2018 (1) TMI 1574 - AT - Income Tax

Undisclosed income - bogus liability - HELD THAT - Factum of advance of Rs. 1, 00, 00, 000/- given to M/s Gulmohar Landcons (P) Ltd. and also the receipt of the amounts back by the assessee have not been examined clearly either by the Assessing Officer or by the Ld. CIT(A). AO has made an addition of Rs. 78, 00, 000/- on account of asset and liabilities statement filed by the assessee and based on the statement of the Shri. Darshan Singh whereas the amount advanced was Rs. 1, 00, 00, 000/-as per the statement of Shri. Darshan Singh. Hence this issue is being sent back to the file of Assessing Officer with a direction to examine the issue afresh. Appeal of the assessee is allowed for statistical purposes. Admission of additional evidences under Rule 46A - CIT-A deleting the addition on account of bogus liability - HELD THAT - CIT(A) has given justification in para 3.2 of the order the reasons for accepting the additional evidences. The additional evidences were accepted as the assessee could not contact Shri. Yashpal Aggarwal during the assessment proceedings and a remand report was also called from the Assessing Officer who in turn examined the details submitted before the Ld. CIT(A) and found no adverse material contrary to the submissions made and hence the Ld. CIT(A) deleted the addition. Since the Assessing Officer has duly examined the copy of the ledger account and the confirmations and not brought any material rebutting the contention of the assessee the decision of the Ld. CIT(A) deleting the addition is hereby confirmed. Unexplained cash credit - Advances in cash - CIT(A) held that if the Department had any doubt it could have enquired into the source of payment made of Rs. 31, 00, 000/- by the assessee which has not been done - HELD THAT - After going through the material available on the record since the amount of Rs. 31, 00, 000/- has been received back by the assessee and the sources have been fully explained and confirmed by the payee supported by the agreements we decline to interfere with the order of the Ld. CIT(A). Transaction between the M/s. Hash Builders Pvt. Ltd. and the assessee - HELD THAT - There was no dispute regarding the advances received the sources were never in question. At the most the Assessing Officer could have estimated commission income on account of transactions done through the assessee for the acquisition of properties for the companies for which he is working. Instead the Assessing Officer has treated the entire advances as income of the assessee which cannot be accepted and without any legal or factual basis. Hence we refrain from interfering with the order of the Ld. CIT(A) in deleting the addition.

Summary

Issues Involved:
1. Addition of Rs. 78,00,000/- as bogus liability and undisclosed income.
2. Admission of additional evidence under Rule 46A and deletion of Rs. 38,00,000/- as bogus liability.
3. Deletion of Rs. 31,00,000/- out of Rs. 40,00,000/- as unexplained cash deposits.
4. Treatment of Rs. 4,46,75,000/- received from M/s Hash Builders Pvt. Ltd. as income.

Issue-wise Detailed Analysis:

1. Addition of Rs. 78,00,000/- as Bogus Liability and Undisclosed Income
The assessee contested the addition of Rs. 78,00,000/- by the Assessing Officer (AO), who treated it as a bogus liability and consequently undisclosed income. The AO noted discrepancies between the balance sheet submitted in March 2011 and the statement of assets and liabilities furnished in December 2011. The AO obtained information from M/s Gulmohar Landcons (P) Ltd and recorded the statement of its MD, Sh. Darshan Singh, who did not confirm the liability of Rs. 78,00,000/-. The CIT(A) upheld the AO's decision, presuming the possibility of a separate cash transaction. However, the Tribunal found that the facts regarding the advance of Rs. 1,00,00,000/- and its partial return were not clearly examined by the lower authorities. Hence, the issue was remanded back to the AO for fresh examination.

2. Admission of Additional Evidence under Rule 46A and Deletion of Rs. 38,00,000/- as Bogus Liability
The Revenue challenged the CIT(A)'s decision to admit additional evidence and delete the addition of Rs. 38,00,000/- as bogus liability. The AO had treated the liability as bogus due to the non-production of Sh. Yash Pal Aggarwal. During appellate proceedings, the assessee submitted confirmation from Sh. Yash Pal Aggarwal, which was admitted under Rule 46A due to sufficient cause. The AO verified the bank statements and ledger account, confirming the transactions were through account payee cheques. The Tribunal upheld the CIT(A)'s decision, noting that the AO found no adverse material against the assessee's submissions.

3. Deletion of Rs. 31,00,000/- out of Rs. 40,00,000/- as Unexplained Cash Deposits
The AO observed a deposit of Rs. 40,00,000/- in the assessee's bank account and treated it as unexplained cash credit, questioning the authenticity of an agreement to sell with Sh. Joginder Singh. The CIT(A) found that the assessee had advanced Rs. 31,00,000/- to Sh. Joginder Singh, who refunded Rs. 40,00,000/- due to a cancelled land deal. The CIT(A) confirmed the addition of Rs. 9,00,000/- as excess receipt but deleted the addition of Rs. 31,00,000/-. The Tribunal upheld the CIT(A)'s decision, noting that the source of Rs. 31,00,000/- was fully explained and confirmed by the payee.

4. Treatment of Rs. 4,46,75,000/- Received from M/s Hash Builders Pvt. Ltd. as Income
The AO added Rs. 4,46,75,000/- received from HASH as income, arguing that the assessee did not utilize the advance for land transactions and lacked documentary evidence. The CIT(A) found that the amount was an advance for procuring land for TATA Housing Development Company Ltd, and due to pending litigation, the land could not be transferred. The Tribunal agreed with the CIT(A) that the advance could not be treated as income, as there was no evidence of income earned from the advance. The Tribunal noted that at most, the AO could have estimated commission income but not treat the entire advance as income without legal or factual basis.

Conclusion
The Tribunal allowed the assessee's appeal for statistical purposes and dismissed the Revenue's appeal, confirming the CIT(A)'s decisions on all contested issues.