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TMI Blog2015 (12) TMI 1120X X X X Extracts X X X X X X X X Extracts X X X X ..... appeals, they are taken up together and disposed off by this common order for the sake of convenience. 2.1 The first issue to be decided in these appeals is with regard to the treatment of rental receipts of Rs. 49,49,677/- for the purpose of Income-tax. 2.2 The brief facts of this issue are that the assessee along with other parties i.e. M/s. Santosh Promoters Ltd and M/s. Delight Suppliers Ltd had entered into a tenancy agreement with M/s. Suparshwa Distributors Pvt Ltd (In Short 'SDPL') on 18-08-2005. Pursuant to this agreement the tenant is supposed to carry out the construction of incomplete super structure in the building at its own cost and is not entitled to claim reimbursement of the same from the assesses herein ( i.e the landlords). In other words, the assesses sought to let out the partially completed building to M/s SDPL and balance construction was agreed to be completed by the tenant without any right of seeking reimbursement of cost from the assesses. The monthly rental was agreed at Rs. 11,20,000/-. The tenancy is for a period of 11 years. The assessee had loan dues payable to SBI and decided to utilize the rental receipts towards loan repayment to State Bank of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to handing over the possession of the let out portion and in case of failure on the part of the owner to furnish the completion certificate, the rent paid by the tenant shall be treated as advance and tenant will be entitled and reserve the right to recover the same from the owner and/ or also cancel the tenancy agreement. The said tenancy is granted on 'as is where is basis' since some completion job is yet to be carried out and tenancy shall be treated to have commenced immediately, subject to the terms and conditions hereinafter agreed. 2.3 Admittedly the copy of the modified tenancy agreement was not submitted by the assesses before the ld.AO. The assesses treated the entire receipts from M/s. SDPL amounting to Rs. 49,49,677/- as advance in view of the fact that the assesses could not complete the construction work by 31-12-2005 as per the modified tenancy agreement. The ld.AO treated the same as income from other sources. According to him, the rent was paid by the tenant as per the original tenancy agreement after subjecting the same after due deduction of tax at source and story of the modified tenancy agreement is only an afterthought. 2.4. On first appeal, before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld.CIT(A) unless the ld.AO is given due opportunity to confront those evidences. He argued that the ld.AO having submitted the remand report also having had the benefit of verification of all the documents during the remand proceedings, ought not to have raised any ground for violation of Rule 46A of the I.T Rules. On merits of this issue, the ld.AR further argued that the assesses had duly acted as per the terms of the modified tenancy agreement. The assesses admittedly could not comply with the completion of construction of building by 31-12-2005. In view of this, the tenant stopped to pay rentals. In other words, the assesses were in receipt of monies only from 19-08-2005 to 31-12-2005 amounting to Rs. 49,49,677/-. At this juncture, a specific query was raised on the Ld AR by the bench as to why the tenant chose to pay the rentals when the property itself was not occupied by it. With regard to this, the ld.AR replied that property is situated in a posh locality in the city of Kolkata at vantage location and would be useful for the purpose of business of the tenant and the tenant was not willing to withdraw from the contract permanently. He also argued that the tenant in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the possession of the subject mentioned property, which is in dispute before us. The relevant paragraph addressed by the tenant to one of the assessees herein vide letter dated 2-1-2006 is reproduce herewith:- "We have, therefore been compelled to revoke/suspend the agreement dt.18.08.05 for your defaults, lapses and batches to comply with the terms of the agreement with retrospective i.e. 18.08.2005. We are thus not liable to make payment of monthly rentals in terms Tripartite agreement and the amount already paid by us will be treated as Advance and we reserve the right to recover the same from you." From the above, it can safely be concluded that possession of the property was not taken by the tenant. Hence, the monies received by the assesses will not take the character of rentals and this is further strengthened by the relevant clause of the modified tenancy agreement herein. The monies received shall get converted as an advance and repayable by the assesses. Hence, it does not take the character of income. 2.8 The assessees have received the monies subject to fulfillment of certain conditions on its part. These conditions ( i.e. completion of the building construction) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances in this case by deleting the addition of 'fresh share capital' of Rs. 25,55,000/- as 'Unexplained cash credit' by entertaining & admitting fresh evidences violating the provisions of Rule 46A of I.T Rules. 3.2. The Learned DR argued that no details of shareholders were produced by the assesses before the Learned AO and accordingly had not satisfied the three necessary ingredients of section 68 of the Act viz identity, genuineness and creditworthiness of the shareholders. In response to this, the Learned AR argued that the entire details of shareholders were given before the Learned CITA who in turn called for a remand report from the Learned AO. The Learned AO also obtained direct confirmations from the shareholders by calling for information u/s 133(6) of the Act. He argued that the Learned AO had actually accepted the receipts as genuine and no adverse comments were given regarding the same. 3.3. We have heard the rival submissions and perused the materials available on record. We find that the Learned AO had clearly stated in his remand report dated 4.5.2012 that from the documents and papers filed and subsequent enquiries conducted by him in remand proceedings, the ..... 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