| The Tax Publishers2020 TaxPub(DT) 2862 (Visakhapatnam-Trib) INCOME TAX ACT, 1961
Section 263
Where for both assessment years i.e. 2007-08 and 2008-09, assessee had required documents which showed that there was reduction of debtors which represented the realization of debtors and further, assessee had invested an amount and as at the end, the above advances were liquidated and since the advances were reduced as at the end of the year, the same clearly showed that the source for investment was realisation of advances from land advances and other debtors, therefore, there was no case for making additions for both the assessment years.
|
Revision under section 263 - Advance recovered from debtors - Source of investment and cash flow -
Assessment was originally completed under section 143(3) read with section 147 by order for both the assessment years, i.e., 2007-08 and 2008-09. Subsequently, PCIT taken up the case for revision and set aside the assessment orders passed by AO with a direction to redo the assessment de novo after giving opportunity to the assessee. Accordingly, AO passed the orders under section 143(3) read with section 263 by order for both the assessment years and made the additions representing advances recovered from debtors by assessee from the opening balances. AO during the assessment proceedings, called for the details of the debtors claimed to have been realized by the assessee and the assessee failed to furnish the same, hence, disbelieved the claim of the assessee with regard to realization of the debtors, and brought to tax the sums of realization of debtors as unexplained and added back to the income. Held: For the assessment year 2007-08, AO made the addition on account of realization of debtors and assessee had furnished the statement of affairs which was also placed before the lower authorities. As per the statement of affairs outstanding debtors was Rs. 69,75,800 which was the opening balance for the year under consideration. Whereas the same balance was reduced to Rs. 59,25,000 by the end of the year which showed that there was reduction of debtors which represents the realization of debtors. For assessment year 2008-09, as per the balance sheet as on 31-3-2007, which was filed along with return of income, outstanding balance of debtors was Rs. 59,25,000 under the head 'other debtors' and Rs. 15,25,000 on account of advances for land purchase. Assessee had invested an amount and as at the end, the above advances were liquidated and there was no outstanding balance as at the end. Since the advances were reduced as at the end of the year, the same clearly showed that source for investment was realisation of advances from land advances and other debtors. Therefore, there was no reason to suspect the source of investment and the cash flow, hence, there was no case for making the addition.
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2007-08 & 2008-09
IN THE ITAT, VISAKHAPATNAM BENCH
 SUBSCRIBE FOR FULL CONTENT
|