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M/s. Fairland Development (P) Ltd. Kolkata Versus Commissioner of Income Tax, Kolkata-I, Kolkata

2016 (1) TMI 1103 - ITAT KOLKATA

Revision u/s 263 - whether in the present case the AO made the necessary enquiry with regard to the money received by the assessee from prospective buyers of the developed land? - Held that:- O had conducted inquiries with regard to the money receipt by the assessee from prospective buyers of developed land. The CIT therefore could not have invoked the jurisdiction u/s 263 of the Act on the ground that there was lack of inquiry on the part of the AO - Decided in favour of assessee. - ITA No. 786 .....

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of land development and sale. It filed the return of income for A.Y.2007-08 declaring total income at Rs.NIL. Order of assessment was passed on 30.12.2009 u/s 143(3) of the Act in which the total income of the assessee was assessed at ₹ 48,78,240/-. 3. The CIT in exercise of his powers u/s 263 of the Act was of the view that the previous year relevant to A.Y.2007-08 was the first year of the business of the assessee. The CIT found that the assessee had invested a sum of ₹ .....

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completing the assessment had not called for the details of such huge liabilities nor had he made any inquiry in respect of advance received from the plot holders. According to CIT, it is unlikely that in the first year of the business, the assessee would receive advance from plot holders in such huge quantity. He, therefore, concluded that AO s order was erroneous and prejudicial to the interest of the revenue as no proper inquiry had been made with regard to the source of investment in land pu .....

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his mind after proper inquiry and concluded the assessment. The assessee pointed out that with regard to the liability of ₹ 1.23 crores received from prospective buyers of the developed land the agreement with the land holders were duly examined by the AO on a test check basis. It was also pointed out that in the case of a company which was the first year of the operation there cannot be any addition on account of unexplained cash credit. In this regard the assessee placed reliance on the .....

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668/- in land purchase and development during the year, but the assessee's own fund was ₹ 2 Lakh only. Besides, unsecured loan of ₹ 1,60,600/- only is reflected in the accounts. It is apparent that the investment was made mainly out of money received from prospective buyers of developed land in project from the assessee company, which is reflected as liability towards 'land holders' of ₹ 1.23 crore included in Current Liabilities in the Balance Sheet. But no details .....

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quire and verify about the sources of the investment in land/land development made by the assessee company during the year. But there is nothing on record in this respect nor any enquiry/verification was made during the assessment. CIT accordingly set aside the order of assessment with the direction to frame assessment after making thorough enquiry regarding the source of funds claimed as advance by the assessee received from prospective plot purchasers and also to examine their iden .....

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ad specifically issued notice u/s 142(1) of the Act dated 29.09.2009 in which he had specifically called upon the assessee to submit the names and addresses, amount of payment, evidence of parties who have advanced for land. The AO also called upon the evidence in the form of plot holder agreement. The assessee had filed a list of prospective purchases of the plot who had given advances together with their addresses the same was filed before the AO during the proceedings u/s 143(3) of the Act. T .....

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was located. It is further seen that on 01.10.2009 order sheet entry of proceedings before AO clearly reveals that the AO also made enquiries with regard to the bank accounts of the assessee and even deputed an inspector to get the reply to notice issued u/s 133(6) of the Act issued by the AO. 8. In the light of the above enquiries made by the AO before concluding the assessment proceedings it cannot be said that the AO failed to make proper enquiries with regard to the money receive .....

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