B M DEVELOPERS,SURAT vs. ITO, WARD 2(3)(1), SURAT

In appeal, the assessee submitted that the aforesaid amount was received as advance from it’s prospective customers and during the remand proceedings initiated by CIT(A), the assessee gave complete details of persons from whom the booking amount had been received and also it was submitted before Ld. CIT(A) that the aforesaid booking amount had also been refunded back to the prospective customers, in subsequent years through banking channels. Accordingly, it was submitted that since the amount in question had been returned back by the assessee to it’s prospective customers, then the aforesaid amount cannot be treated as “5.8 Ground No.2 deals with addition of Rs. 60,40,982/- pertaining to sundry creditors shown by appellant. The conclusions drawn during the assessment proceedings is at Para no.5 of the assessment order dated 30.11.2016. On perusal of this para it is noted the appellant has failed to provide explanation as to why the creditors are pending in the balance sheet in view of the fact that once the land is handed over to the railways authorities then there is no question of construction on that land and also when the appellant in assessment year 2015-16 has shown NIL income and paid no taxes with showing outstanding creditors at Rs. 59,55,982/-. Based on these facts the A.O concluded that the sundry creditors of Rs.60,40,982/- remains unexplained. During the appellate proceeding, it was noted that for this issue to be examined the evidences submitted during appellate proceeding, the A.O was asked by a remand report with specific requirement as noted in letter dated 17.02.2020, i.e. vide point 2 of the remand letter issued by CIT(A) which reads as "(ii). Details Such as PAN card, affidavits, voter ID, balance sheet of earlier years. Ledger accounts etc. regarding sundry creditors. You are directed to give findings regarding years of receipt genuineness of the booking amounts." On this specific requirement made by the appellate authority the A.O examined the issue to the extent of ledger account and the submission filed by the appellant before this office. During the remand report the appellant has only furnished the copy of ledger account and the entries in his books of account to show the transaction. But it is noted that the appellant has not produced any evidences any regard to identity and credit worthiness of the creditor before the A.O during the original assessment order as well as during the remand report, even after providing so many opportunities by the A.O in fact the conclusion drawn by the A.O during the remand report dated 05.06.2024 is worth noting, "However, it is pertinent to mention here that the appellant has claimed to have received net booking consideration totaling to Rs. 11,25,500/- from different bookers in A.Y. 2011-12 however, on perusal of return of income for A. Y 2011-12, it is noticed that the appellant has disclosed closing balance of sundry creditors as on 31.03.2011 of Rs. 2,38,000/- only. The appellant has not substantiated the above discrepancy in its submission. In view of the above, the contention of the assessee may be rejected and addition made by the A.O may be confirmed.” Thus, from the remark it is noted that the appellant has failed to explain and substantiate the identity and credit worthiness of the sundry creditors before the A.O. Further the onus is on the appellant to prove the identity and credit worthiness of the creditors as shown by him.”

The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A) confirming the addition made by the Assessing Officer.

In response, Ld. D.R. placed reliance on the observation made by the Assessing Officer and Ld. CIT(A) in their respective orders.

We have heard the rival contentions and perused the material on record.

On going through the facts of the assessee’s case, we are of the considered view the Ld. CIT(A) has erred in facts and in law in completely ignoring the details submitted by the assessee giving details of amounts received towards booking of flats and the subsequent refunds issued to these customers in subsequent years. Accordingly, in the interest of justice, the matter is restored to the file of Ld. CIT(A) to take into consideration the evidences filed by the assessee and pass appropriate orders, in accordance with law. The assessee is also directed to present a simplified chart giving breakup of each of the persons from whom the B M Developers vs. ITO Asst.Year –2014-15 - 6– booking amount of Rs. 60,40,982/- was received, giving details of their names, addresses and flat numbers etc. and also to specify when the refund was issued to these customers, giving details / particulars of such refunds to various customers. In case, the assessee is able to substantiate that the entire booking amount has been repaid / refunded back to the customers, then in our considered view, such booking amount cannot be treated as unexplained income of the assessee. Accordingly, the Ld. CIT(A) is directed to carry out the verification as directed above and thereafter, pass appropriate orders, in accordance with law, after giving due opportunity of hearing to the assessee.

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced under proviso to Rule 34 of ITAT Rules, 1963 on 25/03/2025