The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the addition could not be made and sustained by invoking the deeming provision of Section 68 of the Income Tax Act 1961.
The appeal has been filed by the assessee KMG International Ltd, for confirming the addition under Section 68 of the Income Tax Act for the amount received from Rishi Promoters (P) Ltd. as advance against property ignoring the evidence placed on record.
Vinod KR Binda on behalf of the assessee submitted that authorities below had made confirmation of the addition without any basis ignoring the fact that the assessee had submitted a photocopy of ledger account of Rishi Promoters in the books of the assessee for the year ended on 31.03.2007 showing receipt of advance against the period along with confirmation and also a copy of the account of such entities in the books of account of the assessee for the year 31.03.2008 showing return of advance taken from the said entity.
But it was submitted on behalf of the assessee that the assessee had also filed copies of the balance sheet, profit, and loss account and schedule of fixed assets as of 31.03.2008 of Rishi Promoters along with a photocopy of PAN, therefore, the factum of receipt of advance during the relevant financial period and its return to the said the entity during the next financial year was established.
The two-member Bench of C.M. Garg, (Judicial Member) and M. Balaganesh, (Accountant Member) noted that despite the several opportunities the assessee filed only a copy of the account in the assessee’s books which showed only the receipt of amount on 01.03.2007 and in the absence of other details and confirmation of the said amount of Rs. 15 lakhs remained unexplained; therefore, it was rightly added to the income of the assessment.
The Bench allowed the appeal filed by the assessee holding that no addition could be made and sustained in the hands of the assessee by invoking the deeming provision of Section 68 of the Income Tax Act and by alleging and considering the same as unexplained in the hands of the assessee.
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