BHA ASSOCIATES PVT. LTD.,NEW DELHI vs. ACIT, NEW DELHI

Brief facts of the case are that for the AY 2009-10 assessee filed their return of income on 19.02.2010 declaring a total income of Rs. 23,85,132/- and on a perusal of the AIR Information the AO found that the assessee had transacted Rs. 77,27,025/- on 03.06.2008 on account of purchase of immovable property at Jaipur but it was not reflected in the balance sheet of the assessee for the period ended by 31.03.2009 as such AO sought the explanation of the assessee. Assessee submitted that Sh. Pravin Juneja who is the Promoter Director of the assessee company but at the time of finalization of balance sheet, the said Jaipur property account and Pravin Juneja share capital account were set off inadvertently but the same was accounted for in the books of account of the assessee. AO did not accept the said explanation of the assessee and proceeded to add the same to the income of the assessee under section 69 of the Act. Besides this, AO added a sum of Rs. 1,67,759/- alleged expense of business and a sum of Rs. 38,535/- under the advertisement expenses.

Appeal preferred by the assessee was dismissed by the Ld. CIT (A) confirming the assessment order and the addition made to the income of the assessee.

Aggrieved by the impugned order, assessee is before us in this appeal, stating that an amount of Rs. 50 lakhs out of Rs. 84,20,000/- relates to the earlier years and the expenditure of salary and advertisement were actually incurred by the assessee.

It is the argument of the Ld. AR that property was purchased by one Pravin Juneja who is the promoter Director of the assessee company and page no. 53 of the PB clearly establish that a sum of Rs. 50 lakhs was paid between 22.11.2005 and 19.10.2007 2

We have carefully gone through the record including the Paper Book submitted by the assessee. Page No. 57 thereof is the allotment letter dated 05.01.2008 issued by Jaipur Need Nirman Pvt. Ltd. showing the assessee as the allottee of the property. It is clearly stated in this letter that a sum of Rs. 50 lakhs was paid by way of cheques between 22.11.2005 and 19.10.2007 clearly in the earlier years as such an amount does not appear to be validly added in the current assessment year. Further according to the assessee all the payments were made to the Jaipur Need Nirman Pvt. Ltd. by way of cheques issued by Sh. Pravin Juneja the Director of the assessee. If the source of the payments, capacity of the party, genuineness of the transaction are verifiable ones that too when the major portion of the amounts appears to have been paid in the earlier previous years but is not relevant to the current assessment year, we find it difficult to sustain the addition of Rs. 84,20,000/- in the current year and we are of the considered opinion that this matter requires factual verification at the end of the AO, after giving the assessee a fair deal of opportunity for producing the evidence as to the sources of funds for making such payments, capacity of the party and genuineness of the transaction. With this view of the matter we set aside the issue to the file of the AO for verification.

Now coming to the expenses of Rs. 1,67,759/- relating to the business expenses of profession and house property and a sum of Rs. 38,535/- the advertisements expenses, the assessee admits that the income from profession and house property is only Rs. 20,000/-. There is no evidence before us to disbelieve the findings of the AO that these expenses do not relate to the business of the assessee and the nexus between the expense and the business is not clinchingly established. We, therefore, do not find any illegality or irregularity in the findings of the authorities

For the reason set forth in the preceding paragraphs, we set aside the issue relating to the addition of Rs. 84,20,000/- u/s 69 of the Act to the file of AO for verification as to the exact year in which such payments were made, source of funds for payment, capacity of the party to make such payments and the genuineness of the transaction after giving an opportunity to the assessee for producing necessary material. In respect of the expenses relating to Rs. 1,67,259/- and Rs. 38,535/- the appeal stands dismissed.

In the result, the appeal of the assessee is allowed in part for statistical purpose.