ITO Vs Chetan Constructions Pvt. Ltd. (ITAT Delhi)
The issue under consideration is whether the AO is correct in making the addition u/s 68 of the Act for the Advances received for booking of commercial space?
In the present case, assessee received advances from six companies. AO asked the assessee to prove identity, creditworthiness and genuineness of the said advances. In response, the assessee filed confirmations of the companies from whom advances were received. Assessee also stated that such advances were towards booking of space in a commercial building. The AO held that the companies did not have sufficient income to lend the advances and accordingly, made addition of such advances under section 68.
ITAT state that it is a case of mere suspicion by the AO of it being a case of accommodation entry. The AO has made addition of the amounts received by the assessee from six entities by relying on inadequate educational qualifications of directors, working profiles of directors, fact of there being no major business activity done by these incomes reported by these entities, bank accounts being in entities, very low turnovers and same bank and branch of these entities. The AO has alleged that it is a case of accommodation entries in lieu of cash. Further, all the six parties from whom assessee received advances appeared before AO and filed confirmations, copies of their Income Tax returns, copies of their bank statements and copies of their Balance Sheets as required by the AO, it would be said that the identity, creditworthiness of creditors and genuineness of the said advances were proved and hence, the addition made under section 68 in respect of such advances was liable to be deleted.
FULL TEXT OF THE ITAT JUDGEMENT
The present appeal has been filed by the revenue against the order of ld . CIT (A)-2, New Delhi dated 28 .02 .2017.
2. During the F.Y. 2011-12, the company has received advances of Rs.2,19,00,000/- from the following companies:
