Case Law Details
Vijay Bajaj Vs ACIT / DCIT (ITAT Chandigarh)
Conclusion: Where assessee had offered business receipts amounting to Rs 41,81,800/- in his return of income which was sufficient to make business advances of Rs 8,05,000/- there was no justifiable reason to not accept the entries in the cash book corresponding to advances of Rs 8,05,000/- made out of said business receipts.
Held: Assessee was engaged in the business of providing DJ services and during the course of survey operations at the assessee’s premises, a ledger namely ‘Bajaj Entertainers’ containing certain entries was found. In his statement recorded u/s 131, assessee was asked to explain the said entries and in response, he submitted that the entries reflected therein pertain to loans and advances given to certain persons mainly artists connected with his business activities out of his undisclosed income and to buy piece of mind and avoid litigation, he surrendered the amount of Rs 8,05,000/-for the purposes of taxation. During the course of assessment proceedings where assessee was again confronted with the same and a show-cause was issued seeking explanation on the individual loan/advances transaction, it was submitted by assessee that these were normal business advances. It was noted that the name of these persons to whom the advances were given was stated by the AO in the show-cause notice and thereafter, in response to the same, assessee had also submitted the details of these persons, the amount of advance, the purpose of such advance, repayment during the year etc. Therefore, as far as the nature of these advances were concerned, a consistent picture which was emerging from the records right from the statement recorded during the course of survey, subsequent surrender letter and the submissions made before the AO was that these were in nature of business advances. Regarding the sources of these advances, there was sufficient cash in hand available in the books at the relevant point in time when the advances were given and the said amount was out of the business receipts which had been offered to tax u/s 44AD. It was true that assessee was not maintaining regular books of accounts but at the same time, as evident from the statement recorded during the course of survey as well, assessee was maintaining receipts book/bills in respect of his business activities and further, it was also a fact that assessee had disclosed these receipts as part of service tax/GST returns. Where the entries, corresponding to business receipts amounting to Rs 41,81,800/- in the receipts books, were reflected in the cash book and the same were accepted by the Revenue, there was no justifiable reason to not accept the entries in the cash book corresponding to advances of Rs 8,05,000/- made out of said business receipts. It was a case where assessee had offered business receipts amounting to Rs 41,81,800/- in his return of income which was sufficient to make business advances of Rs 8,05,000/- and thus, no separate addition wass called for.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
Both the above appeals have been filed by the respective assessees against the separate orders of the Ld. Commissioner of Income Tax, (Appeals)-5, Ludhiana [hereinafter referred to as ‘CIT(A)’] passed under section 250(6) of the Income Tax Act, 1961 (in short ‘the Act’) each dated 27/05/2022 pertaining to A.Y. 2018-19. Both these appeals were heard and are being disposed off by this consolidated order.
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