Vikas Sharma. The assessee argued that the blank receipts and undated cheques were given to Sh. Vikas Sharma as security for a potential loan that was never materialized. The Tribunal noted that the receipts did not mention the name of the person from whom the amount was received, the cheque number, or the date of the cheque. It was concluded that the mere presence of these receipts could not substantiate the claim that Rs. 50 lakhs were advanced by the assessee.

2. Validity of the cancellation receipt:

The assessee presented a cancellation receipt dated 21.03.2012, stating that the cheques and receipts were misplaced and no transaction was carried out. The lower authorities rejected this receipt, considering it a fake document and an afterthought since it was not found during the search. The Tribunal examined the notarization and the stamp paper's veracity, noting that the cancellation receipt was accepted by Sh. Vikas Sharma in his statement recorded by ADIT on 23.11.2016. The Tribunal found no evidence to support the lower authorities' claim that the cancellation receipt was fake.

3. Reliance on the statement of Sh. Vikas Sharma:

The lower authorities relied on Sh. Vikas Sharma's statement to confirm the addition. However, the Tribunal observed that Sh. Vikas Sharma's statement indicated that he signed the receipts and cheques on the assurance of receiving funds from Sh. Manaswi Gautam, which did not materialize. The Tribunal found no contradiction in Sh. Vikas Sharma's statement and noted that the lower authorities' assumption of the cancellation receipt being fake was not substantiated by any material evidence.

4. Consideration of Rs. 30 lakhs received back from Sh. Ram Gopal Surolia:

The assessee argued that Rs. 30 lakhs received back from Sh. Ram Gopal Surolia should be set off against the addition of Rs. 50 lakhs. The Tribunal noted that the lower authorities did not consider this aspect. The Tribunal found that the assessee had advanced Rs. 63 lakhs to Sh. Ram Gopal Surolia in 2008, out of which Rs. 30 lakhs were received back by 19.12.2011. This amount was not a receipt of a loan but a repayment of an earlier advance. The Tribunal directed that if any addition is sustained based on the blank receipts, the set-off of Rs. 30 lakhs should be allowed.

Conclusion:

The Tribunal concluded that the lower authorities failed to establish conclusively that the assessee had advanced Rs. 50 lakhs to Sh. Vikas Sharma. The Tribunal directed the deletion of the addition made and sustained by the lower authorities. The appeal of the assessee was allowed, and the order was pronounced in the open court on 31 March 2022.

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