AVR Hotels & Resorts Pvt. Ltd. vs ITO, Ward-14(1), Kolkata

Parties Involved

Facts Summary

The assessee, AVR Hotels & Resorts Pvt. Ltd., is a Private Limited Company engaged in trading and hotel operations. It filed its return of income for A.Y. 2018–19 declaring a total income of ₹9,40,973. The case was selected for scrutiny, and notices under sections 143(2) and 142(1) of the Income-tax Act, 1961 were issued. The Assessing Officer noticed that Evergreen Retailers Private Limited, a shareholder of the assessee company, was holding 2,09,000 shares (64.19%) valued at ₹1,72,67,430. The Assessing Officer treated this amount as unexplained cash credit under section 68, read with section 115BBE of the Act. Additionally, the Assessing Officer disallowed cash payments exceeding ₹10,000 per day to a single person towards sales promotion and entertainment expenses, totaling ₹26,76,860, under section 40A(3) of the Act. The assessment was completed under section 143(3) vide order dated 19.04.2021, determining total income after additions and raising a demand of ₹1,97,04,090.…

Legal Issues

• 1. Whether the addition of ₹1,72,67,430 as unexplained cash credit under section 68 is sustainable?
• 2. Whether the disallowance under section 40A(3) for cash payments exceeding ₹10,000 per day is justified?

Judgment Outcome

Decided in favour of Assessee.

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