SHRI NOOR SHERGIL, ASSISTANT OFFICIAL LIQUIDATOR, HIGH COURT, BOMBAY AS AN OFFICIAL LIQUIDATOR FOR M/S SRK SHELTORS P LTD.,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 6, PUNE

Briefly, the facts of the case are that the appellant is a Private Limited Company engaged in the business of real estate. The Return of Income for the assessment year 2013-14 was filed on 13.05.2014 declaring a loss of Rs.23,55,300/-. Against the said return of income, the assessment was completed by the Dy. Commissioner of Income Tax, Circle-6, Pune (‘the Assessing Officer’) vide order dated 28.03.2016 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at a total income of Rs.5,60,24,230/-. While doing so, the Assessing Officer made addition of Rs.27,00,000/- on account of on-money consideration received from one Mr. Ajaychandran Nair. The Assessing Officer also made disallowance of interest of Rs.1,96,84,069/- by holding that the interest cannot be allowed as revenue expenditure. The Assessing Officer also made addition on account of unsecured loans of Rs.2,72,14,448/- received from Sairung Developers & Realtors and SRK Gold Earth Constructions Pvt. Ltd. equal consideration, as the assessee had failed to prove the identity, creditworthiness and genuineness of the above loan amount. The Assessing Officer also made protective addition of Rs.84,85,010/- being the 1/6th of the amount of Rs.5,09,10,063/-, which was added on substantive basis in the assessment year 2014-15.

Being aggrieved by the above additions, an appeal was filed before the ld. CIT(A), who vide impugned order deleted the protective addition of Rs.84,85,010/- as the addition of entire amount of Rs.5,09,10,063/- was confirmed on substantive basis for the assessment year 2014-15. As regards, the addition on account of on-money consideration of Rs.27,00,000/-, the ld. CIT(A) considering the impounded material/documents/diaries containing entries of on-money receipt by the appellant had confirmed the addition of Rs.27,00,000/-. As regards, the addition u/s 36(1)(iii), the ld. CIT(A) allowed the ground of appeal on the ground that the interest expenditure of Rs.1,96,84,069/- was incurred on the loans borrowed from Kerala Financial Corporation, therefore, should be allowed as deduction.

Being aggrieved by the decision of the ld. CIT(A) confirming the addition on account of on-money consideration of Rs.27,00,000/-, the assessee is in appeal in ITA No.186/PUN/2018. Being aggrieved by that part of the order of the ld. CIT(A), wherein, the ld. CIT(A) had granted relief on account of on-money consideration of Rs.84,85,010/- and relief on account of unsecured loans of Rs.2,72,14,448/- and relief in respect of addition of Rs.1,96,84,069/- u/s 36(1)(iii), the Revenue is in appeal in ITA No.255/PUN/2018.

Now, we shall take up the assessee’s appeal in ITA No.186/PUN/2018. – By Assessee : 6. When the matter was called on, none appeared on behalf of the assessee despite due service of notice of hearing, therefore, we proceed to dispose of the matter after hearing the ld. Sr. DR.

The addition of Rs.27,00,000/- was made by the Assessing Officer based on the material impounded during the course of ITA No.255/PUN/2018 survey proceedings in the case of Sairung Developer & Realators. When this material was confronted to the assessee, the assessee contended that the said amount was received from one Mr. Ajaychandran Nair, was in the nature of advance and cannot be brought to tax in the hands of the assessee company. Without prejudice to the above, it is submitted that since the assessee was following percentage completion method, no amount was offered to tax and this amount cannot be brought to tax.

On appeal before the ld. CIT(A), the same was confirmed by the ld. CIT(A) considering the material impounded during the course of survey operations.

Being aggrieved, the appellant is in appeal before us in the present appeal.

We had carefully gone through the impounded material which clearly indicates a sum of Rs.27,00,000/- was received from one Mr. Ajaychandran Nair. It is not even the case of the assessee that the said amount was not received by the assessee company. This amount was not shown in the books of accounts. Therefore, the Assessing Officer had rightly brought to tax on-money ITA No.255/PUN/2018 consideration. Thus, we do not find any reason to interfere with the orders of the lower authorities. 11. In the result, the appeal filed by the assessee in stands dismissed. 12. Now, we shall take up the appeal of the Revenue in ITA No.255/PUN/2018 ITA No.255/PUN/2018 – By Revenue : 13. Ground of appeal