TaxTMI 
TaxTMI 
2018 (4) TMI 1372
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....pears from its head office at 7, Sheikh Bagh, Srinagar. The Assessee filed its return of income, on the 14th of November, 2007, for the assessment year 2007-2008 declaring income of Rs. 15,26,210/- (rupees fifteen lac, twenty-six thousand, two hundred and ten only), which was supported by audited balance sheet and, audited profit and loss account for the financial year 2006-07 relevant to assessment year 2007-08. During the course of the assessment proceedings, the Assessee claimed that a sum of Rs. 1,50, 00, 000/- (One crore, fifty lacs only) represented unsecured loan raised from M/s Himachal Futuristic Co. Ltd. (HFCL). This loan, as stated, was raised in the financial year 2001-02 relevant to assessment year 2002- 03 and remained outstanding even at the close of the current assessment year. Moreover, it was also submitted that a sum of Rs. 18,30,000/- (eighteen lacs and thirty thousand only) was an advance received from a customer, namely, Ghulam Nabi in the financial year 2005-06 relevant to assessment year 2006-07 which was repaid during the current assessment year. The Assistant Commissioner of Income Tax-3, Srinagar, in terms of the order of assessment dated 18th of Septembe....
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.... assessment order in respect of such addition made is totally off the mark, ignoring the basic facts. It is also not a case where it is treated as cessation of the liability. In view of this, the addition of Rs. 15,00,000/- (In fact, the figure was Rs. 1.5 Crores) is deleted being baseless. With regard to the second addition of Rs. 18,30,000/- (eighteen lacs and thirty thousand only) running under the caption, 'unexplained expenditure', the Commissioner of Income Tax (Appeals), observed as under: "Here also it is undisputed that this addition was made in Assessment year 2006-07. The facts of the case are that the appellant had shown an amount of Rs. 18,30,000/- as unsecured loan in the name of Mr. Ghulam Nabi. During the stage of assessment it was contended on behalf of assessee that in fact the amount represented trade advances from various parties received through Mr. Ghulam Nabi and it was those advances which are claimed to be settled through sales made to them in the Assessment Year under reference. Anyway, the fact remains that such addition was already made in Assessment Year 2006-07 and was essentially a matter relating to the immediately preceding year and n....
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.... any documentary evidence before the Assessing Officer as well as before the learned first appellate authority and even before this Bench regarding business relation/business transaction for the previous years as alleged by the assessee. Even as per record, it is admitted facts that the assessee has not paid any interest or credited to M/s Himachal Futuristic Co. Ltd. in respect of this credit balance. The Assessing Officer called the explanation from the assessee to explain the reasons for loan of M/s Himachal Futuristic Co. Ltd. being stagnant for 3 years and more and also asked mode of payment, terms of payment and repayment schedule. The assessee submitted its reply dated 14.09.2009, wherein it has I.T.A. No. 458(Asr)/2010 Assessment year: 2007-08 submitted that non-payment of unsecured loan to M/s Himachal Futuristic Com. Ltd. is only a reason that they are very friendly with the assessee firm and due to the liquidity crunch being faced by the assessee firm for the last so many years, the assessee is not in a position to repay the said loan. 11.2 In our considered view, the reply filed by the assessee is totally baseless and illogical and without any cogent documentary evid....
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....with the assessee firm in the normal course. The Assessing Officer had given opportunity to the assessee to establish the requirement of Section 68 of the Act but the assessee failed to establish with any documentary evidence that why the assessee has taken the loan from M/s Himachal Futuristic Co. Ltd. in the financial year 2001-02 and the huge amount is still outstanding without payment of any interest or crediting the interest in the account of M/s Himachal Futuristic Co. Ltd.. In respect of this credit balance, unsatisfactory explanation given by the assessee has been accepted by the learned first appellate authority while deleting the addition in dispute. In our considered view, the impugned order on the deletion of addition of Rs. 15,00,000/- is not as per law and record of the case. Therefore, we are unable to sustain the same. In our considered view, the Assessing Officer is within her power to call for explanation of the assessee on any sum which she has found credited in the books of the assessee maintained for any previous years. The Assessing Officer called the explanation which is not satisfactory and as per the provisions of law and without support of any documentary ....
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....against Sri Ghulam Nabi for the financial year ending on 31.03.2007. The Assessing Officer asked the assessee to produce Sh. Ghulam Nabi and establish his identity but the assessee failed to produce Sh. Ghulam Nabi before the Assessing Officer. The Assessing Officer held that this liability shown by the assessee is bogus and the sum was nothing but assessee's own money introduced by the assessee in its books of account in the garb of unsecured loan. The averment of the assessee I.T.A. No. 458(Asr)/2010 Assessment year: 2007-08 regarding repayment of loan to Sh. Ghulam Nabi during the year in dispute has not been established by the assessee with the proof of any documentary evidence. Learned first appellant authority has wrongly deleted the addition in dispute without being any evidence that the assessee has repaid the amount in dispute to Sh. Ghulam Nabi in the assessment year in dispute. 12.2 In our considered view, the learned first appellate authority has wrongly deleted the addition in dispute merely on presumption and assumption and in the absence of any documentary evidence supporting the claim of the assessee. In the present case, the assessee is claiming the benefit ....
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....s preferred the present appeal. It is contended before us on behalf of the Assessee that the Tribunal has erred in setting aside the deletion made by the Commissioner of Income Tax (Appeals). It has been pleaded on behalf of the learned counsel for the appellant/ Assessee that the following questions arise for our consideration: 1. "Whether on the facts and, circumstances of the appellant the Income Tax Appellate Tribunal has erred in sustaining an addition of Rs. 15,00,000/- (rupees fifteen lacs only) representing the loan received from M/s Himachal Futuristic Co. Ltd., during Assessment year 2002-03 and remaining outstanding at the close of the year?" 2. Whether on the facts and, circumstances of the appellant, and, on true and correct construction of the provisions contained in section 69C of the Act the Income Tax Appellate Tribunal has erred in sustaining an addition of Rs. 18,30,000/-(rupees eighteen lacs and thirty thousand only) representing the advance received from Gulam Nabi in Assessment year 2006-07 and repaid in the instant year? 3. Whether, the Income Tax Appellate Tribunal was justified in law, in reversing the action of the Commissioner of Income Tax (Appea....
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....books of account of the assessee during the year but it is a case in which the assessee has invested the capital in the business and this amount was shown as a closing capital as on 31st March, 1992 and on 1st April, 1992 it was an opening balance. Considering this aspect, the Tribunal has come to the conclusion that what was already credited in the books of accounts ending on 31st March, 1992 for financial year 1991-92 relevant to asst. yr. 1992-93 cannot be an unexplained cash credit or investment in the books of account maintained for the financial year 1992-93, the accounting period of which ends on 31st March, 1993 so as to warrant its consideration as unexplained investment or cash credit for its relevant asst. yr. 1993-94. 6. It does not require any elaborate argument that a carried forward amount of the previous year does not become an investment or cash credit generated during the relevant year 1993-94. This alone is sufficient to sustain the order of the Tribunal in deleting the amount of Rs. 1,55,316 from the assessment for asst. yr. 1993-94. Since the appeal succeeds on the merit of the assessee's case in respect of the additions made in the income computed on re....
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....sh credit of money in the instant year, such a finding is patently misconceived. This finding, as stated, has been made a basis for invoking Section 69C of the Act which is also inapplicable as Section 69C of the Act applies only when Assessee incurs an expenditure which has not been explained. 10.) Mr Kawoosa, the learned counsel for the respondents, while supporting the judgment rendered by the Tribunal, submits that the learned Commissioner of Income Tax (Appeals) was not justified in deleting the addition of Rs. 15,00,000/- (rupees fifteen lacs only) without appreciating the fact that the Assessee failed to justify the reasonableness as to how and why such huge interest free loan was outstanding for payment to a concern with which the Assessee was having neither any business transactions nor any relation. The learned counsel has further argued that the learned Commissioner of Income Tax (Appeals) was also not justified in deleting the addition made under Section 69 of the Act to the tune of Rs. 18,30,000/- (rupees eighteen lacs and thirty lacs only), without appreciating the fact that the Assessee failed to give any explanation when confronted with the issue. Mr Kawoosa has re....
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....e concern M/s Himachal Futuristic Col. Ltd was indeed having a credit balance of Rs. 15,00,000/- (rupees fifteen lacs only) lying with the Assessee since the financial year 2001-02. Finally, the Assessing Officer held that since the settlement of this liability had not reached even during the financial year under consideration, the said liability of Rs. 15,00,000/- (rupees fifteen lacs only) remains unexplained and is, accordingly, added back to the total income of the Assessee under Section 68 of the Act. 13.1) The learned counsel for the appellant/ Assessee submitted that the Assessee, during the course of the appellate proceedings, raised this loan of Rs. 15,00,000/- (rupees fifteen lacs only) from M/s Himachal Futuristic Co. Ltd. somewhere in the year 2001-02 and has been reflecting it in the balance sheet regularly. The learned counsel further submits that though, the assessments for preceding years were also under scrutiny, no adverse inference was drawn by any Assessing Officer in this regard. 13.2) Since the amount is regularly reflected in the Balance Sheet, it cannot be treated as an unexplained cash credit within the meaning of Section 68 of the Act. The representative o....
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.... failed to furnish any ledger account of Shri Ghulam Nabi or specify the mode of payment made to him. When the identity of Shri Ghulam Nabi itself is not established, the issue of making payments to him against the stated liability is also out of question. However, a bogus liability created during the earlier financial year has been stated to be repaid during the financial year under consideration which is nothing but an expenditure which is also unexplained. Finally, the same was treated as unexplained expenditure under Section 69 of the Act and added back to the total income of the Assessee. 14.1) It has been pleaded by the learned counsel for the Assessee/ appellant before us that the addition aforesaid was already made in the assessment order for the assessment year 2006-07 as the matter pertained to that year and has been dealt with during the assessment proceedings of that year. The then Assessing Officer, it is stated, made an addition of this amount to the total income of the Assessee/ appellant for the assessment year 2006-07, after rejecting his explanation and that the matter in respect thereto stands decided in Appeal No.786/2008-09 vide order dated 2nd of August, 2017....