2023 (2) TMI 167 - AT - Income Tax

Addition u/s 56(2)(ix) - assessee has taken advance against the procurement of land from party and received advance for sale of property - A statement U/s 132(4) is recorded from the Managing Director of the assessee in which has admitted that both the amounts are forfeited for AY 2018-19 - assessee’s plea that both the amounts are never to be realised by assessee and reflected in the balance sheet as non-current liability - HELD THAT:- The managing director of the company had accepted that the advance amount is forfeited by statement before the revenue authorities. The managing director had never retracted the statement made before the revenue authority. AR was unable to show any such documents about the retraction of the managing director before the bench. On other hand, the assessee company is continuing the balance of advance in the balance sheet as liability.

Assessee was able to submit these documents as evidence before the bench. In factual matrix, the advance amount was never be forfeited or adjusted in the capital account of the assessee. There is clear contradiction in recorded statement and books of accounts of assessee related adjustment advance amount. But only point is being unanswered by the rival parties whether these two amounts are reflected in the books of accounts of respective parties.

The parties, M/s. Sobha Developers Ltd. and M/s. Elyon Developers Pvt. Ltd. are the company. There was no examination of these parties who has paid this amount to the assessee and also there is no verification of the books of accounts of those parties with reference to this amount.

In our opinion, it is appropriate to remit the issue in dispute to the file of CIT(A) to carry out necessary enquiry and putting the admission made by assessee Director to the concerned parties to this effect and to reconsider the issue accordingly. The assessee relied on various case laws which are kept on record and those case laws are not applicable to the facts of the present case as there was specific admission by the assessee during the course of recording the statement u/s. 132(4) of the IT Act. Appeal of the assessee is allowed for statistical purposes.