FROM MY ARCHIVES-ITAT, KOLKATA UNREPORTED DECISIONS   ( Part 6)

1.     ACIT Circle -3, Asansol vs. Sri Govind Prasad Khedwal

         ITA No. 180/K/2012, ‘A’ Bench; A.Y. 2008-09

        Order dated : 08.04.2013

 Whether unsubstantiated sundry creditors can be added back u/s     68 ?

a) The brief facts of this case are that the assessee is proprietor of M/s. Dinesh Electricals, which is involved in the trading of General Electrical items. That the case AO completed the assessment  u/s 143(3) by making various additions, inter alia, on the ground of unsubstantiated sundry creditors by invoking the provision of sec 68

 b)                  Aggrieved the assessee went in appeal before the First Appellate Authority, who deleted the addition.

 c)                   Honb’le Tribunal dismissed the appeal of the Revenue and held that the onus rests on the AO to disprove the fact that the purchases were bogus. Having accepted the purchases and payments to them A.O cannot add back, merely on non response from the trade creditors, by invoking the provision of Sec. 68 of the Act.

2          ITO Ward 35(3), Kolkata vs. Shri Kamal Kumar Bansal

             ITA No. 2299/K/2010; ‘B’ Bench; A.Y. : 2005-06

             Order dated : 30.06.2011

Whether the A.O has to record a finding that the amount in question was allowed as deduction in any earlier year or that some benefit was derived by way of remission or cessation of liability before invoking the provision of sec 41(1) ?

a)               The brief facts of this issue are that the AO while doing the scrutiny assessment added an amount of Rs.9,00,000/- and Rs.5,00,000/- as outstanding liabilities payable to M/s. Element Dealers Pvt. Ltd. and M/s. Exquisite Apartment Pvt. Ltd. respectively by applying the provisions of section 41(1) of the Act. In regard to one party, he  relied upon  the Inspectors report which stated  that M/s. Elements Dealers (P) Ltd. had already received back the advance and the name of the assessee does not appear in the balance sheet of the said party. He further pointed out that the payment was not made by the assessee but by Shri R.D.Bansal.

b)              On appeal the ld. CIT(A) has deleted the addition  by observing that there is no finding of the AO that the amount was allowed as deduction in any earlier year and that some benefit was derived by way of remission or cessation of liability.

c)               Aggrieved that the Department is in appeal before the Tribunal. Hon’ble Tribunal dismissed the appeal of the Department holding that –"We are of the considered view that in this case neither the provision of section 68 of the Act is applicable as it is an admitted fact that the assessee has brought forward these loans/advances from the earlier years. As regarding the applicability of section 41(1) of the Act the ld. CIT(A) has clearly mentioned that there is no finding by the AO that above amounts were allowed as deduction in the earlier years. Therefore, we find no infirmity in the order of the ld. CIT(A). We confirm the same and dismiss the appeal of the Revenue”.

Manisha Prakash Amin vs. JCIT Range-48, Kolkata

ITA No. 1839/K/2010; ‘A’ Bench; A.Y.:2006-07

Order dated : 24.05.2011

Where loans are received by the assessee in cash from relatives, whether transaction between relatives is not in the character of loans or deposit attracting the provisions of sec. 269SS of the Act and penalty u/s 271D is not attracted ?

a)               Brief facts leading to the above issue are that the Assessing Officer during the course of assessment proceedings noticed that the assessee has received a sum of Rs.1,90,000/- from Smt. Gita Ben D Amin and a sum of Rs.80,000/- from Sri Narayan Bhai J Amin respectively in cash. Accordingly, he initiated penalty proceedings u/s. 271D of the Act for violation of provisions of section 269SS for accepting cash. The only issue in this appeal of the assessee is against the order of CIT(A) confirming the levy of penalty by JCIT, Range-48, Kolkata u/s. 271D of the Act exceeding Rs.20,000/-. The main issue involved is that levy of the penalty for violation of provisions of section 269SS for receiving loan in cash in excess of Rs.20,000/-. Accordingly, he levied penalty for a sum of Rs.2,70 lacs.

b)              Aggrieved, assessee preferred appeal before CIT(A), who in appeal, confirmed the action of the Assessing Officer. Being further aggrieved, the assessee is now in appeal before the Tribunal.

c)               Hon’ble Tribunal observed that the loans received by the assessee in cash from relatives in cash and transaction between relatives is not in the character of loans or deposit attracting the provisions of sec. 269SS of the Act and  allowed the appeal of the assessee holding that the loans from relatives are in the nature of financial support within the family and this is a reasonable cause falling u/s. 273B of the Act. Accordingly, deleted the penalty levied by JCIT and reversed the orders of lower authorities.