2023 (2) TMI 311 - AT - Income Tax

Reopening of assessment u/s 147 - deemed income u/s. 69A of the Act and taxed u/s. 115BBE - payment against the sale of 54 flats was received in cheques by the Assessee on which the Assessee has not given any explanation regarding not mentioning of the transaction in the audit report - HELD THAT - Since the Assessee did not ever present the cheque to the bank there is no question of realization of the cheques. In the matter of mentioning of this amount in 3CD report the cheques of this amount were taken as abundant precaution to secure the interests and not as advance/income and hence the Assessee was not under obligation to report this alleged income in form 3CB and 3CD as there is no appropriate column to disclose such cheques which are taken (to secure the interests) in lieu of incomplete and unfulfilled agreement. Vide letter M/s. Shubhkamna Buildtech Pvt. Ltd. has asked for not depositing the issued cheques handed over vide agreement dated 04.03.2012 and to return the same. In this case the argument of the ld. AR is understandable that if this income is considered as accrued the claim of the Assessee is that the same became a bad debt and hence needs to be allowed. Assessee before us claimed that the cheques on the basis of which the addition has been made were never presented in its bank account and the said company i.e. M/s. Shubhkamna Buildtech Pvt. Ltd. has also asked the Assessee to return unpresented cheques. In our considered view as the parties also consented to the following facts needs to be examined (i) Whether the Assessee has returned the cheques to the said company or not; (ii) Whether the Assessee has taken any amount in lieu of returning the said cheques; (iii) Whether the Assessee has taken any part payment on account of commission/brokerage in any other form. We clarify that the primary onus would be on the Assessee however the Assessing Officer will take appropriate action in accordance with law to summon the said company i.e. M/s. Shubhkamna Buildtech Pvt. Ltd. and/or any other person to unearth the real transactions. Appeal filed by the Revenue Department stands allowed for statistical purposes.

Summary

Issues:
Assessment proceedings under section 147 of the Income-tax Act, 1961 - Addition of income under section 69A and section 115BBE - Dispute regarding commission on flats sold - Non-realization of cheques - Assessment order passed ex parte - First appeal before Commissioner - Claim of bad debt - Onus of proof on Assessing Officer.

Analysis:
1. Initiation of Assessment Proceedings: The appeal was filed by the Revenue Department against the order passed by the Commissioner of Income-tax (Appeals) for the assessment year 2012-13. The proceedings under section 147 of the Income-tax Act were initiated after recording reasons, leading to the issuance of a notice under section 148 of the Act. The Assessee filed objections for reopening the assessment, which were disposed of by the Assessing Officer.

2. Assessment Order and Addition of Income: The Assessee declared an income of Rs.45,52,330/- in response to the notice under section 148. However, due to non-compliance with show cause notices, the Assessing Officer passed an ex parte assessment order under section 144. The AO treated Rs.3,29,66,160/- as income of the Assessee under section 69A and applied section 115BBE due to lack of explanation regarding the mentioned transaction in the audit report.

3. First Appeal and Claim of Bad Debt: The Assessee contested the addition of Rs.3,29,66,160/- before the Commissioner, citing an agreement with M/s. Shubhkamna Buildtech Pvt. Ltd. for commission on flats sold. The Assessee argued that the company failed to honor the agreement due to non-delivery of flats and refunded deposits. The Commissioner noted that the cheques were never presented or realized, and the Assessee's claim of bad debt was considered valid, ultimately deleting the addition.

4. Judicial Review and Onus of Proof: The Tribunal considered the facts and circumstances, emphasizing that the cheques in question were not presented in the Assessee's bank account. The Tribunal directed examination of whether the Assessee returned the cheques, received any amount in return, or accepted part payment in another form. The primary onus was placed on the Assessee, with the Assessing Officer tasked to investigate the transactions further.

5. Conclusion: The Tribunal allowed the appeal filed by the Revenue Department for statistical purposes, indicating a reversal of the decision in favor of the Revenue Department. The judgment highlighted the need for a detailed examination of the transactional aspects and the onus of proof in such cases.

This detailed analysis of the legal judgment outlines the progression of the case, the arguments presented by the parties, and the considerations made by the authorities and the Tribunal, providing a comprehensive overview of the issues involved and the ultimate decision rendered.