INCOME TAX OFFICER WARD-34(3)(2) , MUMBAI vs. OMEGA DEVELOPERS , MUMBAI

The assessee by filing the present appeal, sought to set aside the impugned order dated 14.03.2023 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment year 2014-15 on the grounds inter-alia that :- “1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made by the AO, without appreciating the fact that that the same was made in absence of requisite submission by the assessee during the assessment proceedings.? 2 M/s. Omega Developers

The assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has deleted the addition by allowing the appeal. Feeling aggrieved with the impugned order passed by the Ld. CIT(A) the Revenue has come up before the Tribunal by way of filing present appeal.

Notice of the appeal was issued to the assessee on 20.06.2023 which was received back undelivered with the remarks that “assessee has left the place of his last address”. Perusal of the form No.36 shows that the notice was duly sent on the given address and no fresh address, if any, was intimated by the assessee. In these circumstances the appeal cannot be kept pending and hence the Bench has decided to dispose of the same on the basis of material available on record with the assistance of the Ld. D.R. for the Revenue. 3 M/s. Omega Developers

We have heard the Ld. D.R. for the Revenue, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and case law relied upon.

The sole issue raised by the Revenue by filing the present appeal is: “As to whether the Ld. CIT(A) has erred in deleting the addition of Rs.23,48,66,766/- made by the AO as unexplained cash credit of the assessee under section 68 of the Act which the assessee has introduced as capital during the under consideration?”

The Ld. CIT(A) decided the issue in favour of the assessee after thrashing the facts in detail, by calling the remand report from the AO by returning following findings: “5.1 The addition made by the Assessing Officer, submissions of the appellant and the remand report of the AO have been perused. It is seen that the appellant introduced capital in the firm which was added as income of the firm in the absence of filing of details called for by the AO. No return of income for the earlier and later years was filed by the appellant. As per the Remand Report, there are no transaction in the bank account of the firm for the year and even for earlier years. The balance sheet prepared and submitted with return of income is fabricated and unreliable. The appellant firm had assigned the slum redevelopment authority project to M/s. SG Enterprises vide assignment deed dated 09.09.2010 and the expenditure on the project has been incurred by them as admitted by the partner of M/s SGF Enterprises, Mr. Shaik Ghulam Farid in his statement recorded u/s.131 before the AO on 10.11.2017 amounting to Rs.23.48 crore between FY 2009-10 to FY 2015-16. This amount has been claimed by the firm in its balance sheet in view of the dispute with M/s. SGF to present before SRA. In view of the dispute with M/s. SGF and which reached the Bombay High Court the claim of expenditure by M/s. SGF is found to be validated by the assessment order passed for AY 2010-11 dated 28.12.2017. The AO in his remand report noted that there were no unexplained credits irrespective of the claim made in the Balance Sheet, as the appellant didn't have any books of account for AY 2012- 13 and AY 2014-15. Despite the above findings by the AO in the remand report was again of the opinion that the addition is still sustainable in view of the claim made in the return which is not substantiated. 4 M/s. Omega Developers

The Ld. D.R. for the Revenue challenging the impugned order passed by the Ld. CIT(A) contended that since no details/explanation has been filed by the assessee the addition has been rightly made by the AO.

However, we have noticed from the impugned order passed by the Ld. CIT(A) that in the remand report it is duly accepted by the AO that no transaction took place during the year under consideration which proves that the impugned addition of Rs.23.48 crore is incorrect. The assessee has brought on record copies of bank statement maintained with Central Bank of India rather the assessee has virtually done no business dealings since June 2011. It is also a fact brought on record during remand proceedings that there was a dispute between assessee and M/s. SGF Enterprises pending before the Hon’ble Bombay High Court wherein the claim of expenditure by M/s. SGF Enterprises is validated by the assessment order passed for A.Y. 2010-11 vide order dated 28.12.2017.

Since it is proved during the remand proceedings that when the balance sheet filed by the assessee has been found to be fabricated and M/s. SGF Enterprises has incurred all the expenditure as an assigned developers which is reflected in its books of account the addition made by the AO is not sustainable. No doubt the assessee has introduced capital in the form which the 5 M/s. Omega Developers AO has added as income only in the absence of filing details called for by the AO. However when as per remand report there are no transactions in the bank account of the firm for the year under consideration and in the earlier years the addition made by the AO is not sustainable and has been rightly deleted by the Ld. CIT(A). So finding no illegality or perversity in the impugned order passed by the Ld. CIT(A) the appeal filed by the Revenue is dismissed.