TaxTMI 
TaxTMI 
2026 (5) TMI 1144
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....as selected for Limited Scrutiny assessment under CASS on the following reasons :- i) Taxable receipts from other sources shown in Schedule TDS 2 is higher than the receipts shown in ITR ii) High liabilities as compared to low income/receipts iii) Purchase value of proper less than the value as per stamp authority. 4. Thereafter statutory notices u/s 143(2) and 142(1) of the IT Act, 1961 along with questionnaires were issued to the assessee and the assessee duly replied to all the said notices. The assessee is a limited liability partnership firm and is a builder, developer and job work contractor of Government for the last more than four years. The assessee is deriving income from business, house property and other sources. The AO on examination of balance sheet for the impugned assessment year noted that the assessee has shown advances from parties/customers of Rs. 17,94,02,522/- and Sundry creditors of Rs. 31,12,665/- under the head Trade Payable in the Balance Sheet as on 31.03.2020. The A.O. issued notice u/s 142(1) of the IT Act, 1961 dated 22.08.2022 asking the assessee to submit the details regarding advances receipts from customers in the part....
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....ed by the AO that the assessee is engaged in the business of developer and builder ( residential and commercial complexes) and also noted the turnover of the assessee and accepted the advances s received by the assessee from the customers and no addition was made. Ld. AR referred to the balance sheet as at 31.3.2014 for A.Y.2014-2015 which is available at page Nos.233 to 241 of the paper book wherein the advances from the customers were Rs. 21,83,92,838/- as on 31.03.2014 whereas the corresponding figure as on 31.03.2013 was Rs. 13,01,71,173/-. The AO also referred to the balance sheet, copies of ITR and GST Return for Assessment Year 2019-20 and submitted that the advances from parties were shown at Rs. 14,34,38,128/-. Thereafter the ld. AR referred to the balance sheet as on 31.03.2021 and submitted that the advances were received of Rs. 23,83,97,416/- whereas the corresponding figure as on 31.03.2020 was of Rs. 17,94,02,522/-. Ld. AR also referred to the copy of the ledger account in respect "advances received from the customers/parties at page 88 of the paper book wherein it is clearly demonstrated that the opening balance from flat purchasers/customers was Rs. 14,34,38,128/-. ....
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....were not rejected by the AO while making this addition. The same is not permissible under the Act as has been held by the Hon'ble Delhi High Court in the case of Principal Commissioner of Income-tax, (Central)-1 vs. Forum Sales (P.) Ltd in 468 ITR 392 (Del HC). Finally, the ld. AR prayed that the order of the ld. CIT(A) may be set aside and the addition made by the AO may be deleted. 11. Ld. DR, on the other hand, submitted that the assessee though furnished the details/evidences before the AO but these were not legible and, hence, the AO was right in taking a view that the advances received from the customers could not be verified and unexplained and added the same to the total income of the assessee u/s 68 of the Act. Ld. DR also submitted before the ld. CIT(A) the assessee furnished all the evidences but since the AO had not considered the said evidences and thus rightly restored the appeal to the Assessing Officer. The DR finally submitted before the Bench that there was no proper representation by the assessee, therefore, the case may be restored to the file of ld. AO or ld. CIT(A) for fresh adjudication. 12. After hearing the rival contentions of the parties and perusin....
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....n the case of Commissioner of Income Tax-IV vs. Shivalik Buildwell (P) Ltd in [2013] 40 taxmann.com 219 (Guj HC) find that the Hon'ble Gujarat High Court has held that advance receipts not to be treated as trading receipts during the year under consideration. The relevant observations of the hon'ble High Court reads as under :- "Assessee was a builder and developer - He received certain amount as advance from different parties-Assessing Officer added said amount to assessee's taxable income -Tribunal set aside addition made by Assessing Officer holding that assessee being a developer of project, profit in its case would arise only on transfer of title of property and, therefore, receipt of any advance or booking amount could not be treated as trading receipt of year under consideration - Whether on facts, impugned order passed by Tribunal deleting addition was to be upheld 15. Same ratio has been relied on the case of Principal Commissioner of Income Tax vs. Montage Enterprises (P) Ltd in [2018] 100 taxmann.com 100 (SC) wherein it is held that "Section 68, of the Income-tax Act, 1961- Cash credit (Trade advance)- In course of assessment, Assessing Officer made addit....
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....ater on adjusted in the sales in assessment year2018-19. In support of this contention and for better appreciation, at a glance chart showing the details relating to the receipt of flat advance bookings and the sales recognition of the flat sold was submitted before the Assessing Officer. On one hand, the income declared in assessment year 2018-19 has been accepted, assessed and the department received the tax on such income in that year. Whereas, on the other hand the Assessing Officer after disturbing the declared income this year, taxed the entire advance of Rx.3.71 crores in this year which has clearly resulted into double taxation. The law is well settled that the same income cannot be taxed twice. [Para 20]" 18. Similar ratio has been placed in the case of Mahaveer Kumar Jain v. CIT (2018) 165 DTR 113 (SC) wherein it is held that "We have gone through the relevant provisions but there seems to be no such provision in the I.T. Act wherein a specific provision has been made by the legislature for including such an income by an assessee from lottery ticket. In the absence of any such provision, the assessee in the present case cannot be subjected to double taxation. ....