TaxTMI 
TaxTMI 
2022 (8) TMI 601
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.... worthiness of the debtors, creditors, etc. 3. The ld. CIT(A) failed to note that the amount shownas Rs.35,50,000/- shown as drawings of the appellant not accounted for by the firm in the reconciliation statement given before the CIT(A) did not appearing in the reconciliation statement given during the remand proceedings and that the reconciliation statement given by the assessee is only play of numbers and not genuine. 4. For these and such other grounds that may be adduced at the time of hearing it is prayed that the order of the CIT(A) may be reversed and that of the Assessing officer restored. As evident, the revenue is aggrieved by relief provided by Ld. CIT(A) in the impugned order qua unexplained investment and unexplained credit. 2. The Registry has noted delay of 95 days in the appeal, the condonation of which has been sought by Ld. Sr. DR. Considering the fact that the impugned order was passed during lockdown situation arising out of Covid-19 Pandemic, we condone the delay and admit the appeal for adjudication on merits. 3. The Ld. Sr. DR, drawing attention to the grounds of appeal, assailed the relief granted to the assessee. The Ld. Sr. DR submitted that the ass....
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....ed to remand proceedings. The remand report was furnished by Ld. AO on 07.05.2019 whereas 2nd remand report was furnished on 07.07.2020. 5.2 After perusal of financial statements, it transpired that the assessee was a partner on CEM with 10% profit-share and had a debit balance in the current account. The entry was explained by the assessee as under: Addition as non genuine sundry creditors: Rs. 2,24,12,180/- The learned Assessing officer has made an addition of Rs.2,24,12,180/- holding that the sundry creditor is not genuine and also on the ground that the name of the appellant is not reflected as debtor in the books of the relevant party M/s. Chendur Earth Movers during the relevant period under consideration. The appellant submits that the appellant is one of the partners of the firm M/s. Chendur Earth Movers. The balance of M/s. Chendur earth Movers as per the books of the appellant were refiected at Rs.2,24,12,180/- (credit balance) but in the books of M/s Chendur Earth Movers the balance of the appellant is reflected at Rs.91,73,765.77(credit balance) this is due the fact that during the previous year relevant to the AY. 2016-17 contract receipts of Rs.3,12,50,000/- pert....
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....account Rs. 9,47, 90,275 Depreciation debited to profit and loss account Rs. 10,36,393 Gifts received during the year Rs. 1,65,00,000 Less: income tax and wealth tax Rs. 3,20,43,070 LIP and Mutual Funds Rs. 9,93,836 Drawings Rs. 2,40,000 Rs. 3,32,76,906 Rs. 8,40,34,331 Add: increase in Unsecured loans Rs. 2,37,67,200 Increase in Secured Loans Rs. 2,87,17,460 Amount withdrawn from Chendur Earth Movers Rs. 3,20,00,000 Amount withdrawn from Gokulam Chits Rs. 5,25,000 Reduction in sundry debtors Rs. 1,51,75,790 A1 Rs. 18,42,19,781 Less:addition to fixed Assets before depreciation A2 Rs. 16,32,48,583 Closing cash and bank balances Rs. 2,09,71,198 A2 = Addition to fixed assets which is explained by increase in capital As per para 6 of AO the addition to fixed assets is only Rs.1294.20 lakhs. It is submitted that the above cash flow proves that the appellant had adequate funds to meet the expenses and also make investments. In view of the facts of the case as explained, it is prayed that the additions of Rs.3,16,46,929/- made in the assessment....
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....uded by Ld. CIT(A) that adequate funds were available with the assessee for investments. Further, the figures picked up by AO were from declared accounts and there was no case that any undisclosed asset has been found. Finally, the addition on account of unexplained investment was deleted. 5.6 Regarding unexplained credit of CEM, it was held that the same was merely due to mismatch in account but the same would not lead to conclusion of escapement of income. Finally, except retaining the addition to the extent of unreconciled amount of Rs.3.91 Lacs, the balance addition was deleted. 5.7 Aggrieved, as aforesaid the revenue is in further appeal before us. Our findings and Adjudication 6. So far as the addition of unexplained cash credit is concerned, we find that the same arises out of reconciliation difference in assessee's capital account with CEM wherein the assessee is a partner. For the said reason, the assessee would not be figured as debtors in the books of that firm. We find that the assessee reflected balance of Rs.224.12 Lacs in the name of M/s CEM whereas this balance is Rs.91.73 Lacs in the books of the firm. The same has been reconciled by the assessee as under: - P....