KAILASH DAYANAND PUNJABI,PUNE vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE, DHULE

Facts of the case, in brief, are that the assessee is an individual engaged in the business of poultry farm under the name and style of Kailash Poultry Farm. He filed his return of income on 13.10.2016 declaring total income of Rs.76,15,730/- and agricultural income of Rs.1,82,176/-. The case was selected for scrutiny through CASS. Accordingly, statutory notice u/s 143(2) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was issued and duly served on the assessee. Subsequently notice u/s 142(1) of the Act along with a questionnaire was issued in response to which the assessee filed the requisite details from time to time.

During the course of assessment proceedings the Assessing Officer noted that the assessee has claimed advance of Rs.5,00,000/- for the property at Nashik which was given in year 2006-07 to Mr. Rahul Sawle. The said amount was lying with Mr. Rahul Sawle upto 31.03.2015. The assessee filed the copy of account statement from 01.04.2011 to 31.03.2015 with Mr. Rahul Sawle. The assessee claimed that the sale deal was not materialized so the amount was transferred to Dhruvtara Developers by Mr. Rahul Sawle. The assessee recorded the transaction during the year under scrutiny and credited to the capital account. However, the Assessing Officer rejected the contention of the assessee. According to him, no person could keep an advance with somebody over nine years without Interest. Hence the assessee's contentions are afterthought and not acceptable. The introduction of advance of Rs.5,00,000/- in the capital account of the assessee is nothing but income of the assessee within the meanings provisions of section 68 of the IT Act, 1961 which he added to the total income of the assesses.

The Assessing Officer further noted that the assessee has credited an amount of Rs.80,63,685/- to his capital account. On being questioned by the Assessing Officer it was submitted that he had entered into an agreement for purchase of flat at Pune. The total consideration of flat was Rs.1,01,91,500/- in the year 2010. The installments paid in earlier years were out of capital instead of under assets. The assessee reversed the entry debited to capital account and submitted that mistake was made of booking the same at its full value instead of the amount of installment paid. The remaining amount should have been shown as payable to the developer. The corrections are made in the books in FY. 2017-18. The said entry is journal entry having no introduction having any additional capital of any nature in cash or bank. During the year the assessee had paid of Rs.26,49,990/-. The assessee has paid installments in earlier years of Rs.45,98,575/-.

However, the Assessing Officer rejected the submission of the assessee. According to him the sudden credit of amount of investment in flat to the capital account after a period of six years is not true disclosure of financial aspects/investments. The assessee has not disclosed the investment in flat made in earlier years to the extent of Rs.45,98,575/- is nothing but concealed income. He, therefore, treated the same as unrecorded investment u/s 69 and added to the income of the assessee.

In appeal the Ld. CIT(A) / NFAC upheld the action of the Assessing Officer and dismissed the appeal filed by the assessee.

Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal by raising the following grounds:

The Ld. AO erred in making (CIT-A erred in confirming) addition of Rs.5,00,000 u/s 68 of the IT Act.

The Ld. Counsel for the assessee filed an application for admission of additional evidences / corroborative evidences along with a prayer by mentioning as under:

He accordingly submitted that he has no objection if the matter is restored to the file of the Assessing Officer with a direction to verify these details and give consequential relief.

The Ld. DR on the other hand while supporting the orders of the Assessing Officer and the Ld. CIT(A) / NFAC submitted that he has no objection for restoring the matter to the file of the Assessing Officer.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case made addition of Rs.5 lakhs on account of advance for property at Nashik and further made addition of Rs.45,98,575/- on account of investment in flat at Pune. We find the Ld. CIT(A) / NFAC upheld the above additions made by the Assessing Officer. It is the submission of the Ld. Counsel for the assessee that addition of Rs.45,98,575/- is not justified since the actual payments were duly made to the builder from 2009 to 2017 which are reflected in the bank account. Similarly, an amount of Rs.5 lakhs added by the Assessing Officer and confirmed by the Ld. CIT(A) / NFAC is also not justified since these are mere journal entries passed in the books of account. It is his submission that the additional evidences filed now go to the root of the matter and therefore the same should be admitted for adjudication of the issue. Therefore, considering the totality of the facts of the case and in the interest of justice, we admit the additional evidences filed before the Tribunal and deem it proper to restore the matter back to the file of the Assessing Officer with a direction to decide the issue afresh and in accordance with law after providing due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

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