IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (PHYSICAL HEARING)

BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. UDAYAN DASGUPTA, JUDICIAL MEMBER I.T.A. No. 376/Asr/2023 Assessment Year: 2014-15 Naval Kishore Singh, Vs. Deputy Commissioner of Income Prop. N. K. Enterprises Tax, Circle-1, Aayakar Bhawan

126/7, Trikuta Nagar, Rail Head Complex, Jammu Jammu-180012 180012 [PAN: CDVPB 5195D]

(Appellant) (Respondent)

Appellant by : Sh. Joginder Singh, C. A. Respondent by : Sh. Charan Dass, Sr. D.R.

Date of Hearing : 24.09.2025 Date of Pronouncement : 15.12.2025

ORDER

Per Udayan Dasgupta, J.M.:

This appeal is filed by the assessee against the order of the ld. CIT(A) NFAC, Delhi dated 27.10.2023 passed u/s 250 of the Income Tax Act, 1961 which has emanated from the order of the DCIT/ACIT, Circle-1, Jammu u/s 144 of the Act, 1961 dated 28.12.2016.

2. The assessee has taken four grounds in the memo of appeal which relates two issues, firstly on account of addition of Rs.1,94,95,410/- being the claimed brought forward balance of opening capital as on 1^st April, 2013 as per reflection in the balance sheet for the year under appeal and second issue relates to the disallowance of bank interest of Rs. 14,97,898/-, as claimed in the audited accounts for the year.

3. Brief facts of the case are that the assessee is a civil contractor and has disclosed a net profit of 56.59 lakhs on a total turnover of Rs. 4.50 crores for the year under appeal , and the case was picked for limited scrutiny and on examination of the audited balance sheet as at 31^st March, 2014, closing capital was reflected at Rs.2.88 crores (as observed by the AO in page – 2 , para – 2 of assessment order ) and thereafter, the AO has travelled backwards to give a finding that the assessee has disclosed a business profit of Rs.15.16 lakhs in the Asst year 2013-14 u/s 44AD and for the year earlier to that (ie. AY 2012-13), he has shown a capital balance of Rs. 78.37 lakhs as on March 2012, and thereafter, the AO has mathematically worked out the probable capital balance available with the assessee to be Rs. 93.53 lakhs for the year ended 31^st March, 2014 (Rs. 78.37 plus Rs.15.16 ), and since the balance sheet of the assessee reflected the closing capital balance at Rs. 2.88 crores as on 31^st March, 2014, the difference of Rs. 1,94,95,410/- has been added back to the total income.

4. Apart from above, the bank interest and bank charges debited by the assessee amounting to Rs.14.97 lakhs in audited profit and loss account has been disallowed due to the fact that the assessee has made an advance for flat Rs.2 crores ( two crores) and a further advance of Rs.11 lakhs to one Alliance Transport Pvt Ltd , and no interest is shown to be receivable from these parties. It is clarified that in the assessment order the AO has wrongly stated “taken advance” actually it should be “given advance”

because the advance for flat is paid by the assessee and reflected in assets).

5. Subsequently the assessment was completed on a total income of Rs. 2.63 crores (with an addition of Rs.1.94 crores on capital a/c plus Rs.14.97 lakhs on a/c of bank interest disallowed).

6. The matter carried in first appeal, has been adjudicated on the basis of the statement of facts and the grounds of appeal after considering materials on record on merits and the additions has been sustained by the first appellate authority by observing as follows:

“7.2 In this ground of appeal, the appellant has assailed the addition of Rs. 1,94,95,410/- on account of increase in capital account for AY 2014-15. The appellant is a civil contractor and is a Proprietor of M/s N.K. Enterprises. During the assessment proceedings, the appellant has not furnished any reply in response to the notices issued to him by the AO on various dates. On perusal of the assessment order, it is found that the AO had noticed change in proprietor's capital from Rs. 93,53,991/- in A.Y. 2013-14 to Rs. 2,88,49,401/- in A.Y. 2014- 15 i.e. increase of Rs. 1