TaxTMI 
TaxTMI 
2025 (11) TMI 728
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....ined to the extent of Rs. 15,00,000/-, as per the remand report, though the same as pointed out in addition to the unexplained sources for the loan extended by the Director of the Company. 4. The ld CIT(A), NFAC erred in deleting the addition of Rs. 1,73,32,864/- though the assessee failed to substantiate the receipt during the assessment proceedings. 5. The ld CIT(A), NFAC failed to call for the report under Rule 46A on rejoinder submitted by the assessee. 6. Any other ground that may be craved to be added amended during the course of hearing. 3. The brief facts of the case are that, the assessee is a company. It had taken a building on rent and modified the same to enable software companies to establish their business units therein. For A.Y. 2015-16, the assessee did not file any return of income under section 139 of the Income Tax Act, 1961 ("the Act"). Based on information available (including TDS statements), the Ld. Assessing Officer ("Ld. AO") noticed that the assessee had income of Rs. 33,50,249/-, on which tax had been deducted at source. Accordingly, the case of the assessee was reopened under section 147 of the Act and notice under section 1....
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....ent received: The rent received has already been covered in revenue in turnover of company. Therefore question as regard to proposed addition of Rs. 4,39,26,083/- is on different issue. 5. Aggrieved with the order of Ld. AO, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) deleted the addition and allowed the assessee's appeal. The Ld. CIT(A)'s findings are contained in para 5.2.3 to para 5.2.5 of his order, which is to the following effect : 5.2.3 In the course of present proceedings, the appellant filed fresh evidence namely copies of rental agreements and details of rent received as additional evidence, which was found to be integral to the issues under dispute and going to the root of the matter. Hence, in the interest of justice the same were admitted and remanded to the Assessing Officer. The Assessing Officer has submitted remand report dated 23/09/2024 relevant extracts of which are reproduced as under: As seen from the records and as per the bank account statement the total credits in the bank account no. 235502000000567 held with Indian overseas bank the total credits in the bank account were Rs. 5,40,00,000/- out of....
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....,000/- was provided by Smt. Peddi Udayasri. The balance of Rs. 10 lakhs relates to the appellant. This amount represents the rental advance received from Gyansamhita Tech Pvt. Ltd. The amount was received through cheque No.467880 dated 9.10.2014 drawn on the appellant and the same was deposited into the bank account of the appellant with Indian Oveseas Bank, Kompally branch which was credited on 15.10.2014. But while recording the said transaction in the books of the appellant company the same was mentioned to be received from Smt. Peddi Udayasri. The entry made in the books of the appellant company showing to the credit of Smt. Peddi Udayasri is not correct. Smt. Peddi Udayasri also confirmed this vide her affidavit deposed on 29.10.2024. A copy of the cheque and the affidavit of Smt. Peddi Udayasri are submitted for kindly perusal. The contents of the affidavit of Smt Peddi Udayasri are reproduced as under: "I, Peddi Udayasri, wife of Sri Peddi Sitarami Reddy, aged about 49 years, resident of H.No.5-155, Kompally, Secunderabad do hereby solemnly affirm and stated as under. As mentioned in the letter of confirmation given by me earlier on 20.9.2....
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....rom tenants Rs. 1,73,32,864 and lease rentals at Rs. 1,00,73,917 which were already admitted as income. It is also noted that the appellant had maintained books of account, which were duly audited. The appellant has also submitted its financial statements, lease agreements, bank statements, ledger account and ITR of director Peddi Udayasree. The AO has not made any adverse observations with regard to the appellant's explanation and evidence filed in respect of the source of bank credits, other than the discrepancies pointed out with regard to an amount of Rs. 15,00,000 stated to be received as part of the loan from Smt. Udaya Sree. The said discrepancies have now been clarified vide appellant's rejoinder and affidavit of the lender as above. As regards the sources for advancing such loan, as seen from the copy of return of income filed by Smt Peddi Udayasri for AY 2015-16, her creditworthiness is not in doubt. Taking all the above material facts and evidences into consideration, it can be concluded that the credits in the bank account Indian Overseas bank account No.23550200000567 of the appellant have been duly explained. In view of the above, the addition made by....
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....ntant (page nos.3 to 9 of the paper book) were furnished before the appellate authority. He further argued that, non-upload of a report under section 44AB of the Act on the portal does not, by itself, discredit the authenticity of audited financial statements or the primary evidence placed before the appellate fora, particularly when the dispute pertains to character/nature of bank credits and not a penalty for audit default. Further, on the alleged mismatch (Rs. 2,62,00,000/- vs. Rs. 2,02,11,646/-), the Ld. AR took us through the ledger account of the Director in the assessee's books (page no.41 of the paper book) and the confirmation of the Director (page no.42 of the paper book). He explained that, the gross inflow from the Director during the year was Rs. 2,62,00,000/- (as confirmed by the Director at page no.42 of the paper book) and the repayments during the year was Rs. 59,88,354/- (as appearing in the ledger at page no.41 of the paper book). Accordingly, there was net movement for the year i.e. Rs. 2,62,00,000/- (received) minus Rs. 59,88,354/- (repaid) = Rs. 2,02,11,646/-, which exactly tallies with the amount shown in the Related Party Transactions note in the audited fin....
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....that Rs. 2,62,00,000/- is the gross amount advanced by the Director during the year (as per confirmation), while Rs. 2,02,11,646/- in the related party note is the net movement after considering repayments of Rs. 59,88,354/- reflected in the Director's ledger. The arithmetical reconciliation is cogent and directly borne out by the records (page nos. 6, 41 and 42 of the paper book). We also note the Ld. CIT(A)'s specific verification regarding the Rs. 15,00,000/- item i.e. Rs. 1,50,000/- and Rs. 3,50,000/- were verified as received from the Director, while Rs. 10,00,000/- was received from Gyansamhita Tech Pvt. Ltd. by cheque No. 467880 dated 09.10.2014, credited on 15.10.2014 in the assessee's bank (page no.19 of the paper book) and inadvertently posted to the Director's ledger, an error that was satisfactorily explained and accepted by the Ld. CIT(A) (para no. 5.2.4 of the order). The Ld. AO's objection on the Director's source also stands addressed in the Ld. CIT(A)'s order (page no.10 of the order), which records the explanation and acceptance after verification. Therefore, we find no perversity in these concurrent factual verifications so as to warrant interference. Accordingly....
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....o called for a remand report from the Ld. AO. In the remand proceedings, the Ld. AO did not point out any deficiency or adverse inference. Hence, it is not correct to contend that the discrepancies remain unresolved. With regard to the deposit of Rs. 50 lakhs from Clinical IT Consulting India Pvt. Ltd., the Ld. AR submitted that the receipt was a security deposit and not rental income, and therefore there is no requirement of TDS under the Act. The dispute was only about the genuineness of receipt of security deposit, which was satisfactorily verified by the Ld. CIT(A). 11.1 Regarding the receipt of deposit of Rs. 35 lakhs from IT India Pvt. Ltd., the Ld. AR admitted that certain instalments were received prior to the date of the lease agreement. However, he drew our attention to the bank statement entries (page nos.12, 15 and 16 of the paper book) showing receipts of Rs. 5 lakhs (26.09.2014) Rs. 13 lakhs (16.12.2014) and Rs. 17 lakhs (10.03.2015), all credited in the name of IT India Pvt. Ltd. He argued that, even though part of the amount was received earlier, the genuineness of receipt from the same party is not in doubt. The Ld. CIT(A), after verifying the documents, found t....
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....ok) issued by the tenant itself. This adequately explains the difference in names and no adverse inference can be drawn once the documentary evidence of name change is produced. 12.3 On the basis of the above discussion, we find that the Ld. CIT(A) has properly verified the genuineness of the rental advances aggregating Rs. 1,73,32,864/-. The remand exercise was carried out and the Ld. AO did not record any deficiency in his report. The socalled discrepancies raised now by the Revenue stand reconciled through the documents cited above. Therefore, we see no infirmity in the Ld. CIT(A)'s order warranting interference. The finding of the Ld. CIT(A) accepting the genuineness of rental advances of Rs. 1,73,32,864/- is hereby upheld. Accordingly, ground No.4 raised by the Revenue is dismissed. 13. Ground No.5 of the Revenue relates to alleged contravention of Rule 46A. In this regard, the Ld. DR submitted that the Ld. CIT(A) has erred in procedure by not following Rule 46A of the Income Tax Rules, 1962. It was argued that though the Ld. CIT(A) initially called for a remand report from the Ld. AO on the additional evidence furnished by the assessee, subsequently the assessee filed s....