The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) held that additions under Section 68 of Income Tax Act,1961 would be made for the cash credits received by an assessee in its accounts during the year relevant to Assessment Year (AY).
The assessee Shaktigarh Textile and Industries Limited has filed its return of income at ‘NIL’. The case of the assessee was selected for scrutiny assessment and a notice under Section 143(2) of the Income Tax Act was issued and served upon the assessee.
On verification of the accounts, it revealed to the Assessing Officer (AO) that a sum of Rs.1,00,00,000/- has been credited in the accounts of the assessee against the name of M/s. Kasa Contrade Pvt. Limited in the guise of share application money.The AO ultimately treated this cash credit as unexplained and made the addition.
Aggrieved by the order the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], which upheld the decision of AO.Further aggrieved the assessee filed an appeal before the Tribunal.
The Authorised Representative of the assessee (AR) AK. Tulsyan, submitted that the AO has reproduced the copy of the relevant loan ledger. This ledger would show that as on 1.4.2011 opening balance was Rs.5,74,05,326/-. M/s. Kasa Contrade Pvt. Limited has received the amount of Rs.1 crore through Real-Time Gross Settlement (RTGS) on 29.03.2011 from an account maintained with SBI.
He further presented all Relevant documents and submitted that the sum of Rs.1,00,00,000/- came to the possession of M/s. Kasa Contrade Pvt. Limited in Financial Year (FY)2010-11 relevant to Assessment Year (AY) 2011-12, therefore, it is not taxable in A.Y. 2012-13 in the hands of the assessee.
The Departmental Representative (DR) relied upon the assessment order.
The bench comprising of Rajpal Yadav, Vice-President and Rajesh Kumar, Accountant Member observed that a perusal of Section 68 of the Income Tax Act would indicate that additions would be made for the cash credits received by an assessee in its accounts during the year relevant to A.Y. 2012-13. No amount was received by erstwhile M/s. Kasa Contrade Pvt. Limited and, therefore, being a successor company, it cannot be assessed in the hands of the assessee in A.Y. 2012-13.
The Tribunal held that since no assessment was reopened in A.Y. 2011-12, therefore, addition is not sustainable.Thus allowed the appeal of the assessee and deleted the addition.
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