Case Law Details
Manohar Dealcom Private Limited Vs ITO (ITAT Kolkata)
The case of Manohar Dealcom Private Limited Vs. ITO, as adjudicated by the Income Tax Appellate Tribunal (ITAT) Kolkata, involves several key issues regarding the assessment made by the Assessing Officer (AO) and affirmed by the Commissioner of Income Tax (Appeals) [CIT(A)] for the Assessment Year 2014-15. The appeal is filed by the assessee against the order of the National Faceless Appeal Centre, Delhi.
The grounds of appeal raised by the assessee include jurisdictional issues, addition made under Section 69 of the Income Tax Act, 1961, disallowance of expenses, and procedural irregularities in the assessment proceedings.
Firstly, the assessee challenged the jurisdiction of the Assessing Officer who issued a notice under Section 143(2) of the Act. The notice was served by affixture at the address mentioned in the PAN database. The assessee argued that the Assessing Officer did not have jurisdiction over the case. However, the Tribunal ruled that since the PAN database reflected the jurisdiction of the Assessing Officer at the time of issuing the notice, and the notice was validly served, the jurisdictional objection raised by the assessee was dismissed.
Secondly, the Tribunal addressed the addition made under Section 69 of the Act, which allows the Assessing Officer to treat unexplained investments as income if they are not recorded in the books of accounts. In this case, the AO added Rs. 3.86 crore to the assessee’s income under Section 69 based on an alleged increase in loans and advances compared to the preceding financial year. However, the Tribunal found that the increase in loans and advances was duly explained by the sale of investments recorded in the audited balance sheet. The funds from the sale of investments were utilized to provide short-term loans and advances, making the entries in the books of accounts legitimate. Therefore, the Tribunal ruled that Section 69 of the Act was not applicable, and the addition made by the AO was deleted.
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