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2020 (8) TMI 5 - AT - Income TaxUndisclosed investment - assessee has given advance for the property which was taken over by assessee’s sister concern - AO has made the addition only because assessee has not shown the same in its sister concern in their balance sheet - HELD THAT:- Assessee had given the amount as advance for the golf club road project, which is evidenced in the balance sheet of assessee as on 31.03.2005. Initially assessee wanted to take over the project from its sister concern which did not materialize, so the advance paid by assessee to landlord was adjusted with current account balance of sister concern M/s. Capital Construction Assessee in fact had shown the same under the head “Loans and Advances” and has included the amount in “Advances recovered in cash or in kind” in its balance sheet as on 31.03.2005 and the payment had been made by cheque for Golf Club Road Project. So, no addition was warranted u/s. 69B (undisclosed investment) of the Act. It is trite law that method of accounting cannot determine the true character of a transaction CIT Vs. MESSRS. SHOORJI VALLABHDAS AND CO [1962 (3) TMI 6 - SUPREME COURT]. Assessee has given advance for the property which was taken over by assessee’s sister concern and shown by assessee in its balance sheet and squared up in later year so no addition under section 69B of the Act is sustainable and therefore directed to be deleted. Addition u/s. 69C as undisclosed expenditure - assessee had to incur additional interest expenditure for buying property at Kalibari Lane - AO accepted the payment of interest to landlords given by cheque but according to AO, since the assessee failed to produce the parties he added the same u/s. 69C - HELD THAT:- AO made the addition since assessee failed to produce the landlords to whom payments were made and Ld. CIT(A) made the addition since assessee did not produce the parties creditworthiness from whom the assessee sourced the cash for making the payment. Since according to assessee, it had made the payment of ₹ 3,55,000/- to six parties on 3 (three) different dates which were routed through cash book, and the AO having not examined the cash book even to determine whether the assessee had the cash balance to make the payment on three different dates, which is necessary to adjudicate the issue, it is remanded back to AO for de novo adjudication.
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