ITO Vs Farhat Yusuf Shaikh (ITAT Mumbai)
Assessee is an individual whose case was selected for limited scrutiny to examine certain issues. Noticing an increase in closing balance of unsecured loans as compared to previous year, AO made additions u/s 68 by invoking provision of sec. 144.
On appeal, assessee contended that he had entered into an agreement for purchase of properties & therefore, increase in unsecured loans was not on account of any fresh loan taken but was a mere book entry on account of purchase consideration shown in the asset side of the balance sheet. Convinced with the submissions made, CIT(A) deleted the addition.
On appeal by Revenue, Tribunal acknowledged assessee’s explanation & also noted that AO could neither prove any entry of fresh loans availed in books of assessee nor could he prove that an amount was received in cash/cheque towards unsecured loans. Therefore, appeal was dismissed.
Another issue related to additions made u/s 69 based on information available in AIR report that assessee had invested in properties & their full value was not disclosed in the balance sheet. Assessee contended that although agreements to sale were registered during the year, the construction could not be completed & he never got the properties. Holding that additions were made purely on the basis of AIR report, CIT deleted the addition.
