S. K. DEVELOPERS PRIVATE LTD.,KOLKATA vs. ITO, WARD-5(1), , KOLKATA

Brief facts as noted by the AO are that while going through the Balance Sheet of the assessee company, the AO noted that Rs.1.39 cr. has been reflected under the sub-head “Advance to Customers” under the head “Other Current Liabilities” in Note 11 annexed to the Balance sheet. According to AO, this amount was reflected against the name of M/s. Sarada Construction Pvt. Ltd. (hereinafter referred to as “M/s. SCPL”) and on a query from the AO, the assessee replied that this amount was received as payment/advance for sale of property.

We have heard rival submissions and gone through the facts and circumstances of the case. The main plea of the assessee is that this amount (credit of Rs.1.39cr.) lying in the name of M/s. SCPL under the head advance to customers was credited in the FYs 2008-09 to 2010-11, the details of which has been reproduced at pages 12 and 13 of the impugned order of Ld. CIT(A) is again reproduced for ready reference as under:

According to Ld. AR, the aforesaid relevant ledger account would substantiate that the amount in question (Rs. 1.39 cr.) was not credited in the year under consideration (AY 2012-13) but it was only carry forwarded balance from past several years. Thus, according to Ld. AR, since the amount in question (Rs.1.39 cr.) was not credited in the year under consideration (AY 2012-13) and only represents carry forwarded balance from earlier years, the said sum cannot be added u/s. 68 (unexplained credit) or u/s. 69C of the Act (unexplained expenditure) and for that he cited the decision of the Hon’ble Calcutta High Court in the case of CIT Vs. J. J. Development (P) Ltd. in ITA No.519 of 2008 dated 16.06.2016 (which has been reproduced by the Ld. CIT(A) at pages 14 and 15 of the impugned order) and also he cited the decision of Hon’ble Calcutta High Court in the case of CIT Vs. Embicon Engineering Private Limited in ITA 687 of 2007 and ITO Vs. Anil Kumar Singh, ITA 968 of 2010 of Hon’ble Calcutta High Court wherein the ratio of the aforesaid decisions were that the credit appearing in the books of the assessee if carry forwarded from previous year and not pertaining to the relevant assessment year, then there cannot be any addition made u/s. 68 of the Act as done by Ld CIT(A). Further, according to Ld. AR, the AO erred in making the addition under section 69C of the Act because the case of the AO/CIT(A) was

Moreover, the Ld. AR also brought to our notice that the amount of Rs.1.20 cr. out of Rs.1.39 cr. has been refunded/repaid as per the order of the Justice Shyamal Sen Committee (Against M/s. SCPL, ED enquiry and due to some inquiry headed by Justice Shyamal Sen Committee pursuant to the orders assessee made payment) which fact is discernible from a perusal of page 9 to 13 of paper book wherein the bank statement of the assessee has been kept and we note that the assessee had made payments in five (5) installments of Rs.24.40 lacs each to the Justice Shyamal Sen Committee on various dates starting from 25.04.2014, 23.05.2014, 24.06.2014, 23.07.2014 and 29.08.2014 and thus total amount of Rs.1.22 cr. was repaid. Therefore, according to Ld. AR, looking from any angle, the addition made by the AO should not be sustained.

Per contra, the Ld. DR vehemently pleaded that the genuinity of the advance supposed to have been paid by M/s. SCPL is under suspicion because there was no agreement/instrument to support such a transaction as claimed by assessee. According to Ld. DR the assessee’s claim that it has made repayment of Rs.1.22 cr. to the Justice Shyamal Sen Committee also need to be verified. So, according to Ld. DR the matter may be sent back to AO for verification.

After hearing the rival submissions and on perusal of the record, we note that the amount in question have been credited in FYs 2008-09 to 2010-11 as seen from the ledger account (supra). The addition made by the AO in this relevant assessment year i.e. AY 2012-13 u/s. 69C of the Act cannot be sustained for the simple reason that it is not the case of the AO that this amount was unexplained expenditure incurred by the assessee in this year. Coming to the addition as observed by the Ld. CIT(A) u/s. 68 of the Act also cannot be sustained for the

Next ground is against the action of the Ld. CIT(A) in not adjudicating the issue of short TDS credit of Rs.1,60,644/- by the AO in the computation sheet. We direct that this issue should be verified by the AO since assessee disputes it factually. So the AO to verify the facts and is directed to hear the assessee and pass order in accordance to law on this issue of short TDS credit of Rs.1,60,644/-. The assessee may submit documents to substantiate its claim and the AO to decide in accordance to law.

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