TMI Blog2017 (5) TMI 1208X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT(A)-28, New Delhi. 2. Following grounds have been raised in this appeal: 1. That the learned Commissioner of Income Tax (Appeals)-28, New Delhi has erred both in law and on facts in confirming an addition of ₹ 10,03,46,128/- representing the alleged unexplained cash credit under section 68 of the Act. 1.1 That while confirming the above addition, the learned Commissioner of Income Tax (Appeals) has failed to appreciate the factual substratum of the case, statutory provisions of law and as such, addition so sustained is highly misconceived, totally arbitrary, wholly unjustified and therefore, unsustainable. 1.2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that sum of ₹ 10,03,46,128/- represented advances received by the appellant company against sale of plots through marketing agents from various buyers by account payee cheques and as such the sum received could not be regarded as unexplained cash credit u/s 68 of the Act. 1.3 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that sum received by the appellant was under a memorandum of understanding with M/s Mahamedha Bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the Act. Later on, the case was selected for scrutiny. During the course of assessment proceedings, the AO noticed from the balance sheet of the assessee that it had shown advance booking amount received for ₹ 13,22,23,000/- as on 31.03.2010 and the amount shown as opening balance was ₹ 3,18,76,872/-, as such there was an increase of ₹ 10,03,46,128/-. The AO asked the assessee to file detail of persons with name and address from whom this amount was received and also the description of the unit for which this advance booking was received. The assessee vide reply dated 10.12.2012 furnished the list of persons from whom booking amount had been received containing the name, addresses and amount received. The assessee also filed copy of the site plan of the project. The AO again asked the assessee to file agreement made with customers for taking advance from them with the portion of stock marked for sale and the opening balance of customer advance received. In response the assessee furnished the location of the stock in trade and copies of application forms of persons from whom advances were received. The AO again asked the assessee to explain as to why the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directly or through appointment of any of the agent to nourish funds for development mid construction of the project. The assessee company had already appointed M/s Mahamedha Builders, A-30, Ashok Nagar, Ghaziabad vide agreement dated 19.02.2007 in this respect of act as an marketing agent giving it the authority to solicited customers, collect booking amount and doing publicity of the project in the name of Mahamedha City . The copy of agreement is enclosed, which later on had been applied for marketing the products of Group housing project. An agreement dated 16.03.2007 had also been executed between the assessee company, Seven Heaven Developers Private Limited and it sister concern Superior Associates (copy enclosed) to book and allot 85 plots of different customers from whom booking amount has initially been collected by the M/s Seven Heaven Developers Private Limited and its sister concern M/s Superior Associates. The money so collected by M/s Seven Heaven Developers Private Limited and its sister concern M/s Superior Associates from the buyers of 85 plots had been paid back on behalf of the said buyers to the assessee company and other companies of the same group. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act were issued to four of the applicants. Among this, reply was received from Ms. Asha Prem Nath denying any transaction with the assessee company. The relevant portion of her reply is being reproduced here - ..that M/s. Stride Infrastructure is not known to me. The name of this company I come to know through your notice only. I further declare that I have never done any transaction with this company during my lifetime... It falls to my understanding that how could an applicant have invested an amount through an agent/broker without being aware of the name of the company or any group of consortium in which the company was also a part of, for giving advance for purchase of plot? Hence on the above stated facts, the agreement copy filed between the assessee and M/s Mahamedha Builders is not found to be genuine and for the purpose it is stated to be for. Further the assessee vide the said letter filed photocopy of supplementary agreement between itself and M/s. Mahamedha Estates private Limited as one party and M/s. Seven Heavens Developers Private Limited dated 16.03.2007 which states that it will provide land in form of plots of 200 sq yards for 85 plots to the second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any layout plan. 6. Thereafter, the AO asked the assessee to show cause that as to why the booking amount received was not to be treated unexplained credit entry. In response the assessee submitted as under: The letters/notices and other documents sought as above said, are very much necessary for the assessee to give correct reply in the matter. The assessee has placed reliance on following case law wherein the Hon ble Punjab Haryana High Court has held that the Assessing Authority is duly bound to disclose all the evidences collected by him to give the assessee a reasonable opportunity of rebutting it. Chiranji Lal Steel Rolling Mills Vs CIT Punjab (1970) 84 ITR 222 (P H). 7. However, the AO did not find merit in the submissions of the assessee and made the addition of ₹ 10,03,46,128/- by observing as under: I have carefully gone through the submission of the assessee and also to the documents collected in this regard. The contention of the assessee was that burden of the assessee in respect of the advance received against booking from the two parties stands discharged and therefore no addition is tenable. Further that once the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Shankar Industries vs. CIT(Cal) 114 ITR 689 5. CIT Vs Presicion Fianance Private Limited (Cal) 208 ITR 465 Hence the amount of ₹ 10,03,46,128/- is treated as income of the assessee as unexplained credit as per the provisions of section 68 of the Act in view of the detailed discussion above. 8. Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted that the assessee initially started its business with the object of development of land owned by it to do the sale of the said developed land by splitting in plots of different sizes. Therefore, the assessee applied with HPDA for necessary approval of the proposed layout of the land which had been approved by HPDA as on 15.02.2007. It was further stated that the assessee company appointed M/s Mahamedha Builders as marketing agent for booking of plots/flats and later on three more companies, namely, M/s Nutech Buildcon P Ltd., M/s Nuage Buildcon P Ltd. and M/s Gain Infrastructure Pvt. Ltd. to the same group of companies have land at village Tarapur, Hapur, joined hands with the assessee to establish a group housing project over the land owned by them and to do this, all these fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avits of the proprietors of the aforesaid firms, copy of agreement and supplementary agreement between the parties, list of customers from whom booking amount had been collected by the two agents. It was accordingly submitted that the burden of the assessee in respect of the advance against booking from the two parties stood discharged and therefore, addition was not tenable. It was also stated that the amount had been received by account payee cheques and creditors had duly confirmed the transactions, no adverse inference could have been drawn. 10. The ld. CIT(A), however, did not find merit in the submissions of the assessee and sustained the addition made by the AO by observing in paras 3.4 to 3.7 of the impugned order which is reproduced verbatim as under: 3.4 In this case under consideration, it was noted by the assessing officer that in the balance sheet of the assessee company there is increase in current liabilities of ₹ 10,03,46,128/ on account of advance received from customers. Accordingly the assessee was asked to furnish necessary details as per questionnaire dated 23.05.2012 and subsequent noting, In response the assessee furnished copy of the ledger a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly during the course of the appellate proceeding the appellant was asked to furnish the copy of account of the customers in the books of account of the booking agents. However even after being given sufficient opportunity neither the copy of account of the customers in the books of account of the booking agents were filed nor the details of the amount received from the customers were furnished. 3.6 The filing of an affidavit from the proprietors of related concerns (1) M/s Mahamedha Builders and M/s Super Associates that they have received booking amount in question i.e. ₹ 4,75,57,230/ ₹ 5,06,90,000/ from the customers does not established the genuineness of the transactions. In the case of Krishan Kumar Jhamb vs. I.T.O High Court of Punjab Harayna (2009) 179 Taxman 141 has opined that in case of amount received in cash, on stated execution of agreements for sale of shops, same does not stand proved merely by filing of affidavits of payers, when those could not be produced for authentication; Similarly production of agreement to sale, incomplete and unsigned does not prove assessee's version. Moreover in the case under consideration it is apparent that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition of ₹ 10,03,46,128/- made by the Assessing Officer on account of unexplained cash credit under section 68 of the Act is confirmed. 11. Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and it was further submitted that the assessee had received the advance from the customers against sale of plots and had shown duly in its balance sheet in earlier years which has been accepted by the department and that there was no cessation of liability. Therefore, the addition made by the AO and sustained by the ld. CIT(A) was not justified. It was further submitted that the assessee furnished the confirmation from the concerned persons and appointed two firms as marketing agents, the said firms, namely, M/s Mahamedha Builders and M/s Superior Associates were duly assessed to tax and furnished copy of acknowledgment of their respective returns of income (copies of which are placed at page nos. 60 and 61 of the assessee s paper book). It was further submitted that the proprietors of the aforesaid firms furnished their affidavits and stated in the said affidavits that the advances collected from customers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affidavit read as under: I, Raj Singh Bhati S/o Late Sh. Bhim Singh, aged 44 years, R/o A-30/31, Ashok Nagar, Ghaziabad, do hereby solemnly affirm and declare as under:- 1. That I am proprietor of M/s Mahamedha Builders, A- 30-31, Ashok Nagar, Ghaziabad. 2. That M/s Mahamedha Builders had entered into an agreement on dated 19-02-2007 with M/s Stride Infrastructure (P) Ltd. 100 -K, Basement, Milap Bhawan, Bahadurshah Zaffar Marg, I.P. Estate, New Delhi for collecting advances from customers against booking of plots/flats. 3. That the details of advances collected by M/s Mahamedha Builders from customers against booking of plots/flats and remitted to M/s Stride Infrastructure (P) Ltd, is as under: Sr. No. Assessment Year Amount (Rs.) i) 2007-08 17,28,000/- ii) 2008-09 2,90,56,000/- iii) 2009-10 10,92,872/- iv) 2010-11 4,84,06,128/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk accounts and thereafter remitted to M/s Stride Infrastructure (P) ltd. 4. That my PAN is BDLPS1201G Sd/- DEPONENT VERIFICATION I, the above named deponent do hereby verify that the contents of the above affidavit in para 1 to 4 are true and correct to the best of my knowledge and belief. Verified today the 15th day of March 2013 at Ghaziabad. Sd/- DEPONENT The contents of the aforesaid affidavit are also not rebutted by bringing cogent material on record. 15. In the present case, it appears that neither the AO nor the ld. CIT(A) appreciated the facts in right perspective and did not make the further inquiry from those persons who furnished the confirmations and affidavits stating therein that the impugned amount was given to the assessee and the said amount was received by them from different customers from whom booking amount for plots/flats had been collected. We, therefore, considering the totality of the facts deem it appropriate to set aside this issue back to the file of the AO to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. 16. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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