TaxTMI 
TaxTMI 
2017 (3) TMI 1961
X X X X Extracts X X X X
X X X X Extracts X X X X
....ties to the tune of Rs. 1,16,38,000/- towards various old liabilities which were held by the AO as bogus liability claim of the assessee. The AO tried to ascertain the genuineness of the liability reflected in the balance sheet by issuing notice u/s. 133(6) to the following, namely, M/s. Nirupama & Co. in whose account there was a postponement of liability of Rs. 6,38,000/-. According to the AO the notice came back unserved for which the AO took an adverse view and made the addition u/s. 41(1) of the Act. 5. The next sundry creditor, namely, M/s. KIT Sales Pvt. Ltd. from whom the liability was being reflected from the year 2006-07 onwards wherein an outstanding liability of Rs. 50 Lakhs, was also issued notice u/s. 133(6) whereby reply was received from the said company to the effect that (a) there was no transaction for the period from 01.04.2010 to 31.03.2011, 01.04.2011 to 31.03.2012 and 01.04.2012 to 31.03.2013 and for which period no Xerox copy of the ledger account could be produced. (b) that there was no advance of any amount at any time to M/s Abir International, proprietor Sri Prabir Roy Chowdhury and (c) there was no agreement ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....has been treated by the AO as bogus claim and added u/s. 41(1) of the Act. The assessee's case is that during the F.Y. 2005-06 received advances from Sri Bimal Kumar Gupta of an amount of Rs. 25 Lakhs as advance for purchase of land vide 3 cheques. In the month of January and February, 2006 and during the F.Y. 2006-07, the assessee received vide cheque dt. 25.04.2006. Rs. 35 Lakhs, thus a total amount of Rs. 60 Lakhs was paid by Sri Bimal Kumar Gupta to the assessee i.e. for A.Y. 2006-07 and 2007-08. According to the assessee, though the registration of the property took place in May, 2006, however, the physical possession of the property could not be handed over to Sri Bimal Kumar Gupta and it was done only during the next assessment year (A.Y 2013-14). So, the assessee was showing the said amount i.e. Rs. 60 Lakhs as liability because in case if the physical possession could not be handed over to the Sri Bimal Kumar Gupta, the amount which has been taken as advance needs to be returned back to Sri Bimal Kumar Gupta. This explanation of the assessee was not accepted by the AO who added the same as bogus claim and for doing so invoked Section 41(1) of the Act fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....adjustment results in surplus and when there is a deficit, it will come in the expenditure side). So, we take note that after completing the legal formalities and handing over the property during the F.Y. 2012-13, the profit from the sale of land to Sri Bimal Kumar Gupta of Rs. 34 Lakhs has been transferred to the P&L Account of M/s Abir International in which the assessee is a proprietor. We note that the cost of land purchased from Dindayal Gupta of Rs. 26 Lakhs was adjusted against the advances which was duly reflected in the books as "Advance paid on the asset side". So, we find that in the facts and circumstances of the case this transaction of the assessee cannot attract Section 41(1) of the Act. So, therefore, there is no infirmity in the order passed by the Ld. CIT (A) and we confirm the same. 11. Coming to Rs. 50 Lakhs shown by the assessee as liability from M/s Kit Sales (P) Ltd. The AO notes that the assessee stated that it is an advance from the said party which was given to the assessee on 28.08.2006 for land purchase. However, since the land purchase could not be materialized, the assessee has been carrying forward the liability and if the land trans....
X X X X Extracts X X X X
X X X X Extracts X X X X
....M/s Kit Sales (P) Ltd. on 28.08.2006 by cheque totaling to an amount of Rs.50 Lakhs. It was pointed out by the Ld. Counsel that after confronting the assessee and having known the assessee's explanation about the fact that the transactions happened in 2006, and that too through banking channel the assessee was in receipt of the amount in dispute from the very same M/s Kit Sales (P) Ltd, the AO before drawing any adverse inference against the assessee, ought to have confronted M/s Kit Sales (P) Ltd. regarding the veracity of the cheque transactions between M/s Kit Sales (P) Ltd. on 28.08.2006 with the assessee. However, no such action has been undertaken by the AO and if the AO treated the statement of M/s Kit Sales (P) Ltd. as gospel truth to disbelieve the assessee, then in the light of the cheques issued by M/s Kit Sales Ltd. to the assessee, the veracity of the reply given to the AO by M/s Kit Sales does not inspire confidence to act against the assessee; and more over, if the AO was using the reply of M/s Kit Sales u/s. 133(6) adversely against the assessee, that too without confronting M/s Kit Sales (P) Ltd. with the explanation given by the assessee, then the assessee should ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vance as claimed by the assessee is found to be non-genuine from the very inspection itself, at least in terms of Section 41(1) of the Act, there is no cure for it. May be the said amount which is credited in the books of the assessee could attract Section 68 of the Act which could have been done in the year when the amount was credited in the books of the assessee i.e. in the A.Y. 2007-08, since the fact remains that the said credit entry in the books of account happened on 28.08.2006. So, therefore, we do not find any infirmity in the order passed by the Ld. CIT (A) and we dismiss the appeal of the Revenue. 12. Now, coming to Rs. 6,38,000/- which was shown by the assessee as liability from B. Nirupam& Co. We note that the assessee has been showing the same as liability from B. Nirupam& Co. We note that the assessee has been showing the same as liability which was existing in the books since 1997-98 and was carried forward as on 31.03.2012. The AO issued notices, however, the notices returned back unserved and the AO was of the opinion that the liability is not genuine and, therefore, he applied Section 41(1) of the Act and added the same as income of the assessee. The ld.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....b was of Rs. 5 Lakhs, thus totaling to Rs. 17,50,000/-. Sunland Purchase Pvt. Ltd. has confirmed to the AO of cost of construction of hostel of Rs. 12,50,000/-. The balance amount of Rs. 5 Lakhs was reflected by the assessee as income in the next assessment year, which is A.Y. 2013-14 (F.Y. 2012-13). It was claimed by the assessee that this was in accordance to the guidance note on accounting for real estate transactions issued by the Institute of Chartered Accountancy of India (ICAI) and since all risk and reward of ownership was transferred in that year (next A.Y.) upon execution of agreement with West Bengal Financial Corporation where the assessee had acted as an intermediary in getting the land transferred the assessee contended that Rs. 5 Lakhs crystallised as income next year and so it was shown as income next year and so not shown as income in this A.Y. The Ld. CIT (A) has deleted the addition by observing as under: "I have considered the submission of the appellant and perused the assessment order. The AO has made addition on account of difference of the Rs. 1750000/- and Rs. 1250000/- from Sunland Projects (P) Ltd. This amount w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted from the property, the AO has accepted the genuineness of the payment of Rs. 6,65,000/-, so, the AO ought to have examined the remaining recipients also and if he had expressed any doubts about the genuineness of the transaction, then he could have given time to the assessee for getting confirmation from the recipients. The Ld. CIT (A) was of the opinion that since the assessee failed to adduce evidence with regard to the authenticity of the payments he confirmed the addition made by the AO. 18. Aggrieved, the assessee is before us. 19. We take note that the assessee has made claim of payment of Rs. 15,92,500/- for evicting the encroachers on the land where the project has to be commenced. We note that out of the said amount, the AO accepted the genuineness of payments of Rs. 6,65,000/-, the rest of the payment in respect to Rs. 8,67,500/- was disallowed, because 5 persons to whom the payments were made could not be established by documentary evidence but there were proof in the form of receipts issued by these persons who have accepted the payments towards them. The Ld. AR stated that if the matter is remanded back to the file of the AO, the assessee ....