SAR LAYOUT PLANNERS PRIVATE LIMITED,RATNAGIRI vs. DEPUTY COMMISSIONER OF INCOME TAX,CIRCLE-1,KOLHAPUR, KOLHAPUR
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Income Tax Appellate Tribunal, SMC BENCH, PUNE
Before: SHRI R.S. SYAL
आदेश / ORDER
PER R.S. SYAL, VP:
This appeal by the assessee arises out of the order dated
28-12-2022 passed by the CIT(A) in National Faceless Appeal
Centre, Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also
called ‘the Act’) in relation to the assessment year 2017-18.
The only ground involved in this appeal is against the
confirmation of addition of Rs.15.90 lakh made by the Assessing
Officer (AO) u/s.68 of the Act.
At the outset, the ld. AR submitted that the part of the ground
concerning the challenge to the confirmation of addition of
2 ITA No.57/PUN/2023 Sar Layout Planners Pvt. Ltd.
Rs.90,000/- was not pressed. The same is, therefore, dismissed as
not pressed.
Coming to the remaining addition of Rs.15.00 lakh, the factual
matrix is that the assessee deposited cash of Rs.15.00 lakh in his
bank account. On being called upon to explain the source of the
amount, the assessee submitted that cash of Rs.15.00 lakh was
received from Kokan Hill Farms as a business advance. The AO
called upon the assessee to furnish the ledger account of Kokan Hill
Farms corresponding to the total revenue of Rs.37,64,683/- claimed
to have been received from it. The AO also requested the assessee to
furnish the detail of nature of services and also the Permanent
Account Number (PAN) of Kokan Hill Farms along with their Profit
and loss account and Balance sheet for the year under consideration
and two earlier years. The assessee furnished a letter in response to
the AO’s requisition stating that the services offered to Kokan Hill
Farms were liasoning work, construction work liasoninig which
involved demarcation of plot, NA work, 7/12 extract submission,
town planning submission work etc. The assessee also furnished
PAN of Kokan Hill Farms along with confirmation from Ms. Snehal
Santosh Chavan, proprietor of Kokan Hill Farms, to the effect of
having given business advance of Rs.15.00 lakh to the assessee. The
3 ITA No.57/PUN/2023 Sar Layout Planners Pvt. Ltd.
AO found some deficiency in the PAN mentioned in the
confirmation, which was duly explained that, inadvertently, the PAN
of the proprietor’s husband was mentioned. The correct PAN was
submitted. The AO did not further dispute the PAN controversy. He
perused the return of income filed by Ms. Snehal Santosh Chavan,
proprietor of Kokan Hill Farms for the year under consideration and
found that income only of Rs.3,47,144/- was shown after deduction
of certain expenses. Nature of income shown in such return was
`Commission’. In the absence of Ms. Snehal Santosh Chavan
showing payment of Rs.15.00 lakh as advance to the assessee in her
return of income, the AO made addition for such sum u/s.68 of the
Act. The ld. CIT(A) affirmed the addition, against which the
assessee has approached the Tribunal.
Having heard the rival submissions and gone through the
relevant material on record, it is seen that the assessee submitted
confirmation from Kokan Hill Farms to the effect that a sum of
Rs.15.00 lakh was paid in cash during the period 21-10-016 to
08-11-2016 against contract assigned to the assessee for carrying out
land development, liasoning and other construction works in relation
to their site at Rehale Bhagadi, Chiplun, Ratnagiri. A copy of such
confirmation has been placed at page 17 of the paper book. The AO
4 ITA No.57/PUN/2023 Sar Layout Planners Pvt. Ltd.
examined the Income-tax return of Ms. Snehal Santosh Chavan,
proprietor of Kokan Hill Farms and found that the amount of
Rs.15.00 lakh shown by the assessee as trade payable was not shown
by her as receivable in the detail of assets. On this basis, he
proceeded to make the addition u/s.68 of the Act. On one hand, there
was confirmation before the AO from Ms. Snehal Santosh Chavan
that she gave trade advance of Rs.15.00 lakh to the assessee and on
the other there was Income-tax return of Ms. Snehal Santosh Chavan
not indicating disclosure of business advance of Rs.15.00 lakh
having been given to the assessee. Without carrying out further
investigation as to which of the two versions was correct, the AO
simply rejected the confirmation and proceeded to decide on the
basis of the Income-tax return that no amount of cash was given by
Ms. Snehal Santosh Chavan to the assessee. In my considered
opinion, this course of action is not known to law. If there are two
conflicting evidences before the AO – one supporting the case of the
assessee and other of the Revenue – then, before accepting the
evidence in favour of the Revenue, it becomes duty of the AO to
establish as to how the evidence supporting the assessee’s stand is
not correct. He needs to controvert the veracity of such an evidence.
5 ITA No.57/PUN/2023 Sar Layout Planners Pvt. Ltd.
The AO cannot unilaterally choose the evidence in his favour without
legally rejecting the contrary one.
Adverting to the facts of the instant case, it is found that the AO
simply chose to go with the income-tax return of Ms. Snehal
Santosh Chavan, not depicting the amount receivable from the
assessee, in disregard to the confirmation given by her of having
given business advance to the assessee. Before reaching any
conclusion, he ought to have examined Ms. Snehal Santosh Chavan,
proprietor of Kokan Hill Farms to find out whether her confirmation
was correct or the return not showing the amount paid. Nothing of
the sort has been done in this case, which vitiates the one-sided view
of the AO.
Further, the advance of Rs.15.00 lakh received by the assessee
during the year under consideration was adjusted against the work
done by the assessee in the immediately succeeding year ending on
31.3.2018. A copy of ledger account of Kokan Hill Farms for such
year has been placed on record with opening balance of Rs.15.00
lakh adjusted against ‘Works contract receipts’ of equal amount
leaving closing balance at Nil. It is further borne out from the record
that the first notice u/s 143(2) was issued to the assessee on
6 ITA No.57/PUN/2023 Sar Layout Planners Pvt. Ltd.
13.08.2018, which is much prior to completing the work by the
assessee.
In the given facts and circumstances of the case, I am satisfied
that the addition was wrongly made and sustained. I, therefore,
overturn the impugned order on this score.
In the result, the appeal is partly allowed. Order pronounced in the Open Court on 26th July, 2023.
Sd/- (R.S.SYAL) VICE PRESIDENT पुणे Pune; िदनांक Dated : 26th July, 2023 सतीश
आदेश की �ितिलिप अ�ेिषत/Copy of the Order is forwarded to: अपीलाथ� / The Appellant; 1. ��थ� / The Respondent 2. 3. The Pr.CIT concerned 4. DR, ITAT, ‘SMC’ Bench, Pune गाड� फाईल / Guard file. 5.
आदेशानुसार/ BY ORDER,
// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune
7 ITA No.57/PUN/2023 Sar Layout Planners Pvt. Ltd.
Date 1. Draft dictated on 25-07-2023 Sr.PS 2. Draft placed before author 25-07-2023 Sr.PS 3. Draft proposed & placed before JM the second member 4. Draft discussed/approved by JM Second Member. 5. Approved Draft comes to the Sr.PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order.
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