ITO, WARD-8(1), NEW DELHI vs. EKKTA BUILDWELL P.LTD, NEW DELHI

The grounds of appeal is as under:-

1. The ld CIT(A) has erred in law and on the facts of the case in deleting the addition of Rs. 2,15,00,000/- made by the AO on account of unexplained cash credit u/s 68 of the Income Tax Act, 1961.

Brief facts of the case are that the Assessee company is engaged in the business of immovable property and real estate development. During the previous year relevant to the Assessment Year 2012-13, the Assessee had not earned income which was chargeable to tax under the head “Profits and gains of business or profession”. From the perusal of the balance sheet as on 31.03.2012 the AO observed that the Assessee has received advance collaboration deposits of Rs. 2,15,00,000/- from M/s. Indian Bio Diesel Ltd. On AO’s query the Assessee furnished collaboration agreement. No confirmations or other documentary evidences were filed to verify the identity, creditworthiness and genuineness of the transaction. The AO issued notice u/s 133(6) to the said party but the notice remained un-complied with. Despite several opportunities given by the AO the Assessee did not file any confirmation regarding this transaction. In these circumstances, the AO held that the Assessee has thoroughly failed to prove creditworthiness of the alleged depositors and genuineness of the transactions. Hence, he added the said amount to the income of the Assessee u/s 68 of the Act.

Before the ld CIT(A) the Assessee furnished additional evidences. He also noted that the Assessee has submitted that it had entered into collaboration agreement dated 09.12.2010 with M/s. Satya Sai Infradevelopers Pvt. Ltd and M/s. Indo Biodieset Ltd which subsequently became M/s. India Infranirman Ltd. That further, Assessee has received collaboration deposits amounting to Rs. 4.15 crores out of which it has received Rs. 2.15 crores from M/s. India Infranirman Ltd. That the amount was received through cheque and it appeared in the audited account of the Assessee. That the AO issued notice u/s 133(6) of the Act to both the parties from whom Assessee has received collaboration deposits, but reply of M/s. Indo Infranirman Ltd reached to the AO on 06.04.2015 after the date of the order. That, hence the AO treated the deposit as unexplained and added it to the taxable income of the Assessee. The Ld. CIT(A) further noted that in this regard, the Assessee had enclosed the income tax return of M/s. India INfranirman Ltd, audited copy of the balance sheet, the ledger account of the Assessee in the books of M/s. India Infranirman Ltd. The ld CIT(A) remanded the additional evidence to the ld AO. The AO in his remand report submitted that on perusal of audited balance sheet and P&L Account of M/s. India Biodiesel ltd (now known as M/s. India Infranirman Ltd) the same company has done only job work of Rs. 5,42,000/-. That the information was filed by M/s. India Biodiesel Ltd i.e. Kolkata based company by hand in the office of the AO instead of by post. The ld CIT(A) also noted that the AO has objected the acceptance of additional evidence. However, the ld CIT(A) proceeded to accept the Assessee’s contention that the AO has not expressed any doubt on the authenticity of the evidence. He also submitted that documents submitted by the said party corroborate the claim of the Assessee. The payment was made through banking channel and the bank statement of the person making the payment has also been submitted to the AO. The Assessee further submitted that it was not getting cooperation from the said party for the reason that property under collaboration with such party was under dispute. That the transaction was in audited accounts of the Assessee company as well as M/s. India Infranirman Ltd from its bank account having sufficient balance to advance deposit to the Assessee. That the Assessee has received collaboration deposit of the said party of Rs. 1.50 cores in previous year and no addition was made by the AO. Accordingly, Ld. CIT(A) proceeded to delete the addition.

Against this order the revenue is in appeal before us.

We have hard both the parties and perused the records.

Ld Sr. DR submitted that no detail whatsoever was submitted before the AO, that on the basis of only Assessee’s submission and some documents produced the ld CIT(A) has accepted the transaction and deleted the addition without giving any factual finding about the financial aspect justifying the creditworthiness of the party to make the deposit.

Per contra ld counsel for the Assessee relied upon the orders of the ld CIT(A) reiterated that all the details have been furnished.

Upon careful consideration we note that the finding of the ld AO and of ld CIT(A) are diametrically opposite. Nothing was brought before the ld AO. The person who has given money to the Assessee is Kolkata based company which is not traceable at the said address. Therefore, so called details were also furnished by hand by some unknown persons. The ld CIT(A) accepted that as the said party was not cooperating the confirmation and evidence pertaining to the said party somehow got delivered to the AO subsequent to the date of the passing of the assessment order. AO noted that at the said company giving money has very meager transaction. The ld CIT(A) did not pay any attention to this aspect. Without referring to any material brought on record in his order, he held said that the said company has sufficient balance. We find that the aforesaid order is cryptic and laconic order. It was incumbent upon the ld CIT(A) to examine the fact that the party giving the money from Kolkata is not traceable at the address. He did not bother to refer to the financials. It was emanating that the said company has meager transaction. How the said company has sufficient balance to give the sum to the Assessee needed an examination as towhether the same was the said company own or circuitatious rotation of unaccounted money. Nothing in this regard was examined and the ld CIT(A) merely accepted the submission of the Assessee and documents and decided the issue in favour of the Assessee.

In our considered opinion there are apparent errors in the aforesaid order hence, in the interest of justice we remit the issue back to the file of the AO. The AO shall examine the documents which was furnished before the ld CIT(A) in appropriate detail after giving notice to the concerned parties. The ld AO shall examine financials of the said party and shall bring on record as to whether the identity, creditworthiness and genuineness of the transaction are proved or not.

We order accordingly.

In the result, the appeal of the revenue is allowed for statistical purposes.