This article delves into the case of Patton Warehousing Pvt Ltd versus the Income Tax Officer, Ward 19(3), New Delhi for the assessment year 2015-16, marked by ITA No. 1319/DEL/2020. This case was presided over by Shri Amit Shukla, Judicial Member, in the Delhi Bench ‘SMC’ of the Income Tax Appellate Tribunal.
The dispute arises from an assessment order dated 18.03.2020 by the CIT (Appeals), New Delhi, against which Patton Warehousing Pvt Ltd appealed. The core of the dispute revolves around a substantial addition of Rs.18,60,820 deemed as unexplained income by the assessing officer. The addition was based on the loan transactions which the assessing officer concluded as unexplained due to the lack of proper response to notices and inconsistencies in the bank statements of the director, Shri Sachin Kumar.
The appellant raised multiple legal arguments challenging both the procedure and the merits of the assessment. Key issues highlighted included the alleged failure to account for the actual timing of the loan transaction and the procedural validity of the assessment made under section 68 of the Income Tax Act, 1961.
The tribunal noted the appellant’s arguments that there was no discrepancy in the loan amount except for the timing of the transaction. The loan amount of Rs.18,60,820 was shown in the books on 31st March 2015, but it was credited in the bank account on 27th June 2015. The tribunal emphasized the importance of timing in the context of section 68 and whether such an entry could be treated as unexplained income.
This case highlights significant procedural safeguards intended to protect taxpayers’ rights during the assessment process. The tribunal concluded that just because the cheque was cleared in the next financial year, it does not mean the amount credited in books when the cheque was received on 31st March is unexplained income of this year. If the Assessing Officer is treating that it is not the amount received during the year, then ostensibly the addition under Section 68 could not have been made in this year. Thus, the tribunal found no reason for making an addition of Rs.18,60,820 under Section 68 of the Act in this year when the assessee had shown to have received the amount in its books on 31st March 2015. Accordingly, the addition of Rs.18,60,820 was deleted.
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