AI Drafter 
TaxTMI 
TaxTMI 
2019 (11) TMI 405
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.... Rs. 4,28,550/- on account of disallowance of bank commission and interest on investment in Canara HSBC Life Insurance and on FDRs. 2.1 Aggrieved, the assessee had approached the Ld. First Appellate Authority who deleted all the three additions. Now, the department is before the Tribunal challenging the deletions by the Ld. CIT (A) and has raised the following grounds of appeal: 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 2,21,25,000/- on account of unsecured loans u/s 68 of the Act without appreciating the facts that the assessee has failed to prove the identity, genuineness and creditworthiness of the transaction during the course of assessment proceedings. Therefore, the Ld. CIT (A) is not justified in deleting the addition. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of Rs. 3,54,63,946/- on account of sundry creditors without appreciating the facts that since the assessee has failed to prove the genuineness and in furnishing the complete conformations of the sundry creditors. Therefore the Ld. CIT (A) is not justified in dele....
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....of the assessee's paper book at pages 137 and 138 of the paperbook. It was submitted that from the said details it is clear that out of a total sum of Rs. 2,21,25,000/- pertaining to outstanding unsecured loan as on 31-03-2016, the opening balance was to the tune of Rs. 1,16,25,000/- and during the year under consideration the amount received as loan was a sum of Rs. 1,05,00,000/-. Further, our attention was drawn to the copy of audit report for the year under consideration (at pages 22 to 38 of the paper-book and details of unsecured loans received during the year incorporated in column No. 24a at page 24). The Ld. AR drew our attention to the following chart in the audit report and containing the said details: 24 a Particulars of each loan or deposit in an amount exceeding the limit specified in section 269SS taken or accepted during the previous year: - Name of the lender or depositor Address of the lender or depositor PAN of the lender or depositor Amount of loan or deposit taken or accepted Whether the loan or deposit was squared up during the pervious year Maximum amount outstanding in the account at any time during the previous ....
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....f the fresh credit. It was submitted that the Ld. CIT (A), after taking in to consideration all these evidences, which were ignored by the AO, has rightly concluded that the addition made in respect of unsecured loans was uncalled for. 4.0.4 It was further submitted that as far as the opening balances are concerned, the same cannot be added in view of the judgment of Hon'ble Delhi High Court in the case of CIT Vs. Usha Stud Agricultural Farms Ltd. [2008] 301 ITR 384 (Delhi) and our reference was specifically drawn to Para 8 of the said judgment. 4.1.0 Replying to the arguments of the Ld. Sr. DR with respect to Ground no. 2, the Ld. AR submitted that out of the total outstanding sundry creditors of Rs. 3,54,63,946/-, an amount of Rs. 1,05,70,246/- was the opening balance and the assessment for A.Y. 2012-13 (immediately preceding A.Y.) was framed vide order dated 27-03-2015 passed u/s 143(3) of the Act and, therefore, the addition to the extent of opening balance of Rs. 1,05,70,246/- is not maintainable. 4.1.1 It was further submitted that in so far as the remaining addition of Rs. 2,48,93,700/- (Rs. 3,54,63,946/- less Rs. 1,05,70,246/-) is concerned, the same relates to the....
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....anding in respect of purchases cannot be added. Thus, it was submitted by Ld. AR that addition has rightly been deleted by Ld. CIT (A). 4.2.0 With respect to Ground No. 3, the Ld. AR placed reliance on the findings of the Ld. CIT (A). 5.0 We have heard the rival submissions and have also perused the records. We now take up the grounds one by one for adjudication. 5.1.1 As far as the addition pertaining to unsecured loans is concerned, it is seen that undisputedly, the assessment in respect of immediately preceding Assessment Year, i.e., A.Y. 2012-13 was framed u/s 143(3) of the Act vide order dated 27-03-2018. Copy of this order is placed at page 134 of the paper book. From the audit report and the details of unsecured loans filed at page 24 and pages 137 & 138 it is clear that fresh loans during the year under considerations were only to the extent of Rs. 1,05,00,000/-. It has also been brought on record that the assessee, during the course of assessment proceedings, had placed on record all the confirmations of the unsecured loans. The list of fresh unsecured loans has also been given in the audit report at page 24 and confirmations of all these unsecured loans were also....
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....s 74 to 121 of the paper-book. Therefore, before the conclusion of the assessment, the relevant evidences in respect of a sum of Rs. 1,96,52,805.72 was filed before the AO. We have also gone through these confirmations submitted by the assessee and found that the amount outstanding is on account of opening balance and purchases made during the year. 5.2.1 It is further seen that another set of confirmations for a sum of Rs. 1,62,12,538.37 (List at page 139 and confirmations at pages 140 to 172) were filed only before the Ld. CIT (A). This fact is evident from the index of the paper-book. We have also gone through these confirmations and found that in these confirmations also, the outstanding balance is on account of opening balance as well as purchases made during the year under consideration. 5.2.2 The law is well settled that opening balance pertaining to sundry creditors cannot be added to the income of the assessee more particularly when the assessment for the immediately preceding year was framed u/s 143(3) of the Act. In the present case, it has been found that the assessment for A.Y. 2012-13 was framed u/s 143(3) vide order dated 27-03-2018 (Copy at page 134). It is al....