TaxTMI 
TaxTMI 
2022 (9) TMI 881
X X X X Extracts X X X X
X X X X Extracts X X X X
....unal, Varanasi (hereinafter called "the tribunal"), reads as under: "1. Because of additions of Rs.55,36,000/- received as advance against sale of stock in trade i.e flats is against facts. 2. Because the advance deposit received against sale does not qualify for addition u/s 68 of Income Tax Act being nature of trade advance. 3. Because order passed is in contrary to the facts and against the principle of equity and natural justice." 3. The brief facts of the case are that the assessee is engaged in business of construction of residential flats at Varanasi. The assessee filed return of income declaring income of Rs. 30,02,510/- , on 30th September, 2013. The case was selected by Revenue for framing scrutiny assessment under Section 143(3) read with Section 143(2) of the 1961 Act. During assessment proceedings, the AO observed that the assessee has not given any details with regard to advances received amounting to Rs. 54,00,000/- in aggregate . The assessee was confronted by AO that no details are being provided with respect to advances received to the tune of Rs. 54 lacs and in absence of details thereof, the same shall be treated as income of the as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at no confirmation from these persons to the effect that they have paid the advance was given except copies of their PAN Cards and Aadhar Cards. The AO observed that the assessee has failed to satisfy mandate of section 68 as the assessee failed to satisfy the identity and creditworthiness of the persons from whom advances were received as also the assessee failed to establish the genuineness of the transactions. The AO added the advance of Rs. 68,000/- each received from Miss Nandini Singh and Mr. Laxmieshwar Singh as income of the assessee , as unexplained cash credit by invoking provisions of Section 68 of the Act, and further amount of Rs. 54,00,000/- being unverified advances were added by AO as income of the assessee being unexplained cash credit, by invoking provisions of Section 68 , vide assessment order dated 18.03.2016 passed by AO u/s 143(3) of the 1961 Act, as under:- S. No. Name Amount 1 Miss Nalini Singh 68,000/- 2 Mr. Laxmishwar Singh 68,000/- 3 Unverified Advance 54,00,000/- While making aforesaid additions, the AO also relied upon following judicial precedents: a) Hon'ble Supreme Court judgment and order in the case ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Mr. Laxmieshwar Singh 68,000/- 3 Unverified Advance 54,00,000/- 6. Note-4 to the balance sheet as on 31.03.2013, contains details of 'other long term liabilities' (flat bookings) which has names of various persons including the name of the Ms. Nandini Singh, Mr. Laxmieshwar Singh and advanced from customers for flat bookings amounting to Rs. 68,000/-, 68,000/- and Rs. 54,00,000/- respectively received during the year under consideration. Vide order sheet entry point no.-6 dated 22.12.2015, the A.O. pointed out to the assessee that amount of Rs. 2,32,86,000/- has been shown (being other long term liabilities-flat bookings). He also noted that no details including addresses of the persons have been furnished and sought explanation of the assessee on the same. Vide order sheet entry dated 06.01.2016, the A.O. further noticed that details with regards to advance amounting to Rs. 54,00,000/- has not been filed and no evidence with regard to receipts of advance during the year have been filed. Vide its reply dated 18.01.2016, the counsel of the assessee submitted before the A.O. the list of the names of the persons from whom advances of Rs. 54,00,000/- have ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sh in Mumbai from 17 person who booked flats in Vinayaka Project of the assessee situated at Varanasi ,which cash amount was deposited by said Director in Mumbai in the bank account of the assessee maintained with ICICI Bank. It was submitted that all the 17 bookings of flats against which aforesaid advance amount of Rs. 54 lacs was received were later cancelled by the applicants, and the entire amount of Rs. 54 lacs was refunded in cash in subsequent year to all these 17 applicants who had made bookings with the assessee. It was submitted that the AO made addition to the income of the assessee under Section 68 of the Act, and ld. CIT(A) confirmed the additions. Our attention was drawn to Para 3.5 onwards of the assessment order passed by AO and also to Para 6 of appellate order passed by ld. CIT(A). It was submitted that there was cash receipts from all these 17 persons aggregating to the tune of Rs 54,00,000/- and it was submitted that books of accounts were not rejected by AO/CIT(A). It was submitted that all the payments were received in cash and were refunded also in cash as all these 17 bookings were later cancelled, and the amount stood refunded in cash in the subsequent yea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tax (Appellate Tribunal) Rules, 1963 along with supporting documents , which are placed on record in file. It was submitted that the assessee was having sufficient cash balance in hand on these days when cash stood deposited in bank and there was no need to show cash receipts against in-genuine bookings of flats. It was submitted that confirmations are sought from all these 17 persons who made booking of flats and paid cash as booking advance, and infact confirmation are received from most of these persons which are placed on record , and the same can be verified by authorities below. Our attention was drawn to Para 3.3 - 3.4 of the assessment order passed by AO with respect to addition of Rs. 68,000/- each made by AO and which stood later confirmed by ld. CIT(A) , with respect of the amount of Rs. 68,000/- each received from Miss. Nandini Singh and Mr. Laxmieshwar Singh. It was submitted that income of Rs. 68000 each received from aforesaid two persons, were disclosed in the subsequent year. It was submitted by ld. Counsel for the assessee that these two persons gave money for doing some extra work in their flats which the assesee did. Our attention was drawn to page no. 11-14 of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....54 lacs received from 17 persons allegedly for booking of seventeen flats in Vinayaka Project that the assessee has merely furnished the list of the names of the creditors/ persons from whom the booking amount was received in cash and no details were furnished, before the AO as well before ld. CIT(A) and the entire transaction of accepting bookings is in cash and these amounts were claimed to have been returned in the subsequent year in cash . It was submitted that both the transaction for receiving the booking amount as well returning/refunding of the booking advance is stated to be in cash, while no agreement was filed by the assessee before the AO as well as ld. CIT(A) , and no agreement is even filed before ITAT. It was submitted by ld. Sr. DR that the assessee was having unsold inventory of three flats in the Vinayaka Project , and how the assessee has accepted bookings from 17 persons for 17 flats, it was submitted that it is not possible at all. The Ld. Sr. DR submitted that it is claimed by the assessee that there is an agreement of the assessee with landlords in Vinayaka Project, but the assessee has not submitted any details whatsoever before AO as well the CIT(A) and als....
X X X X Extracts X X X X
X X X X Extracts X X X X
....- p. Santosh Viswakarma 3,50,000/- q. Durgesh Kumar Singh 3,50,000/- It is further claimed by the assessee that none of the seventeen persons who booked the seventeen flats in Vinayaka Project (Varanasi) continued with the flats, and rather all these seventeen persons who booked these 17 flats cancelled all the seventeen flats and in the subsequent year the said booking advance of Rs. 54 lacs were refunded by assessee in cash to all these 17 persons who earlier booked 17 flats in Vinayaka Project(Varanasi). The assessee had unsold closing stock of three flats in Vinayaka Project(Varanasi) , when these 17 bookings were claimed to be accepted from 17 different persons. The assessee has claimed that the landlords(owners) in its Vinayaka Project(Varanasi) who earlier booked flat with it , had mandated assessee to sell their flats on their behalf , and it is claimed by assessee that against the mandate of these landlords(owners) in Vinayaka Project(Varanasi), the assessee accepted bookings from these seventeen persons for selling the flats owned by landlords/owners. It is pertinent to mention that even at the stage of tribunal as of now, the assessee has not disclos....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r based on facts and circumstances of the case as the assessee was not able to discharge its onus as is cast u/s 68 of the 1961 Act, the additions were made , which later stood confirmed by the ld. CIT(A). The assessee did not co- operated with the AO nor with ld. CIT(A) , as is emanating from the orders of authorities below, as complete details were never furnished. Even before us, the assessee could not prove the genuineness of transaction as well creditworthiness of the persons who gave cash to the assessee to the tune of Rs. 54 lacs for alleged booking of 17 flats. No evidences as to booking of flat by way of agreements , cancellation of flats and also agreements with the landlords who mandated assessee to sell their flats is produced. Even the cash receipt are dated 31/03/2013 with no mention of details of flat, while the cash is claimed by the assessee to be received in April/May 2012. Now, at this stage on 23.08.2022(i.e. one day prior to hearing) fresh evidences are filed by assessee such as affidavit and some confirmations , without permission of the Bench, as is mandated under Rule 29 of the Income-tax(Appellate Tribunal) Rules, 1963. We could have allowed the admission o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....quired to explain to the satisfaction of the AO cumulatively about the identity and capacity/creditworthiness of the creditors along with the genuineness of the transaction to the satisfaction of the AO. All the constituents are required to be cumulatively satisfied. If one or more of them is absent, then the AO can make the additions u/s. 68 of the Act as an income. The burden is very heavy on the assessee to satisfy cumulatively the ingredients of Section 68 of the Act as to identity and establish the credit worthiness of the creditors and genuineness of the transaction to the satisfaction of the AO, otherwise the AO shall be free to proceed against the assessee company and make additions u/s. 68 of the Act as unexplained cash credit. The use of the word "any sum found credited in the books ' in Section 68 indicates that it is widely worded and the AO can make enquiries as to the nature and source thereof. The AO can go to enquire/investigate into truthfulness of the assertion of the assessee regarding the nature and the source of the credit in its books of accounts and in case the AO is not satisfied with the explanation of the assessee with respect to establishing identity ....