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of <h1>Tribunal partially allows appeal on Income Tax Act additions, discrepancies</h1> <h3>Shri R.C. Bhaskar Sri Rameshwari Supari Traders Versus The Addl. CIT Shimoga Range Shimoga</h3> Shri R.C. Bhaskar Sri Rameshwari Supari Traders Versus The Addl. CIT Shimoga Range Shimoga - TMI Issues Involved:1. Addition under Section 41(1) of the Income Tax Act.2. Addition under Section 68 of the Income Tax Act.3. Addition under Section 69 of the Income Tax Act.4. Levy of interest under Sections 234B and 234C of the Income Tax Act.Detailed Analysis:1. Addition under Section 41(1) of the Income Tax Act:The issue revolves around the addition of Rs. 11,01,453/- in respect of outstanding balances of certain sundry creditors. The Assessing Officer (AO) invoked Section 41(1) of the Act, treating this amount as income due to the cessation of liability since the balances were outstanding for 3 to 4 years, and the assessee failed to provide confirmation from the creditors. The tribunal, however, held that mere non-filing of confirmation letters does not lead to the conclusion that the debt has ceased to exist. The debts were acknowledged by the assessee in the balance sheet, and the Karnataka High Court's judgment in the case of CIT Vs. Alvares and Thomas (394 ITR 647) was cited, which states that cessation of liability must be legally established. Consequently, the addition was deleted.2. Addition under Section 68 of the Income Tax Act:2.1. Addition of Rs. 2,05,130/-:The AO added Rs. 2,05,130/- due to a discrepancy in the cash book's opening balance on 17.9.2007. The tribunal upheld this addition, noting that the closing balance on 13.9.2007 should match the opening balance on 17.9.2007, and there was no transaction justifying the difference.2.2. Addition of Rs. 4,50,000/-:The AO added Rs. 4,50,000/- as unexplained cash credit, which the assessee claimed to have received from Bindu Promoters. The tribunal deleted this addition, accepting the assessee's explanation that the amount was a return of an advance given for land purchase, which was reflected in the balance sheet of the previous year.2.3. Addition of Rs. 9,50,000/-:The AO added Rs. 9,50,000/- due to a discrepancy in the cash book entry dates. The tribunal remitted this issue back to the AO, allowing the assessee to reconcile the cash book entries and provide correct details.3. Addition under Section 69 of the Income Tax Act:The AO added Rs. 19,02,709/- as unexplained investment in house construction, which was later reduced by the CIT(A) to Rs. 9,51,000/-. The tribunal found inconsistencies in the valuation report and the bank's information. The tribunal remitted this issue back to the AO for fresh consideration, directing the AO to furnish all collected information to the assessee and decide afresh.4. Levy of Interest under Sections 234B and 234C:The tribunal did not specifically address this issue in detail, as it was contingent on the outcome of the above issues.Conclusion:The appeal was partly allowed for statistical purposes, with some additions deleted, some upheld, and others remitted back to the AO for fresh consideration.
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