TaxTMI 
TaxTMI 
2025 (8) TMI 1281
X X X X Extracts X X X X
X X X X Extracts X X X X
.... issued. In response to the notice u/sec.148 of the Act, the assessee filed return of income on 08.02.2021 declaring total income of Rs. 59,790/-. The case was selected for scrutiny and during the course of assessment proceedings, the Assessing Officer noticed that, the assessee had purchased immovable property for Rs. 1,94,33,335/- during the previous year relevant to the assessment year under consideration. Therefore, the Assessing Officer called-upon the assessee to furnish relevant evidences including source for purchase of immovable property. In response, the assessee vide letter dated 16.09.2021 has submitted relevant details and also explained source for purchase of property out of amount received from two Directors and interest free borrowings from Bluepark Aquatics Private Ltd. The assessee had also explained source out of advance received from customers against sales and claimed that, subsequently, the said advances has been adjusted against the sales of shrimp. In this regard, the assessee has furnished relevant ledger account along with ITR copies of the above creditors. The Assessing Officer after considering relevant submissions of the assessee observed that, on going....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... borrowings from two Directors viz., K. Narahari Reddy and Smt. K.Vijaya Gowri aggregating to Rs. 30,04,640/-. Therefore, rejected the explanation of assessee and made addition of Rs. 1,65,89,135/- u/sec.68 of the Income Tax Act, 1961 as unexplained cash credits. 3. On being aggrieved by the assessment order, the assessee preferred appeal before the learned CIT(A). Before the learned CIT(A), the assessee has reiterated it's submissions made before the Assessing Officer along with confirmation letters from the loan creditors, their financial statements, ITRs filed for the relevant assessment year, ledger account copies. The assessee further submitted that, entire amount of loan has been received through proper banking channel from the loan creditors as well as advances from the customers for sale of shrimp. The Assessing Officer without appreciating the relevant financial statements, has simply made addition of Rs. 1,65,89,135/- u/sec.68 of the Income Tax Act, 1961, even though, the assessee has explained the source for acquisition of property out of loan received from two Directors and related party i.e., Bluepark Aquatics Private Ltd. 4. The learned CIT(A) after considering ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arned CIT(A), the is now, in appeal before the Tribunal. 6. CA, P. Ashok Reddy, Learned Counsel for the Assessee submitted that, the learned CIT(A) was erred in sustaining the addition made by the Assessing Officer towards unexplained investment in purchase of fixed assets u/sec.68 of the Act as unexplained credit, even though, the assessee has explained the source for purchase of property out of interest free borrowings from two Directors and related party and also other trade payables. Learned Counsel for the Assessee further submitted that, the Assessing Officer misread the financial statements and come to the conclusion that, there is no source for purchase of fixed assets to the extent of Rs. 1,65,89,135/- and observed that, the above amount is unexplained cash credits of the assessee, even though, there is no credit in the books of accounts to the extent of Rs. 1,65,89,135/-. Further, the appellant-company was incorporated on 17.10.2011 and the appellant starts commercial operations for the assessment year 2013-2014. Since it is the first year of operation, the assessee has purchased land, building and other fixed assets out of interest free borrowings from Directors and r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....evoid of merit. The learned CIT(A) after considering the relevant facts, has rightly sustained the addition made by the Assessing Officer and, therefore, he submitted that, the order of the learned CIT(A) should be upheld. 8. We have heard both the parties, perused the material on record and the orders of the authorities below. It is an undisputed fact that, the appellant-company had acquired fixed assets being free hold land and building valued at Rs. 1,95,93,775/-. The appellant-company has explained the source for purchase of fixed assets out of interest free advances received from two Directors viz., K. Narahari Reddy and Smt. K.Vijaya Gowri to the tune of Rs. 30,04,640/-. The appellant-company further explained the balance amount of fixed assets out of interest free advance from Bluepark Aquatics Private Ltd., for Rs. 1,10,65,000/- and advance received from M/s. Anjaneya Seafoods and Mr. K. Raghu. Admittedly, Bluepark Aquatics Private Ltd., is a group company having common Directors which is evident from the findings of the Assessing Officer. It means, the above company is associated/related party of the appellant-company. Therefore, it is necessary for us to examine the re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llant-company, the appellant-company has received advance starting from 17.11.2012 through Oriental Bank of Commerce. The above advance has been subsequently adjusted against sale of shrimp. From the details submitted by the assessee as on the date of investment in purchase of fixed assets, the appellant-company was having sufficient funds in the form of advances received from Mr. K. Raghu. Although, the same has been subsequently adjusted against sale of shrimp, but, the corresponding deficit in source has been explained out of trade payables and other short term borrowings from Directors and other parties, which is evident from the balance-sheet filed by the assessee, where, the short term borrowings has been increased from Rs. 1.02 crores to Rs. 1.38 crores. Likewise, trade payables and other current liabilities has been increased for Rs. 74 lakhs. 10. Similarly, the appellant-company has explained source out of funds received from M/s. Anjaneya Seafoods which is evident from the ledger account which is part of order of the learned CIT(A), where, the appellant-company has received advance of Rs. 50 lakhs on 10.02.0212 through proper banking channel. The Assessing Officer with....