HIREN JUGRAJ PARMAR,PUNE, MAHARASHTRA vs. INCOME TAX OFFICER, WARD 7(1), PUNE, PUNE, MAHARASHTRA

The brief facts of the case are that, the assesse is running a proprietary concerns in the name and style of (i) M/s Parmar infrastructure co and (ii) Parmar Reality which are engaged in business of building and constructions works. The assessee has filed return of income for the A.Y. 2018-19 on 31.10.2018 disclosing a total income of Rs. 95,26,158/-. Subsequently, the case was selected for scrutiny through CASS to verify the “income from the Real estate business.” The Assessing Officer (AO) has issued notice under Section 143(2) and notice 142(1) of the Act calling for the details of loans and advances, sundry debtors, sundry creditors, and ongoing projects etc. and in compliance to the notice, the assessee has uploaded the said details called for. The AO on perusal of the financial statements, income tax return found that the assessee has disclosed Sundry Creditors of Rs. 7,48,86,651/-and asked to furnish the detailed list and the assessee has filed the information and explained about the closing balances of sundry creditors referred in the order. The A.O considered the information, guidelines and was not satisfied with the explanations on the projects and outstanding balances, The A.O find that there was only one project and it was completed, whereas some advances received from parties are more than three years and even after project is completed it remained outstanding in the books of account and made an addition u/sec 41(1) of the Act of Rs. 79,35,916/- and assessed the total income of Rs.1,74,62,074/-/- and passed the order under Section 143(3) r.w.s. 144B of the Income Tax Act dated 28.09.2021.

At the time of hearing, the Ld. AR submitted that CIT(A) has erred in confirming the action of the Assessing Officer, overlooking the provisions of the Act that the section41(1) of the Act is not applicable as liability still exist and has to be discharged and also the submissions in the proceedings. The Ld AR substantiated the submissions with factual paper book and judicial decisions and prayed for allowing the appeal. Per contra, the Ld.DR supported the order of the CIT(A). 5. We heard the rival submissions and perused the material on record. The sole crux of the disputed issue envisaged by the Ld.AR that the CIT(A) has erred in sustaining the addition u/sec41(1) of the Act overlooking the factual aspect of liability is still payable. The CIT(A) without providing proper opportunity has overlooked the facts and material evidences that the assessee has refunded the amounts to customers and in some cases was offered to tax in subsequent years. The assesse has filed all the details before the lower authorities and the CIT(A) has not considered the documents and information supporting the claim of the assesse. Prima-facie, the CIT(A) has dealt on the findings of the AO and there are no proper findings on the submissions/evidences of the assessee filed in the proceedings referred and has not allowed the grounds of appeal. Therefore,we considering the overall facts, circumstances and principles of natural justice shall provide with one more opportunity of hearing and accordingly restore the disputed issue to the file of the CIT(A) for afresh adjudication on merits and the A.O. shall provide adequate opportunity of being heard to the assessee and the assessee should also cooperate in submitting the information for early disposal of appeal.. And the grounds of appeal of the assessee are allowed for statistical purpose.

In the result, the appeal filed by the assessee is allowed for statistical purposes.