AIBANI ENTERPRISES,MUMBAI vs. DCIT CIR 24(1), MUMBAI

The Ld.AR for the assessee, at the time of hearing, submitted that the Ld.CIT(A) was erred in confirming additions towards maintenance charges of Rs. 27 Lacs, without appreciating the fact that, the assessee need to maintain the property, in respect of unsold units, for which maintenances charges including municipal taxes has been paid. The assessee, further, submitted that it has filed necessary details including receipts from Brhuan Mumbai Maha Nagara Palika for proof of municipal taxes. The AO, ignoring all evidences simply made additions, on the ground that no details has been filed. The Ld. DR, on the other hand, strongly supported order of the Ld.CIT(A).

We have heard both the parties, perused the material available on record and gone through orders of the authorities below. The Ld. AO never disputed fact that the assessee is a builder and developer and had developed a property called Arc plaza. It is also not in dispute that certain units were remains unsold for the impugned assessment year. When, the assessee is having unsold units of property, it needs to maintain such properties by paying necessary municipal taxes and other incidental expenses. In this case, the assessee has filed various details including receipts for payment of municipal taxes to BMC and also bank statement of the society, which is maintaining the property called Arc plaza Cooperate Housing Society, which are part of paper book page No. 6-23 filed by the assessee. Therefore, we are of the considered view that the AO, as well as CIT(A) were erred in disallowance of maintenance charges. Accordingly, direct the AO to delete the additions made towards disallowance of maintenance charges.

The next issue that came up for our consideration from ground No. 2 and 3 of assessee’s appeal is additions towards unexplained cash credit on u/s 68 of the I.T.Act, 1961, amounting to Rs. 46 Lacs.

The Ld. AR for the assessee, submitted that the AO as well as CIT(A) were erred in additions towards advance received for sale of flats from three parties u/s 68 of the I.T.Act, 1961, even though, the assessee has filed complete details, including cash receipts during the course of assessment proceedings. The Ld. AR, further submitted that although, Shri.B.K.Ashok confirmed payment to the extent of Rs. 5 Lacs, but fact remains that he has paid a sum of Rs. 19 Lacs, which is further evidenced by sale agreement between the parties, as per which, he has confirmed having paid a sum of Rs. 27 Lacs. Similarly, in respect of Kajal D. Sankhe, although initial notices issued u/s 133(6) was returned, but assessee has filed confirmation with new address. Therefore, it is incorrect on the part of AO to allege that no details has been filed to prove advances received for sale of flats.

The Ld. AR for the assessee, put forth on alternative argument in light of survey conducted in the case of assesee during subsequent period, as per which the assessee has admitted a sum of Rs. 3,40,00,000/-, in respect of possible omissions and also on account of on money received for sale of flats. Therefore, if at all amount of Rs. 14 Lacs is not confirmed by the person who gave advance, the same is covered out of disclosure made during the course of survey and accordingly, further additions towards advances for non confirmation by the party amounts to double additions and hence, the same may be deleted.

The Ld. DR, on the other hand, strongly supported order of the CIT(A).

We have heard both the parties, perused the material available on record and gone through orders of the authorities below. In respect of, additions of Rs. 10 Lacs towards advance received for sale of flat No. 103 from Shalini Ashok Mukumdan, the assesee has filed ledger account copy, as per which advance for sale of flat has been collected on various dates. In respect of advances received from B.K. Ashok, the assesee has filed cash receipt along with agreement, as per which a sum of Rs. 19 Lacs was collected up to date of F.Y. 2010-11. Similarly, in respect of advance received from Kajal D.Sanke, the assesee has filed confirmation along with cash receipts and agreement for sale. All these evidences are part of paper book filed by the assessee. However, the Ld. AR for the assessee claims that the agreements for sale was not before the AO. Therefore, in order to verify correctness of claim of advance received from parties, the issue may be set aside to the file of the AO. We find that when, the assessee has furnished primary evidences including confirmation from the parties, it is for the AO to ascertain correctness of claim made by the assessee by carrying out, further investigation including summoning the parties for verification. In this case, we find that, the AO has taken adverse view, in respect of advances received from above parties only for the reason that the parties were not responded to u/s 133(6) notices. No doubt, when information has been called for from the parties, they should file necessary details, but non furnishing of information by the parties cannot be attributed to the assessee, because attendance of parties before the AO is not in the hands of the assessee. At best, assessee can file whatever it can file before the AO. In this case, the assessee has discharged its onus by filing primary evidences including confirmation from the parties. Therefore, we are of the considered view that the AO was incorrect in coming to the conclusion that advances received from three parties is not proved.

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