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2017 (5) TMI 1208
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....Income Tax (Appeals) has failed to appreciate that sum of Rs. 10,03,46,128/- represented advances received by the appellant company against sale of plots through marketing agents from various buyers by account payee cheques and as such the sum received could not be regarded as unexplained cash credit u/s 68 of the Act. 1.3 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that sum received by the appellant was under a memorandum of understanding with M/s Mahamedha Builders, and, M/s Superior Associates (both of whom undisputedly are identifiable parties) and had been received by account payee cheques and as such, the burden which lay upon the appellant to explain the nature and source of credit stood discharged and therefore, addition confirmed under section 68 of the Act is without satisfying the preconditions provided in the Act and therefore, unwarranted. 1.4 That the learned Commissioner of Income Tax (Appeals) has proceeded to confirm impugned addition without appreciating the settled position of law that, it is not for the appellant to explain the source of source of the creditor and therefore, any addition confirmed on irrelevant and e....
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....e assessee also filed copy of the site plan of the project. The AO again asked the assessee to file agreement made with customers for taking advance from them with the portion of stock marked for sale and the opening balance of customer advance received. In response the assessee furnished the location of the stock in trade and copies of application forms of persons from whom advances were received. The AO again asked the assessee to explain as to why the amount shown in bank book as advance from customer was received from different account than the applicants and to file brochure of township for which advance had been received. In response the assessee vide letter dated 11.02.2013 submitted as under: "The company started its business initially with the object of development of land owned by it to do the sale of the said developed land by splitting in plots of different sizes. Therefore the assessee company applied with HPDA for necessary approval of proposed lay out of the land which had been approved by HPDA as on dated 15.02.2007. The copy of the site plan is enclosed. Later on three more companies named M/s Nutech Buildcon Private Limited, M/s Nauge Buildcon Private Limite....
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....85 plots of different customers from whom booking amount has initially been collected by the M/s Seven Heaven Developers Private Limited and its sister concern M/s Superior Associates. The money so collected by M/s Seven Heaven Developers Private Limited and its sister concern M/s Superior Associates from the buyers of 85 plots had been paid back on behalf of the said buyers to the assessee company and other companies of the same group. The booking amount collected by M/s Mahamedha Builders time to time in pursuance to the above said agreement dated 19.02.2007 had been paid back to the assessee company through account payee cheques. A complete list of persons from whom the total booking amount had been collected alongwith the address proof/ID proofs of all the customers have been already been furnished on earlier date of hearing." 5. The AO after considering the submissions of the assessee observed as under: "From the above stated facts by the assessee and the documents submitted, the following points were noticed - (1) There was a conditional approval from HPDA (Hapur Pilakhwa Development Authority) dated 19.02.2007 for residential layout plan bearing no. 162/2006 for Kha....
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....the assessee and M/s Mahamedha Builders is not found to be genuine and for the purpose it is stated to be for. Further the assessee vide the said letter filed photocopy of supplementary agreement between itself and M/s. Mahamedha Estates private Limited as one party and M/s. Seven Heavens Developers Private Limited dated 16.03.2007 which states that it will provide land in form of plots of 200 sq yards for 85 plots to the second party in lieu of consideration received by it. It completely fails to derive any logical sequence of event in which one hand the assessee seems to have entered into any agreement with M/s. Mahamedha Builders for marketing and collecting of money from public of its township as stated to have been approved by the HDPA on 19.02.2007 and then on 16.03.2007 it decides to sell of the plots to M/s. Seven Heavens Developers Private Limited for an amount support of the amount shown as received from customer during the year. Thirdly the assessee vide the same letter has filed a copy of consortium agreement between M/s. Nutech Buildcon Private Limited, M/s. Nuage Buildcon Private Limited, M/s. Gain Infrastructure Private Limited and the assessee dated 01.02.2008....
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....e the addition of Rs. 10,03,46,128/- by observing as under: "I have carefully gone through the submission of the assessee and also to the documents collected in this regard. The contention of the assessee was that burden of the assessee in respect of the advance received against booking from the two parties stands discharged and therefore no addition is tenable. Further that once the amount has been received by account payee cheques and the creditors have duly confirmed the transactions no adverse inference can be drawn. In this regard it is to be stated that the advance has been received from two parties, which I have discussed above had no locus standi vis a vis the assessee to collect such amount on behalf of the applicant in its name. The creditors stands in the books of the assessee in the name.of advance for booking and these advance are stated by it to have been received from individuals who have denied that they know the existence of the assessee company. Hence the whole matrix of transaction stated is sham and not proved to be genuine in the name of the assessee. The amount merely being received through cheques does not discharge the onus from the assessee company to ob....
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....gent for booking of plots/flats and later on three more companies, namely, M/s Nutech Buildcon 'P' Ltd., M/s Nuage Buildcon 'P' Ltd. and M/s Gain Infrastructure Pvt. Ltd. to the same group of companies have land at village Tarapur, Hapur, joined hands with the assessee to establish a group housing project over the land owned by them and to do this, all these four companies executed a joint consortium agreement dated 01.02.2008 and in pursuance thereof prepared a joint layout of the proposed housing project applied with HPDA for its necessary approval which had been approved by HPDA on 15.07.2008. It was stated that all the above said four companies further agreed to promote the assessee company as developer company for development and construction of the approved Joint Group Housing Project and authorized it to do marketing of all the approved joint group housing project and authorized it to do marketing of all the plots/flats developed and constructed over the land owned by all the four companies. It was also agreed between the companies that the booking money for whole of the project will also be collected by the assessee company either directly or through appointment of any othe....
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.... officer that in the balance sheet of the assessee company there is increase in current liabilities of Rs. 10,03,46,128/ on account of advance received from customers. Accordingly the assessee was asked to furnish necessary details as per questionnaire dated 23.05.2012 and subsequent noting, In response the assessee furnished copy of the ledger account of the appellant in the hooks of M/s Mahamedha Builders and M/s Superior Associates. Copy of Affidavit of Sh. Raj Singh, Prop M/s Mahamedha Builders and Shri Sunil Singh prop M/s Super Associates, list of customers from whom booking amount have been collected by the two agents, copy of application of 15 customers. 3.5 On verification of the various agreement and confirmations from Hapur Palakhwa Development Authority the A.O found lot of contradictions in the submission of the assessee as discussed in detail on page 3 and 5 of the assessment order. Further to verify the genuineness of the customers, notice under section 133(6) was issued to applicants of 24 plots namely Ms Asha Premnath (applicant shown for 6 plots), Sri. Inder Singh (applicant shown for 5 plots), Sri. Jogider Singh Mavi( applicant shown 7 plots) and Ms Meena Devi....
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.... of agreements for sale of shops, same does not stand proved merely by filing of affidavits of payers, when those could not be produced for authentication; Similarly production of agreement to sale, incomplete and unsigned does not prove assessee's version. Moreover in the case under consideration it is apparent that the amount of advance was not received by the booking agents by account payee cheques or by the bank drafts. Further since credits had been received in assessee's books of accounts. Section 68 put certain obligations on the assessee, which he has to prove. The assessee has to prove the identity of the person from whom the amount has been received. The assessee has also to prove the creditworthiness from whom the credit has been received. The assessee has also proved the genuineness of the transaction. The Assessing Officer had found many discrepancies. It was necessary to verify whether the booking amount came from the person who the assessee claimed to have paid to his booking agents. However on verification the same was not confirmed by the so called buyers. Moreover even the detail of amount received from the so called buyers were not furnished. 3.7 Hence....
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....y of acknowledgment of their respective returns of income (copies of which are placed at page nos. 60 and 61 of the assessee's paper book). It was further submitted that the proprietors of the aforesaid firms furnished their affidavits and stated in the said affidavits that the advances collected from customers against booking of plots/flats had been remitted to the assessee and the detail was given in the said affidavits each dated 15.03.2013 (copies of which are placed at page nos. 58, 59 and 62 of the assessee's paper book). It was accordingly submitted that neither the AO nor the ld. CIT(A) appreciated the facts in right perspective. Therefore, the addition made by the AO and sustained by the ld. CIT(A) was not justified. Alternatively, it was submitted that the matter may be remitted back to the AO to be adjudicated afresh after considering all the relevant documents furnished by the assessee and by giving a proper opportunity of being heard to the assessee. 12. In his rival submissions the ld. DR strongly supported the orders of the authorities below and reiterated the observations made in their respective orders. It was further submitted that the AO had given the proper o....
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....28/- Total 8,02,83,000/- 4. That the entire advances received by M/s Mahamedha Builders stand credited in its bank accounts and thereafter remitted to M/s Stride Infrastructure (P) Ltd. 5. That I am having PAN No. AGQPS6977A and duly assessed to tax with Ward No. 2 (2), Ghaziabad Sd/- DEPONENT VERIFICATION I, the above named deponent do hereby verify that the contents of the above affidavit in para 1 to 5 are true and correct to the best of my knowledge and belief. Verified today the 15th day of March 2013 at Ghaziabad." Sd/- DEPONENT 14. Copy of account obtained from the said firm M/s Mahamedha Builders is placed at page nos. 56 & 57 of the assessee's paper book. Similarly, confirmation of accounts from M/s Superior Associates is placed at page no. 61 and the affidavit of Sh. Sunil Singh proprietor of M/s Superior Associates is placed at page no. 62 of the assessee's paper book. The contents of the aforesaid affidavits has not been doubted. The assessee also furnished the affidavit of Sh. Raj Singh at page nos. 79 & 80 wherein it has been stated that being a Director of the assessee company he entered ....