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Income Tax Appellate Tribunal, DELHI BENCH ‘F’ NEW DLEHI
Before: SHRI N.K. CHOUDHRY & DR. B.R.R. KUMAR
This appeal has been preferred by the Revenue Department against the order dated 02.03.2022, impugned herein, passed by the learned Commissioner of Income-tax (Appeals)- 4, Kanpur (in short “Ld. Commissioner”), u/s. 250(6) of the Income-tax Act, 1961 (in short ‘the Act’) for the assessment year 2012-13.
In the instant case, proceedings u/s. 147 of the Act have been initiated after recording reasons which resulted into issuance of notice u/s. 148 of the Act on dated 29.03.2019, in response to which the Assessee filed its objections for reopening of the assessment proceedings u/s. 148 of the Act, which was disposed of vide office letter dated 13.12.2019 by the Assessing Officer.
The Assessee in response to notice u/s. 148 of the Act filed its return of income on dated 21.11.2019 whereby an income of Rs.45,52,330/- for the year under consideration was declared. Subsequently, the Assessing Officer issued the statutory notice u/s. 142(1) of the Act. Thereafter, show cause notice dated 12.11.2019 was issued, however, the Assessee made no compliance. Therefore, in the constrained circumstances, the Assessing Officer passed the assessment order as exparte u/s. 144 of the Act on the basis of the material available on record and by observing that the Assessee was required to submit books of accounts as well as computation to verify whether the income of Rs.3,29,66,160/- which was accrued and duly received through cheques from M/s. Shubhkamna Buildtech Pvt. Ltd., as the Assessee has given no explanation regarding not mentioning the above transaction of Rs.3,29,66,160/- in the audit report (if the realization of the above money is suspicious or doubtful therefore, the same has been included in the audit report of the Assessee). The AO further held that therefore, R.3,29,66,160/- is treated as the income of the Assessee u/s. 69A of the Act and section 115BBE will be applied accordingly.
The Assessee being aggrieved against the said addition preferred first appeal before the ld. Commissioner and claimed that in the instant case, the Assessing Officer found an information in the form of agreement allegedly executed between the company namely, M/s. Shubhkamna Buildtech Pvt. Ltd. according to which the Assessee was to get commission to the tune of Rs.4,85,00,000/- on account of flats sold through the Assessee to various persons/allottees by the builder. According to the agreement, it was a condition that once the entire service/payment made by the allottees, then the Assessee will get the commission. As the allotments made to the prospective buyers/allottees have not cultivated into final result, as the said company failed to deliver the possession of the said flats to the allottees and stated to have refunded their deposits, therefore, the agreement between the Assessee and the said company was never honoured by the company. It is also a fact that the Assessee company has neither paid the service tax of Rs.49,95,500/- on the amount of commission of Rs.4,85,00,000/- nor deducted the tax at source to the tune of Rs.53,39,550/- on the amount of total of Rs.5,34,95,500/-. The Assessee in order to substantiate its claim also submitted that the cheques were never presented and realized as per certificate given by the bank, i.e., Axis Bank Ltd. Indirapuram.
3.1 The AO by considering the aforesaid peculiar facts and circumstances observed that vide agreement dated 04.03.2012 between the Assessee (Proprietor of M/s. Balaji Properties) and M/s. Shubhkamna Buildtech Pvt. Ltd., final payment against the sale of 54 flats was received in cheques by the Assessee, on which the Assessee has not given any explanation regarding not mentioning of the transaction of Rs.3,29,66,160/- in the audit report. The AO further observed that this income has accrued and if the realization of the same was suspicious or doubtful, the same would have been included in the audit report. Therefore, this amount of Rs.3,29,66,160/- has been treated as deemed income u/s. 69A of the Act and taxed u/s. 115BBE of the act.
3.2 The ld. Commissioner thoroughly considering the peculiar facts and circumstances of the case specifically to the effect that certificate given by the bank shows that said cheques which pertain to the year under consideration were never presented or realised. The Assessee was served a notice by the said company that the dealing of allotment of flats was cancelled by the allottees and they had demanded their money back, which is stated to have been later paid by the company. Since the Assessee did not ever present the cheque to the bank, there is no question of realization of the cheques. In the matter of mentioning of this amount of Rs.3,29,66,160/- in 3CD report, the cheques of this amount were taken as abundant precaution to secure the interests and not as advance/income and hence, the Assessee was not under obligation to report this alleged income in form 3CB and 3CD, as there is no appropriate column to disclose such cheques which are taken (to secure the interests) in lieu of incomplete and unfulfilled agreement. Further, vide letter dated 31.05.2012, M/s. Shubhkamna Buildtech Pvt. Ltd. has asked for not depositing the issued cheques handed over vide agreement dated 04.03.2012 and to return the same. In this case, the argument of the ld. AR is understandable that if this income is considered as accrued, the claim of the Assessee is that the same became a bad debt and hence, needs to be allowed.
The ld. Commissioner further observed that entire project came into dispute and allottees filed court cases against the builder and this fact of non construction and non actual handing over of the flats can be verified from the field. The claim of the Assessee is that the builder could not construct the flats under consideration and hence the agreements with the buyers and the broker were terminated, was required to be examined by the AO, since this claim shifts the onus on the Assessing Officer before making any addition in this regard. The ld. Commissioner ultimately deleted the addition of Rs.3,29,66,160/- accrued in the hands of the appellant.
We have heard the parties and given thoughtful consideration to the peculiar facts and circumstances of the case. The Assessee before us claimed that the cheques on the basis of which the addition has been made, were never presented in its bank account and the said company i.e., M/s. Shubhkamna Buildtech Pvt. Ltd. has also asked the Assessee to return un- presented cheques.
In our considered view as the parties also consented to, the following facts needs to be examined:
(i) Whether the Assessee has returned the cheques to the said company or not; (ii) Whether the Assessee has taken any amount in lieu of returning the said cheques; (iii) Whether the Assessee has taken any part payment on account of commission/brokerage in any other form.
We clarify that the primary onus would be on the Assessee , however the Assessing Officer will take appropriate action in accordance with law, to summon the said company, i.e., M/s. Shubhkamna Buildtech Pvt. Ltd. and/or any other person to unearth the real transactions.
In the result, the appeal filed by the Revenue Department stands allowed for statistical purposes.
Order pronounced in the open court on 01/02/2023.