The Income Tax Appellate Tribunal (ITAT), Delhi comprising of N. K. Billaiya, (Accountant Member) and Astha Chandra, (Judicial Member) has deleted the addition of Rs.1.70 crores made on account of unexplained cash credit.
BACKGROUND
During the assessment proceedings the AO noticed the assessee has shown liability of Rs.1.70 crores as advance received against sale of land in previous year. The AO noticed that this liability was adjusted against the 0% optionally convertible debenture issued to M/s. Tiara Developers Pvt. Ltd. The assessee was asked to provide the details of the same. The assessee explained the transaction but did not file the details.
Invoking the provisions of section 68 and relying upon various judicial decisions the AO made the addition of Rs. 1.70 crores u/s. 68 of the Act.
The Assessee agitated the matter before the CIT(A) and explained that the provisions of section 68 are not applicable as the assessee has not received any loan/advance during the year under consideration. It was pointed out that Rs. 1.70 crores is the opening balance.
OBSERVATION
The tribunal after considering the facts and the submissions the CIT(A) was convinced that opening balance cannot be added under section 68 during the year under consideration.
However, the CIT(A) directed the AO to take necessary action in the year in which the amount of Rs.1.70 crores was received and deleted the addition from the year under consideration.
The ITAT noted that pursuant to the directions of the CIT(A) assessment of assessment year 2013-14 was reopened to verify the genuineness of the credit of Rs.1.70 crores. The AO framed the assessment u/s. 147/143(3) of the Act vide order dated 20.02.2019 bearing DIN -20131146222 at Nil income.
Case Title: ITO Versus M/s. Midway Apartments Pvt. Ltd.
Citation: ITA No.8095/Del/2018