9911796707
TMI Blog2021 (7) TMI 1404X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. Asst. Commissioner of Income Tax, Circle 3(1)(1), Mumbai (hereinafter referred to as ld. AO). 2. The Revenue has raised the following grounds:- "i. Whether, on the facts and circumstances of the case and in law, the Ld,CIT(A) was correct in accepting the proof of payments submitted by the assessee before him which were never produced before the AO in contravention to the provisions of' Rule 46A of the Income Tax Rules, 1962? ii. Whether, on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in holding that the AO has not established that the assessee had actually written off the outstanding liabilities in the books of account without appreciating that mere reflection of liability in the books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the vendor i.e. the assessee shall have option to terminate the MOU and earnest money paid by the purchaser shall be refunded without any interest. The said MOU was cancelled by the assessee vide letter dated 13/09/2008 as purchaser i.e. Art Advertising and Marketing (India) Pvt. Ltd., expressed their inability to complete the transaction. The assessee started repaying earnest money as per MOU from F.Y.2010-11. The balance outstanding as on 31/03/2015 payable by the assessee to Art Advertising and Marketing (India) Pvt. Ltd., was Rs.1,66,42,608/-. The assessee had also made payments to the said party subsequent to 31/3/2015 and that the balance outstanding as on 31/03/2017 was Rs.32,87,498.15. The ld. AO observed that the liability of Rs.1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the materials available on record. It is not in dispute that the sum which is the subject matter of addition was nothing but advance received by the assessee for sale of his flat originally pursuant to MOU entered into with the purchaser. It is not in dispute that since the said purchaser expressed his inability to pay the remaining part of the consideration for the property, the MOU was cancelled by the assessee. As per the said MOU and pursuant to its cancellation, the assessee is bound to refund the advance received on sale of property without interest to the said purchaser. The assessee had explained that since he had no sufficient funds to refund the advance to the party, the same were refunded in installments. Accordingly, as agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med any deduction in the earlier years while creating this liability. Hence, the basic pre-requisite of invoking the provisions of Section 41(1) of the Act had not been fulfilled in the instant case, On this count also, the action of the ld. AO deserves to be dismissed and action of the ld. CIT(A) deserves to be upheld. The various case laws relied upon by the ld. AO in his assessment order are distinguishable and not germane to the facts on record before us. 5.1. We also find that Revenue has raised in one of the grounds that there was a violation of Rule 46A of the Income Tax Rules (in short "Rules‟) wherein the ld. CIT(A) had merely accepted the payments subsequently made by the assessee to Art Advertising and Marketing (India) Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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