TaxTMI 
TaxTMI 
2022 (7) TMI 259
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....at the outstanding liabilities towards various banks, i.e., Bank of Baroda, Indian Overseas Bank and Punjab National Bank are overstated to the extent of Rs. 4,44,12,989/-. The Assessing Officer accordingly added the said amount to the total income of the assessee holding the same to be bogus liability shown by the assessee to reduce the taxable profits of the company. The Assessing Officer further observed that the assessee has shown an amount of Rs. 13,46,880/- as receipts under dispute appearing under the head "other liabilities". The Assessing Officer alleged that such liability has ceased to exist and consequently added the aforesaid sum to the total income. The Assessing Officer next observed that assessee has received an amount of Rs. 1.40 crore from one Shri Ashok Verma. In the absence of any confirmation from the aforesaid lender, the Assessing Officer treated the amount receipt as unexplained income introduced in the shape of cash credits. The Assessing Officer also made some other additions (with which we are not presently concerned) and assessed the income of Rs. 7,11,80,313/- against the returned income of Rs. 28,71,047/-. 3. Aggrieved, the assessee preferred appeal....
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.... cessation of liability ignoring the fact the assessee has not filed any confirmation in respect of these liability either before the AO or CIT(A)? (3) Whether on the facts & the circumstances of the case, Ld. CIT(A) was correct in deleting the addition of Rs. 12,92,241/- on account of advance received from Sh. Jagdish Kumar & Sh. Avanish Kumar ignoring the fact that the identity, genuineness & creditworthiness of these two customer were proved either before the AO or the CIT(A)." 5. When the matter was called for hearing, the Ld. counsel for the assessee adverted to the grounds of appeal of the assessee and pointed out that first issue concerns addition of Rs. 1.40 crore made by the Assessing Officer under Section 68 of the Act and confirmed by the CIT(A). In the matter, the ld. counsel pointed out that the assessee has entered into the collaboration agreement with the lender, Shri Ashok Verma and his brother, Shri Rakesh Verma for construction of Multiplex Cinema, Karnal, Haryan. However, the project could not be completed and the finances received by the assessee were returned to the lenders in terms of comprise agreement dated 25.11.2011 entered into between the ass....
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....h all the customers in question. The copy of flat booking agreement etc. were adverted and it was pointed out that the advance received against the sale of flat was in the ordinary course of real estate business and is backed by clinching documents in corroboration. It was thus submitted that the CIT(A) was not justified in denying the relief to the extent of Rs. 4,89,744/- to the assessee. By the same token, it was claimed that the appeal of the Revenue challenging the relief to the extent of Rs. 12,92,241/- is without any sound basis. It was thus submitted that Ground No. 3 of the Revenue appeal is integrally connected to corresponding Ground No. 3 of the appeal of the assessee. 7. As regards Ground No. 1 of the Revenue's appeal, the Ld. counsel for the assessee submitted that the Assessing Officer had made such addition on account of 'other liabilities' payable to banks as shown in the financial statement of the assessee on the ground that such liability was not confirmed from the respective banks. In this regard, the Ld. counsel submitted that the CIT(A) rightly appreciated the fact that it was not a case of bank overdraft where the bank could reflect such liabil....
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....ssessment order as well as first appellate order. The matter referred to and relied upon has also been looked into in terms of Rule 18 of the Income Tax (Appellate Tribunal) Rules. We now proceed to examine various issues raised herein. 11. Ground No. 1 of the appeal of the assessee is general in nature. 12. Ground No. 2 concerns addition of Rs. 1.40 crore received from Shri Ashok Kumar Verma under Section 68 of the Act. It is the case of the assessee that the amount was received in pursuance of collaboration agreement dated 21.08.2008 to pursue certain business interest in the form of 35% share in 'Harsha K3C Mall Cinema Karnal'. An amount of Rs. 1.25 lakhs were claimed to have been received directly from Shri Ashok Verma and Rs. 15 lacs were received from his brother Shri Rakesh Kumar on behalf of Shri Ashok Verma. The amounts were stated to have been received by way of foreign inward remittance from the lender who claims to be British Nationals and persons of Indian origin. The financing transactions culminated in complaint dated 05.05.2010 against the assessee by the lender before ROC (placed at page No. 61-64 of the paper book). Copy of confirmatory letter from I....
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....re ITAT (i) Jagdish Kumar 15,74,983 15,74,983 - - 5,51,243 (ii) Shahid 7,86,783 7,05,039 81,744 81,744 - (iii) Ashutosh Awashti 1,20,000 - 1,20,000 1,20,000 - (iv) Sandeep Chaudhry 7,86,903 7,86,903 - - (v) Avanish Kumar 7,41,000 7,41,000 - - 7,41,000 (Vi) Santosh Kr. Chugh 2,00,000 2,00,000 - - - (vii) Mohan Lal 4,00,000 2,00,000 2,00,000 2,00,000 - (viii) Rajiv 88,000 - 88,000 - Total 32,80,669 4,89,744 4,89,744 12,92,2414 13.2. The assessee has submitted party-wise explanation towards advances received from different customers, which is noted herein for appreciation of facts in proper perspective; (a) addition of Rs. 81,744/- sustained by the CIT(A) was on account of receipt from a customer named Mr. Shahid. In this regard, it was submitted that total amount of Rs. 7,86,783/- was received from Mr. Shahid out of which Rs. 7,05,839/- was received in the earlier year and remaining Rs. 81,744/- in question relates to current financial year. Fl....
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....ppellant's company. Out of Rs. 15,74,983/-, Rs. 10,23,740/- was opening balance that Rs. 5,51,241/- has been received during the previous year under consideration. However considering the evidence filed before me I am of the opinion that the identity, the creditworthiness of lender and genuineness of the transaction has been proved therefore no addition is called for. xxxxxxxx An amount of Rs. 7,41,000/- has been received from Sh Avinash Kumar for Shop No. 174 at Harsha city Mall at Indrapuram. The Ld. AR has also submitted the copy of agreement between Sh. Avinash Kumar and M/s. Harsha Associated Ltd. the ledger account of Sh. Avinash Kumar in the books of appellant company is also furnished and it is seen that all the payment have been received by cheque. Considering all the evidences the addition on a/c advance received from Sh. Avinash Kumar is deleted." 14.2. In the light of the agreement with the above noted parties for proposed purchase of flat, the consideration for receipt of business advance stands proved. The action of the CIT(A) thus cannot be faulted. 14.3. Ground No. 3 of the Revenue's appeal is thus dismissed. 15. We now advert to G....
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....s report, the contents of the letter sent to AO are reproduced below:- "Return declaring an income of Rs. 28,71,047/- was filed. In the assessment order, the income of the appellant was determined at Rs. 7,11,80,313/- by making various additions. With regard to the additions made, the appellant has filed certain evidences which were not tiled at the time of assessment as under:- i. With regard to the addition of Rs. 4,44,12,989/-, it has been submitted that these liabilities were on account of book overdrafts on account of cheques issued to various parties. Confirmations from such parties have been filed. ii. With regard to the addition of Rs. 13,46,880/-, it has been submitted that no details were asked for by the A.O. in respect of this liability. A copy of agreement with M/s. Tech soft Global Ltd. and copy of the judgment of Civil Court, Karnal has been filed in support of the appellant's contention. iii. With regard to the addition of Rs. 1.40 Crores, a copy of agreement with Sh. Ashok Kumar and copy of account with Sh. Ashok Kumar and his brother Sh. Rakesh Kumar for having invested Rs. 1.25 Crores and Rs. 15.00 Lacs respectively has bee....
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....k. It was also stated by the Ld. AR that in respect of Bank of Baroda the cheques have been issued to various parties in the month of March, the earliest payment made on 7th March, 2007 and the latest being on 30/03/2007. Considering all the facts and circumstances of the case and the material brought before me and considering the fact that the liability has arisen on a/c of book/overdraft provided by the bank and also considering the fact that the whole transactions have left its footprints in the banking channel which cannot be manipulated. I am therefore, of the view that addition of Rs. 4,71,52,013/- on a/c of other liabilities are not warranted and the same is deleted." 15.3. The Revenue has challenged the action of CIT(A) in reversal of addition made by the Assessing Officer on the basis of unverified additional evidences placed before the CIT(A). We have examined the issue. As per the statement of facts before the CIT(A), it is the case of the assessee that addition in this regard was made by the Assessing Officer without giving sufficient opportunity. The confirmation from corresponding creditors were not demanded by the Assessing Officer. The CIT(A) in the first appeal ....
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.... CIT(A) which is contrary to the factual position on record. It is the admitted position that no documents were filed before the Assessing Officer. The documents filed before the CIT(A) neither supports the claim of assessee nor unverified by the Assessing Officer. The CIT(A) himself has opted to make no independent inquiry and has mechanically accepted the explanation offered by the assessee which does not appear to be backed by any sound basis. Therefore, the action of the CIT(A) for reversal of addition in relation to Bank of Baroda Rs. 67,43,549/- and Punjab National Bank of Rs. 3,71,79,369/- is bereft of any sound factual basis. The Assessee has failed to discharge the onus which lay upon it to offer satisfactory explanation on inflated Bank liability. Hence, the action of the Assessing Officer is restored to the extent of Rs. 4,39,22,918/- and the action of CIT(A) is set aside. 16.4. Ground No. 1 of the Revenue's appeal is thus allowed in part. 17. Ground No. 2 of the Revenue's appeal concerns addition of Rs. 2,46,880/- on the cessation of liability. The outstanding liability, however, is claimed to be disputed by the assessee and pending before the Court. As em....