DCIT CIRCLE 4(1)(1), AHMEDABAD, AHMEDABAD vs. SUKHAM PROPERTIES PRIVATE LIMITED, AHMEDABAD

ITA 607/AHD/2024Status: DisposedITAT Ahmedabad26 March 2025AY 2020-2114 pages

AI SummaryPartly Allowed

Facts

The assessee, a private limited company, had additions made by the AO under Section 69A (Rs.1 crore for forfeited advance) and Section 68 (Rs.4.07 crore for unsecured loans from three entities) for AY 2020-21. The CIT(A) deleted the Section 69A addition and additions related to two of the Section 68 loans (Origin Lifecare and Fringe Properties), but upheld the addition for the third Section 68 loan (Opus Restaurants). The Revenue appealed the deletions by the CIT(A) for the Section 69A addition and the two Section 68 loans totaling Rs.4.05 crore.

Held

The Tribunal upheld the CIT(A)'s deletion of the Section 69A addition of Rs.1 crore, finding the amount was disclosed, offered to tax, and TDS was deducted, thus not being unexplained money. For the Section 68 additions of Rs.4.05 crore from Origin Lifecare and Fringe Properties, the Tribunal found that the CIT(A) failed to adequately verify crucial aspects like actual loan repayment, operational status, and creditworthiness of the lenders. Consequently, the Tribunal set aside the CIT(A)'s order on these loans and remanded the matter back to the AO for fresh verification.

Key Issues

1. Whether the CIT(A) erred in deleting the addition under Section 69A concerning forfeited advance, particularly when the amount was disclosed and taxed. 2. Whether the CIT(A) erred in deleting additions under Section 68 related to unsecured loans from specific entities, given concerns about the lenders' operational status, creditworthiness, and genuineness of transactions.

Sections Cited

69A, 68, 115BBE, 143(3), 144B, 271AAC(1), 133(6), 115JB

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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD

Before: MS. SUCHITRA KAMBLE & SHRI MAKARAND V. MAHADEOKAR

For Appellant: Shri Pritesh L. Shah, AR

आयकर अपीलीय अिधकरण, अहमदाबाद "ायपीठ “सी“, अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD सु"ी सुिच"ा का"ले, "ाियक सद" एवं "ी मकरंद वसंत महादेवकर, लेखा सद" के सम"। ] ] BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER आयकर अपील सं / Year : 2020-21 DCIT Sukham Properties Pvt.Ltd. बनाम/ Circle-4(1)(1) 101, Devarc Mall v/s. Ahmedabad Ahmedabad City Jodhpur Char Rasta SO Ahmedabad – 380 015 "थायी लेखा सं./PAN: AAQCS 3397 D अपीलाथ%/ (Appellant) &' यथ%/ (Respondent) Assessee by : Shri Pritesh L. Shah, AR Revenue by : Shri Rignesh Das, Sr.DR सुनवाई की तारीख/Date of Hearing : 24 /03/2025 घोषणा की तारीख /Date of Pronouncement: 26 /03/2025 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, AM:

This appeal by the Revenue is directed against the order dated 05.02.2024 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, [hereinafter referred to as “CIT(A)”] for the Assessment Year (AY) 2020–21, whereby the Ld. CIT(A) deleted the additions made by the Assessing Officer [hereinafter referred to as “AO”] under sections 69A and 68 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”]. DCIT vs. Sukham Properties Pvt.Ltd. Asst. Year : 2020-21 2 Facts of the Case: 2. The assessee is a Private Limited Company engaged in the business of land and property transactions. It filed its return of income for A.Y. 2020–21 on 08.12.2020, declaring a total income of Rs.53,10,650/- under the normal provisions and Rs.1,02,08,725/- under section 115JB of the Act. The case was selected for limited scrutiny under CASS for the issues of High Creditors / Liabilities, and Unsecured Loans.

During the course of assessment proceedings, the AO noted that the assessee had credited a sum of Rs.1,00,00,000/- to its Profit and Loss account under the head “Other Income,” with the narration indicating that the amount represented an advance received against a property that had been forfeited. On further inquiry, it was revealed that no agreement for sale or cancellation was available for verification. The note appended to the financial statements explicitly recorded that the amount was subject to confirmation from the concerned party. The AO, in order to verify the genuineness of this transaction, called upon the assessee to furnish the agreement to sell, the cancellation agreement, confirmation from the party, and supporting documentary evidence. The assessee admitted that the relevant file had been misplaced and was therefore unable to produce any supporting evidence, including the identity or PAN of the counterparty. In the absence of any documentary evidence to substantiate the claim, the AO held that the nature and source of the said sum remained unexplained. Accordingly, the amount of Rs.1 crore was treated as unexplained money under section 69A of the Act and brought to tax under the provisions of section 115BBE of the Act.