ITAT sets aside order of CIT(A) for prevention of any dispute arising out of applicability of Section 68 in favor of natural justice [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the assessee has not furnished proper details as discussed above in order to substantiate its claim, in the interest of natural justice this issue may be restored to the file of AO for examining it afresh.

The assessee filed this appeal challenging the order dated 28.3.2023 passed by the learned CIT(A), National Faceless Appeal Centre, Delhi and it relates to A.Y. 2013-14. The assessee is aggrieved by the decision of the learned CIT(A) in confirming the addition of Rs. 40 lakhs made by the Assessing Officer under Section 68 of the I.T. Act.

The Learned counsel appearing for the assessee submitted that the assessing officer has made the above said addition of Rs.40.00 lakhs on the reasoning that there was difference in the amount shown as received from M/s Kukreja Constructions. The facts relating thereto are that the assessee he a land at Ghodbander Road, Thane which was proposed to be so to M/s Kukreja constructions and accordingly, the assessee received a sum of Rs.3,85,75,000/- from it. Though the above said amount was confirmed by M/s Kukreja Constructions, yet the books of account of the assessee showed receipt of Rs.4,25,75,000/- against the name of M/s Kukreja Constructions, i.e., the books of account of the assessee showed excess receipts by Rs.40.00 lakhs. Hence the assessing officer asked the assessee to clarify this difference.

The assessee explained that the excess amount of Rs.40.00 lakhs was shown in the account of M/s Kukreja Constructions on account of error committed by its accountant. The  A.R submitted that the assessee transferred a sum of Rs. 40 lakhs by RTGS to a concern named M/s. Elyco Buiers on 3.8.2012 from its HDFC Bank. Accordingly, the account of M/s Elyco Buiers was debited with the above said amount of Rs.40.00 lakhs. However, the said RTGS did not get through and hence the bank reversed the entry by crediting Rs. 40 lakhs to the account of the assessee.

Since the payment did not reach to the account of Elyco Buiers on 03- 08-2012, the assessee transferred a sum of Rs. 40 lakhs by RTGS again to the account of M/s Elyco Buiers on the next day i.e. on 4.8.2012. It was also submitted that the account of M/s Elyco Buiers was showing payment of Rs.80.00 lakhs (Rs.40.00 lakhs was shown twice), while the actual payment made to them was Rs.40.00 lakhs only. Accordingly, it was submitted that the excess debit in the account of M/s Elyco Buiers and excess credit in the account of M/s Kukreja Constructions shou be netted off, as it was an accounting error.

The above said explanation given by the assessee with regard to the difference of Rs. 40 lakhs was not accepted by the Assessing Officer. Accordingly, he assessed the difference amount of Rs. 40 lakhs as income of the assessee under section 68 of the Act. The CIT(A) also confirmed the same.

After hearing both the parties, the two bench member of the tribunal consisting of Narender Kumar Choudhry (Judicial member) and B.R. Baskaran (Accountant member) held that there should not be any dispute that when there was no actual receipt of money from Kukreja Constructions, the question of making any addition under Section 68 will not arise. Since the assessee has not furnished proper details as discussed above in order to substantiate its claim, in the interest of natural justice this issue may be restored to the file of AO for examining it afresh by considering relevant factual aspects. Accordingly, order passed by the CIT(A) on this issue was set aside and restored to the file of the Assessing Officer for examining the claim of the assessee that the differences in the account of M/s Kukreja Constructions and M/s Elyco Buiers were due to an accounting error. Thus the appeal was allowed.

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Mehboob Amirali Kamdar vs ITO , 2023 TAXSCAN (ITAT) 2408 , Shri Rajesh Shah , Smt. Mahita Nair