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Income Tax Appellate Tribunal, ‘SMC’ BENCH VARANASI
BEFORE SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER (A.Y: 2014-15) M/s Royal Symbol Real Vs. Income Tax Officer, EstateAndAgrotech Ward 2(5), Corporation Ltd, Ballia, H.No.181KH,Ward No.14, Uttar Pradesh. Town Hall, Kasim Bazar, Ballia-277001. Uttar Pradesh PAN/GIR No. : AAFCR 0644D Appellant .. Respondent Appellant by : Shri O.P.Shukla,Advocate.AR Respondent by : Shri .A.K. Singh.DR Date of Hearing 11.04.2023 Date of Pronouncement 13.04.2023 आदेश / O R D E R
PER PAVAN KUMAR GADALE JM:
The assessee has filed the appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi/CIT(A) passed u/s. 250 of the Income Tax Act, 1961.The assessee has raised the following grounds of appeal: Royal Symbol Real Estate - 2 - “1. Because the Ld Commissioner of Income Tax (A) NFAC was not justified to pass an order partly and direct the AO to pass appropriate by calculation of amount of penalty on amount of Rs 245000.00 though the Hon'ble ITAT has already set aside the entire assessment order and CIT (A) order vide Para No 2 nd 5.
2. Because the order passed by the Ld. CIT(A) is erroneous, bad in law and on facts and partly allowed of the appeal for imposition of penalty on amount of Rs 245000.00 and also AO has passed the order after the order of Hon’ble ITAT and has duly been accepted the return of income.
3. Because the order passed by the Ld. CIT (A) by ignoring the facts of the case though in the balance sheet the amount of Rs. 13010106.00 including Rs 14,00,000 has mentioned under the head Loans and Advance. But the ld. Comissioner of Income Tax (A) has treated the said amount u/s 69 of the Income tax act without any information and examine books of accounts
4. Because the appellant craves for a right to raise any additional ground during the course of hearing of the case.
5. Because the order passed by the Ld. Commissioner of Income tax (A) is erroneous ad in law and on facts and is liable to be quashed.”
ITA No. 34/Vns/2022 Royal Symbol Real Estate - 3 - 2. The Ld.AR submitted that the assessee has raised the additional ground of appeal and is not pressed and made endorsement. Accordingly, the additional ground of appeal raised by the assessee is withdrawn and dismissed.
3. The brief facts of the case are that the assessee company is engaged in the business of real estate and filed the return of income on 9-5-2015 for the AY 2014- 15 disclosing a total loss of Rs.9,27,310/-. Subsequently, the case was selected for scrutiny and notice u/s. 143(2) and 142(1) of the Act was issued. In compliance to notice, the ld. AR of the assessee and the director of the assesee company appeared and filed the details. In the assessment proceedings, the Assessing Officer (AO) observed that assessee has obtained unsecured loan from M/s Royal Symbol Farming Pvt Ltd and the details were filed. The AO was not satisfied with the information and made the addition of Rs.14,00,000/-. Further, the Assessing Officer found that there are some credit entries in the bank account aggregating to Rs.2,45,000/- though the assessee has raised the contentions that the debit entries should also be considered but the AO has Royal Symbol Real Estate - 4 - made the addition of Rs.2,45,000/- and assessed the total income of Rs.7,17,690/- and passed the order U/sec143(3) of the Act.
4. Aggrieved by the order of the Assessing Officer, the assessee has filed an appeal with the CIT(A), whereas the ld. CIT(A) has granted relief with respect to addition of unsecured loan of Rs.14,00,000/- as against the aggregate additions by the Assessing Officer of Rs.16,45,000/- and at the same time the CIT(A) has made enhancement of income to the extent of Rs.92,45,500/- in respect of cash deposits in Indian Bank and Canara Bank accounts of the assessee and partly allowed the assessee’s appeal. Aggrieved by the order of the ld. CIT(A), the assessee has filed an appeal with the Hon’ble Tribunal. Whereas the Hon’ble Tribunal has considered the facts and circumstances and has restored the matter to the AO with the directions to examine the claims of the assesee. The Assessing Officer subsequently, in compliance to the directions of Hon’ble ITAT has issued notice u/s. 142(1) of the Act and the assessee’s company has submitted the copy of the cash book and explanations in respect of cash deposits in the bank accounts. The ITA No. 34/Vns/2022 Royal Symbol Real Estate - 5 - Assessing Officer found the assesee’s explanations are satisfactory and passed the assessment order u/s. 143(3) r.w.s. 254 of the Act dated29.09.2021 determining the total loss of Rs.6,83,308/-.The AO has initiated penalty proceedings u/s. 271(1)(c) of the Act and, in the penalty proceedings the AO has considered the additions made in the original assessment u/s. 143(3) of the Act aggregating to Rs.16,45,000/- The assessee has filed the explanations on the show cause notice issued but the AO was not satisfied with the explanations and levied a penalty of Rs.5,09,000/- passed order u/s. 271(1)(c) of the Act dated 28.6.2017.
5. Aggrieved by the penalty order, the assessee has filed an appeal with the CIT(A). whereas the CIT(A) has considered the grounds of appeal
, findings of the A.O, submissions of the assessee, decision of the Honble Tribunal .The CIT(A) found that the assessee has got relief in respect of addition of Rs.14,00,000/- and therefore observed that no penalty can be levied on the part relief granted to the assessee and directed the A.O. to calculate the penalty on the remaining amount of addition sustained and partly allowed the assessee appeal. Aggrieved by the order of the CIT(A), Royal Symbol Real Estate - 6 - the assessee has filed an appeal with the Hon’ble Tribunal.
6. At the time of hearing, ld. AR submitted that the CIT(A) has erred in directing the AO to levy the penalty on amount sustained to the extent of Rs.2,45,000/- and whereas, the Honble Tribunal has set aside the matter to the file of the Assessing Officer to examine the claims. The CIT(A) has dealt on these facts in the order but erred in directing the A.O to levy penalty on the addition sustained. The Ld.AR of the assessee has made the submissions before the Hon’ble Tribunal that the assessee was engaged in the real estate business and has obtained advances from the parties against purchases and has disclosed the said amount in Rs.1,30,10,106/- under Loans and Advances. The Ld.AR has substantiated the submissions with the factual paper book and judicial decisions and prayed for allowing the assessee’s appeal.
7. Contra, the ld. DR submitted that the assessee has contested on the enhancement of income and not addition of Rs.2,45,000/- before the Honble Tribunal and was granted relief and the CIT(A) was correct in directing the A.O. to levy penalty on remaining ITA No. 34/Vns/2022 Royal Symbol Real Estate - 7 - sustained amount and the Ld.DR supported the order of the CIT(A).
We have heard the rival submissions and perused the material on record. The sole matrix of the disputed issue envisaged by the ld. AR that the ld. CIT(A) has erred in directing the AO to levy penalty on amount of Rs.2,45,000/-. The Ld.AR emphasized that the said amount is included in the aggregate amount of Rs. 1,301,0106/- as Loans and Advances disclosed in the balance sheet. The contentions of the Ld.AR that the Honble Tribunal has considered the facts of the enhancement of income and disclosure of Loans and advances of Rs1,30,10,106/- and the matter was set aside to the file of the Assessing Officer to examine the claims. At this juncture, we consider it appropriate to refer to the observations of the Hon’ble Tribunal in dated 17-12-2019 at Page 2 Para 2 to Para 6 of the order read as under: “2. At the outset, the ld. AR submitted that the Assessing Officer during the assessment proceedings had made two additions of Rs.14,00,000/- and Rs.2,45,000/- respectively, out of which, the ld. CIT(A) had deleted the addition of Rs.14,00,000/- and had confirmed the addition of Rs.2,45,000/-. It was further submitted that the ld. CIT(A) has enhanced the income of the assessee by Royal Symbol Real Estate - 8 - an amount of Rs.92,44,500/- on the basis of deposits in Indian Bank and in Canera Bank maintained by the assessee. It was submitted that on receipt of notice of enhancement, the assessee had filed complete reply with regard to propose enhancement and had submitted that the deposits in the Bank were made on account of advances received by it against sale of properties on various dates and from various parties. It was submitted that ld. CIT(A) has noted the submission of the assessee at Page 13 of his order, however, he has rejected the contentions of the assessee by holding that the assessee in its balance sheet had not reflected any sundry creditors to prove that advances were received. The ld. AR further submitted that the assessee had declared such advances in the balance sheet under the heading long term capital liability, which the ld. CIT(A) had failed to appreciate. It was submitted that the ld. CIT(A), though has noted this argument of the assessee in his order at Page 15, but did not accept the contention of assessee as in his opinion, the assessee had failed to produce the persons from whom the advances were received and had failed to produce the books of account and receipts issued to such persons. It was submitted by ld. AR that it is correct on the part of ld. CIT(A) to hold that on the final date of hearing none had attended but in the interest of substantial justice, it was prayed that the matter may be set aside to AO for re- examination of the entire issue.
The ld. DR, on the other hand, heavily placed reliance on the orders of the authorities below.
4. We have heard the rival parties and have gone through the material placed on record. We find that Royal Symbol Real Estate - 9 - the ld. CIT(A) has given notice of enhancement for various deposits made in the bank account. The assessee in its reply submitted that the amounts of deposits were received on account of advances against sale of various properties. The ld. CIT(A) noted that the sundry creditors were not outstanding and other liabilities were not outstanding therefore, he disagreed with the contention of the assessee and directed the assessee to produce books of account and to produce the persons from whom the advances were received. We further find that on the final date of hearing none attended and therefore, the ld. CIT(A) dismissed the claim of the assessee by holding as under: “12. On the date of compliance, none attended, nor any request for adjournment were filed. Thus the case is decided on the basis of material available on record. It is seen that the appellant has deposited cash of Rs.53,97,000/- in bank account maintained with Indian Bank and Rs.38,47,500/- in bank account maintained with Canara Bank. These amounts were not explained from balance sheet of profit and loss account. The profit and loss accounts shows receipt from operations as NIL. Further the balance sheet shows sundry creditors payable as NIL and other creditors at Rs.20,000/- only. When the appellant was required to explain the source of cash deposit, he tried to explain the same as receipt of advance against sale of some property and it has was claimed that in the balance sheet, this amount was shows as Long Term Borrowings. When the appellant was requested to attend the office personally as well as to produced the persons ITA No. 34/Vns/2022 Royal Symbol Real Estate - 10 - from whom the advance was allegedly received and also to produce books of accounts and receipts issued to such person from whom the advances were allegedly received, no compliance was made. The appellant has taken entirely a new stand to explain the source of cash deposits in bank accounts which was not satisfactorily explained either from the balance sheet or profit and loss account. Even during the course of appellate proceedings, the submissions made by the appellant are clearly an afterthought and no evidence in support of this new claim could be filed. No receipts from the person were filed. Further the appellant did not have any land or other property with it, against which the advance could have possibly been received. Thus it is held that the source of cash deposit in the bank account is not explained and accordingly, the income of the appellant is enhanced to the extent of deposits of cash in the bank account and the cash deposit to the bank accounts is added to the income of the appellant u/s 69 of the IT Act. The income of the appellant is enhanced to the extent of Rs.92,44,500/- (Rs.53,97,000/- in bank account maintained with Indian bank and Rs.38,47,500/-) in bank account maintained with Canara Bank.”
The above findings of ld. CIT(A) clearly demonstrate that the addition was sustained because of non cooperation by the assessee as it had not appeared before him to clarify the amount of advances received by it and clarified under the heading long term borrowings. Therefore, in the interest of substantial justice, we feel it Royal Symbol Real Estate - 11 - appropriate that the matter be set aside to the Assessing Officer to examine the claim of the assessee. We order accordingly. The AO is directed to examine the claim of the assessee after giving sufficient opportunity of being heard. In view of the above, the appeal is allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.”
The contentions of the Ld. AR that the assessee has contested on the sustained addition of Rs.2,45,000/ and the enhancement of income of Rs.92,45,500/- which are part of Loans and advances received from customers for property transactions disclosed in the balance sheet. The Ld. AR demonstrated the copy of the audited balance sheet, in particular “Non Current Liabilities” where the assessee has disclosed the Loans and advances of Rs.1,30,10,106/- under schedule C “Long Term Borrowings”. Further the Ld. AR referred to the submissions made on enhancement of income before the CIT(A) in the quantum appeal at page 10 to 14 of the paper book explaining the credits and deposits in bank account in particular at page13, it was mentioned that the assessee was engaged in the business of sale of properties and during the year the Royal Symbol Real Estate - 12 - assessee has received the advances from various parties and the details were filed. Further at page 14, it was submitted that the AO has made addition of Rs.2,45,000/- whereas the said amount was obtained against the sale of property from Parvati Devi on various dates and was deposited in the Bank account and is included in the loans and advances. The submissions on disputed issue before the CIT(A) are as under:
“2. That the amount deposited in the bank Rs.13010106.00 which explanation are as under:- a. That the appellant is engaged in business of sale and purchases of property and during the year the company has received advances against sale of property on various date from various parties. A copy of account from the following parties as mentioned in the notice are enclosed on page no. 9 to 76 Amount.
S.No. Amount Name of the parties Page no. of from whom advances parties has been received account against sale of property 1. 1557106 Ajay Chaurasia 9 to 13 2 795000 Akhilesh Mishra 14 to 17 3 200000 Bharat Gupta 18 to 19 4 190000 Hemlata Chaurasia 20 to 21 Royal Symbol Real Estate - 13 - 5 1150000 Manoj Kumar Gupta 29 to 39 6 245000 Parvati Devi 30 to 31 7 2550000 Ram Vilash Gupta 32 to 49 8 3187500 Ramashay Chaurasia 50 to 65 9 270000 Sangyapati Mishra 66 to 69 10 1015000 Sanjay Kumar 69 to 76 Chaurasia 11 150000 Uma Shankar Gupta 22 to 23 b. That the appellant has received the said amount against sale of property from the aforesaid parties and in the balance sheet the auditor has taken the amount under the head long term liabilities and mentioned the head in this account loans and advances Rs 13010106.00. c. That the Ld. Assessing officer in his order has mentioned the head unsecured loan, which term has wrongly mentioned in the assessment order, thought the auditor has mentioned the amount under the head Loan and Advances, The appellant is engaged in business of sale and purchases of property and during the year the cash received against sale of property will not be treated against the provision of income tax Act, During the year the amount received against purchase of property in cash, there are no any bar in the Act Therefore the amount received in cash against sale of property under the head loans and advances in the balance sheet is correct. It is Worthwhile to mention that the new format of the company the head has mentioned long term borrowing, but the A.O. has correctly examined the facts and has accepted the amount received in cash against sale of property and has not made any addition on this head. Royal Symbol Real Estate - 14 - d. That the notice issued by your goodself for enhancement of the amount u/s 251 r.w.s. 250(4) regarding the enhancement of the amount, it is hereby submitted that the AO has fully examined the facts of the case and amount received against sale of property has rightly disclosed by the appellant in the books and balance sheet which copy of account of the parties from whom the said amount has been received is enclosed on page no 9 to 76. e. That the notice issued regarding enhancement of amount is not correct due to facts has already disclosed and explained during the course of hearing of the case by the appellant 3. The addition of Rs 245000.00 made by assessing officer on 02.12.2013, in this respect it is hereby submitted that the appellant has taken the amount on different date against sale of property from Parvati Devi and deposited in the bank whose copy of account has already submitted in this paper book on page no. 30 to 31. Therefore the said deposit has already explained and is liable to be accepted.
That in the light of the aforesaid facts the notice issued u/s 251 r.w.s. 250(4) is liable to be withdrawn and the addition made by the assessing officer is liable to be deleted.”
The assessee has raised grounds of appeal
before the Hon’ble Tribunal disclosed at page 2 of the ITAT order in particular ground of appeal no 5 as under:
5. Because the order passed by the Ld. CIT (A) by ignoring the facts of the case though in the balance sheet the amount of Rs.13,01,0106.00 including Rs.14,00,000.00 has mentioned under the head Royal Symbol Real Estate - 15 - Loans and Advance. But the Ld. Commissioner of Income Tax(A) has treated the said amount u/s 69 of the Income tax act without any information and examine books of accounts.”
Whereas the AO has considered the directions and issued notice of hearing. We find that the disputed issues are set aside to the file of AO to examine the claims. The assessee is engaged in the business of real estate sale and purchase of properties and has obtained the advances in cash against the properties from the various customers and are deposited in the bank accounts. The Honble Tribunal has considered the facts and information and has restored to the file of the Assessing Officer to verify the claims. We considering the facts and circumstances are of the opinion that the amount of Rs.2,45,000/-,whether included in the loans and advances has to be verified based on the chart and submissions referred above. More particularly also keeping in view the observation of the AO that the cash book also revealed that the assessee has received Rs.2,45,000/- on 2.12.2013 as other unsecured loan which was neither mentioned in the total amount nor the assessee explained the source of the same (Pg. 4/CIT(A)’s order dated 05.9.2022). Royal Symbol Real Estate - 16 - Therefore, considering the principles of natural justice, we restore the disputed issue to the file of the Assessing Officer to examine afresh the issue of leviability of penalty u/s. 271(1)(c) of the Act. Accordingly, the order of the ld. CIT(A) is set aside and the disputed issue is restored to the file of the Assessing Officer and we allow the grounds of the assessee’s appeal for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes..
Order pronounced on 13.04.2023 at Varanasi in accordance with Rule 34(4) of the Income Tax Rules, 1963.