The Mumbai bench of Income Tax Appellate Tribunal (ITAT) while upheld the order of Commissioner of Income Tax (Appeal) passed under section 250 of the Income Tax Act, 1961 held that power of the CIT(A) coterminous with that of the Assessing Officer.
The Assessee Raj Maitry & Eskon Developer is a partnership firm. After filing the return of income, the assessor’s case was selected for scrutiny on following issues specifically – A). Income from Real Estate Business and B). Unsecured Loans. During the assessment proceedings various notices were issued to the assessee. but no compliance was made by the assessee against these notices.
Accordingly Case of the assessee was assessed under Section 143(3) r.w.s. 144B of the Income Tax Act by making an addition of Rs. 2,90,30,000/- on account of unsecured loans and Rs. 12,63,66,352/- on account of advance received from the customers under Section 68 of the Income Tax Act.
Aggrieved by the order, the assessee filed an appeal before the tribunal who had deleted the addition. Accordingly the revenue filed a second appeal before the tribunal.
It was observed that that addition under Section 68 of the Income Tax Act on account of Unsecured Loan may be treated as such but as far as advance received from customers is concerned it’s a settled position of law, same can’t be considered as income for the purposes of section 68 of the Income Tax Act. So, addition made u/s. 68 on account of customer’s advance treatment by AO was void-ab-initio .
Hence after considering the order of CIT(A) the bench observed that order of CIT (A) to be reasonable and logical on the given set of facts and other than the issue of giving opportunity to AO under 46A (3) of the Rules, AO is not able to make out the case how it is prejudicial to the interest of revenue or what anomaly is there in the order of Ld. CIT (A)
After considering the issues Karnataka High Court in the case of Biocon Ltd the two member bench comprising N. K. Choudhry, (Judicial Member) & Gagan Goyal, (Accountant Member) concluded that power of the CIT(A) coterminous with that of the Assessing Officer.
Yashwant Gupta,counsel for the assessee and Sanyogita Nagpal, counsel for the revenue.
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