DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1), KOLKATA, KOLKATA vs. M/S. BENGAL NRI COMPLEX LTD, KOLKATA

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ITA 1187/KOL/2026Status: DisposedITAT Kolkata13 July 2026AY 2011-126 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order, agreeing that the transaction was a regular business transaction of selling flats. The assessee was not obligated to justify the source of funds of its customer, and the non-attendance of summons by the customer did not adversely affect the assessee.

What were the facts?

The assessee, a real estate developer, received Rs. 3,61,49,057/- as advance for the sale of two flats. The Assessing Officer (AO) treated this amount as unexplained cash credit under Section 68, as the buyer was a shell company and did not respond to summons. The Commissioner of Income Tax (Appeals) deleted the addition.

What were the issues?

Whether the amount received for sale of flats from a customer, later found to be a shell entity, can be added as unexplained cash credit under Section 68 of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH: KOLKATA

Before: Shri Rajesh Kumar& Shri Pradip Kumar Choubey]

आयकर अपील�य अ�धकरण, कोलकाता पीठ “ए’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH: KOLKATA �ी राजेश कुमार, लेखा सट�य एवं �ी �द�प कुमार चौबे, �या�यक सद�य के सम� [Before Shri Rajesh Kumar, Accountant Member& Shri Pradip Kumar Choubey, Judicial Member] I.T.A. No. 1187/Kol/2026 Assessment Years: 2011-12 DCIT, Central Circle-1(1), Kolkata Vs. M/s Bengal NRI Complex Ltd.

(PAN: AABCB 8119 M) ( अपीलाथ� ) Respondent / ��यथ� Appellant / Date of Hearing / सुनवाई 07.07.2026 क� �त�थ Date of Pronouncement/ 13.07.2026 आदेश उ�घोषणा क� �त�थ For the Appellant/ Shri Akkal Dudhwewala, FCA �नधा�रती क� ओर से For the Respondent/ Shri Manas Mondal, Sr. DR राज�व क� ओर से

ORDER / आदेश Per Rajesh Kumar, AM: This is an appeal preferred by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals)-20, Kolkata (hereinafter referred to as the “Ld. CIT(A)”] dated 26.09.2025 for the AY 2011-12. 2. At the outset we note that the appeal of the Revenue is time barred by 120 days. Considering the reasons cited by the revenue, we find that there is plausible and

2 I.T.A. No.1187/Kol/2026 Assessment Year: 2011-12 M/s Bengal NRI Complex Ltd. bonafide reasons to condone the delay and the delay in filing the appeal is hereby condoned.

3.

The sole issue raised in this appeal is against the order of the ld. CIT(A) deleting the addition of Rs.3,61,49,057/- as made by the AO under Section 68 of the Act in relation to the proceeds received on sale of unit/flat.

4.

Brief facts of the case are that, the assessee is a joint public sector company which had undertaken the development of mega residential project namely ‘Urbana’. The assessee being a real estate developer sold units/spaces in the project in the ordinary course of business. The return of income for AY 2011-12 u/s 139(1) was filed on 22.09.2011 declaring total income of Rs.1,19,77,540/-. The return was processed u/s 143(1) of the Act dated 10.02.2012. Later on, the case of the assessee was reopened u/s 147 of the Act for the reasons that the assessee was in receipt of sum of Rs.1,08,60,674/- from a paper company, M/s Glamour World Movies Pvt Ltd (‘GWMPL’) and that the transaction was made to adjust income/loss of the assessee company. The assessee, in response to notices issued u/s 142(1) of the Act, submitted that, the assessee had entered into an agreement to sell with GWMPL, in terms of which, it had agreed to sell flats bearing no.2704&3204 for a consideration of Rs.1,67,84,880/-& Rs.1,69,61,280/- respectively, plus applicable taxes, charges and stamp duty etc. The buyer, GWMPL had made aggregate payment of Rs.3,61,49,057/- in advance to the assessee, in lieu of which, the assessee issued allotment letters for the two units. Subsequently, the buyer, GWMPL had assigned their rights, title & interest in the two units to two intending buyers viz., Mr. Akash Majumdar and Ms. Amrita Banerjee respectively vide assignment agreements dated 27.08.2017. The assessee showed that these flats were ultimately completed and handed over in FY 2016-17 and that the advances in question were recognized and offered by way of business income in relevant AY 2017-18. The ld. AO however observed that the summons issued upon the buyers u/s 131 of the Act remained unattended and that the Investigation Wing had found that M/s GWMPL was a shell entity. The AO thus held that the entire payment of Rs.3,61,49,057/- received

3 I.T.A. No.1187/Kol/2026 Assessment Year: 2011-12 M/s Bengal NRI Complex Ltd. from GWMPL towards the agreed sale of two flats was in the nature of unexplained cash credit and added the same u/s 68 of the Act.

5.

Aggrieved by the said order, the assessee preferred an appeal before the ld. CIT(A) who allowed the appeal of the assessee on merits by observing and holding as under: “Having gone through the submissions of the appellant, in light of the findings recorded by the AO, it is observed that the appellant is a joint sector company which had undertaken development of a mega residential project titled ‘Urbana’ comprising of seven towers. Being a real estate developer, the appellant was understandably provisionally allotting flats to intending buyers who were paying the booking amounts and further consideration in a staggered manner in proportion to the percentage of work completed, until the flat was finally completed and handed over to the buyers. It is seen that the appellant had inter alia sold two flats being Apartment No. 2704 & 3204 in Tower 1 to M/s Glamour World Movies Private Limited for an aggregate consideration of Rs.3,61,49,057/-. The said customer had inter alia paid booking advance of Rs.1,08,60,674/- during the year. It is therefore observed that, the transaction between the appellant and M/s Glamour World Movies Private Limited involved sale of flat for valuable consideration. The appellant being a real estate developer, the impugned receipt was in the nature of a regular business transaction. It has been brought to notice that, later on, the said intending buyer M/s Glamour World Movies Private Limited had transferred their right, title and interest in these two (2) apartments to Ms. Amrita Banerjee & Mr. Aakash Majumdar vide two (2) deeds of assignment dated 27.08.2017, which are also supported by confirmation letters. The appellant is however noted to have received the entire consideration from the original buyer M/s Glamour World Movies Private Limited. The AO has not disputed the fact that the impugned sum was received by way of sale consideration upon sale of flats and that it was not in nature of any loan or capital etc. The AO has also not disputed that, in lieu of the consideration received, the appellant had indeed transferred the two flats in favour of the buyer. It is also an admitted fact that as and when the construction of the tower was completed and the possession was handed over, the appellant had credited and offered the entire sale consideration of Rs.3,61,49,057/- by way of their business income to tax in AY 2017-18. These facts considered cumulatively shows that, the transaction between the appellant and M/s Glamour World Movies Private Limited was a regular business transaction in which flats were sold for valuable consideration and the proceeds were also offered to tax. On these facts therefore, there is merit in the appellant’s contention that, the nature and purpose of transaction with M/s Glamour World Movies Private Limited was proved and that the appellant was under no obligation to justify the source of funds of M/s Glamour World Movies Private Limited out of which, it had purchased the flats and that if the source of the purchaser was being doubted, then the correct re-course with the AO was to verify and assess the same in the income-tax assessment of the purchaser. The impugned receipt cannot be termed as an accommodation entry or infusion of appellant’s own undisclosed monies, for the reason that the appellant had received this sum upon sale of flats and therefore it had

4 I.T.A. No.1187/Kol/2026 Assessment Year: 2011-12 M/s Bengal NRI Complex Ltd. handed over valuable asset in lieu of the said receipt. On the given facts therefore, I am of the considered view that, the invocation of Section 68 of the Act in relation to this business transaction was unsustainable. It is observed that, the main reason cited by the AO for making the impugned addition was that the summons issued u/s 131 was not served / complied with by M/s Glamour World Movies Private Limited or the two buyers, Ms. Amrita Banerjee & Mr. Aakash Majumdar. According to me, this reason, on the given facts of the case, was unjustified. Unlike the relationship of a company & shareholder or the relationship of a lender- borrower; the relationship of a seller-customer is not a continuing one. The relationship exists only till the transaction is in progress. Once the transaction is complete the relationship comes to an end. Further it is also not necessary that, in this business of real-estate, the customers / flat owners have to be a known associate of any director or shareholders of the assessee company, unlike share applicants or a lender. It is noted that, M/s Glamour World Movies Private Limited had not advanced any loan or subscribed to any share capital of the appellant. Rather, it had approached the appellant for acquiring two flats viz., Apartment No.2704 & 3204 in Tower 1 in their under-construction project ‘Urbana’ and had paid the booking amounts aggregating to Rs.3,61,49,057/- as demanded by the appellant. Upon such payment, the appellant had issued receipts and provisional allotment letters. Having regard to the size of the project and the number of towers being constructed along with the common space being developed, it cannot be said that the time between allotment and the completion of the project was unreasonable, as alleged by the AO. The appellant has also shown that, there indeed was a considerable time gap between the launch of their project and final delivery. It is observed that, when the project was nearing completion, M/s Glamour World Movies Private Limited had assigned and sold their rights to specific performance viz., the provisional allotment letters to Ms. Amrita Banerjee [Flat No.2704] and Mr. Akash Majumder[Flat No.3204]. The appellant is noted to have provided the requisite contemporaneous evidences which it was expected to maintain i.e. the deed of assignment, confirmation letters etc. I find merit in the submission of the appellant that, it did not have any locus standi in the transaction involving sale of flats by and between M/s Glamour World Movies Private Limited and Ms. Amrita Banerjee & Mr. Aakash Majumdar in as much as the appellant was only a confirming party for registration purposes. On these facts therefore, that the non-compliance of summons by the customers cannot be viewed adversely qua the appellant. I agree with the appellant that, nowhere does Section 68 of the Act mandate that the identity, creditworthiness and genuineness of the transaction can be proved only by producing the payer concerned for personal examination by the AO. It is observed that, the transaction involving booking of flats by M/s Glamour World Movies Private Limited was done in FY2010-11, which was assigned to two buyers in FY 2016-17. The purported summons u/s 131of the Act was issued in 2018, which was more than eight years after the completion of the transaction between the appellant and M/s Glamour World Movies Private Limited and therefore it cannot be said to be unusual if the payee was not found at their given address of2010. Also, the appellant has brought to my notice that, Ms. Amrita Banerjee & Mr. Aakash Majumdar who had acquired these flats had also sold them at a later date and therefore the appellant cannot be held responsible, if their correct or present known addresses are not known to it. Moreover,

5 I.T.A. No.1187/Kol/2026 Assessment Year: 2011-12 M/s Bengal NRI Complex Ltd. it is noted that, as and when the flats were completed and delivered, the appellant, which was following completed contract method of accounting, had inter alia offered the entire consideration of Rs.3,61,49,057/- initially received from M/s Glamour World Movies Private Limited to tax as their business income in AY 2017-18. On these facts therefore, the AO’s initial premise that, the impugned monies represented unaccounted income of the appellant routed to reduce income or increase losses is found to be factually incorrect. For the above reasons therefore, the impugned receipt by the appellant from M/s Glamour World Movies Private Limited upon sale of flats cannot be construed to be their own undisclosed monies routed through a shell entity and hence the AO is directed to delete the addition of Rs.3,61,49,057/- made u/s 68 of the Act. This ground is accordingly allowed.” 6. Upon hearing the rival submissions and perusal of the material placed on record, we note that, the assessee being a public sector company jointly owned by Government of West Bengal had undertaken a mega residential township project, in the course of which, the assessee had agreed to sell two flats in the proposed residential tower to the buyer, GWMPL who has paid amounts to the extent of Rs.3,61,49,057/- by way of advance towards the flats provisionally allotted by the assessee. It is not in dispute that the transaction between the assessee and GWMPL was an ordinary business transaction in which flats were sold for valuable consideration. Given the nature of the transaction, we agree with the ld. CIT(A) that the assessee was under no obligation to justify the source of funds of its customer i.e. GWMPL. Also, non-attendance of summons by this customer cannot be viewed adversely. The assessee has shown that, when the project was completed, the advances so received had been offered to tax as well by way of business income. We note that, the buyer had later on assigned its rights in the two flats to two individual buyers, to whom the assessee had transferred and sold the flats as well. We have gone through the order passed by the ld. CIT(A) and find that the ld. CIT(A) has passed an exhaustive and reasoned order appreciating the aforesaid facts and circumstances and thereafter allowed the appeal of the assessee.

7.

Keeping in view the above discussion of the ld. CIT(A) and considering the facts available on record, we do not find any infirmity in the impugned order of the ld. CIT(A) and accordingly we uphold the appellate order by dismissing the appeal of the revenue.

6 I.T.A. No.1187/Kol/2026 Assessment Year: 2011-12 M/s Bengal NRI Complex Ltd.

8.

In the result, the appeal of the Revenue is dismissed.

Order is pronounced in the open court on 13th July, 2026

Sd/- Sd/-

(Pradip Kumar Choubey /�द�प कुमार /चौबे) (Rajesh Kumar/राजेश कुमार) Judicial Member/�या�यक सद�य Accountant Member/लेखा सद�य Dated: 13th July, 2026 SM, Sr. PS

Copy of the order forwarded to: 1. Appellant- DCIT, Central Circle-1(1), Kolkata 2. Respondent – M/s Bengal NRI Complex Ltd., 783, Madurdaha, Anandapur, Kolkata- 700107. 3. Ld. CIT(A)- 20, Kolkata 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata

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