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Income Tax Appellate Tribunal, BANGALORE BENCH-SMC “ B ”
Before: SHRI VIJAY PAL RAO
Per Shri Vijay Pal Rao, J.M. : This appeal by the assessee is directed against the order dt.19.09.2016 of Commissioner of Income Tax (Appeals) for the Assessment Year 2012-13.
The assessee has raised the following grounds :
During the course of appellate proceedings, the Assessing Officer noted that the assessee has claimed unsecured loan of Rs.1,06,16,765 and also shown rental advance received to the extent of Rs.94,95,401. In response to the query from the Assessing Officer the assessee furnished copies of the rental
agreement and in some of the cases, copy of the bank statement. The Assessing Officer noted that the assessee has not furnished any proof in the following cases : i) Mahaveer Chand HUF Rs.12,50,000. ii) Yashveer Chopra Rs.5,00,000.
The assessee was asked to furnish the copy of rental agreement however the assessee did not furnish the same. Thus the Assessing Officer observed that the assessee claimed that the above advances were received in the F.Y.
2011-12 whereas no property was let out to them until 2014. Accordingly, the Assessing Officer held that the assesseeis not in a position to prove these as current liabilities and brought the said amount of Rs.17,50,000 to tax as unexplained investment. The assessee challenged this action of the Assessing Officer before the CIT (Appeals) but could not succeed.
Before the Tribunal, the learned Authorised Representative of the assessee has submitted that the assessee has let out about 55 premises. The assessee produced all agreements except in the case of two parties as the rent agreements were not finalized and executed in those cases however the assessee received the rent advance from these two parties. The learned Authorised Representative has then submitted that the assessee received these
Mr.
Mahaveer Chand, HUF, a cheque of Rs.3 lakhs was even dishonored. The learned Authorised Representative has referred to the Bank Memo of returning the cheque and submitted that due to this dishonor of the cheque, the assessee cold not let out the property to the said party and finally returned the amount of advance rent to Mr. Mahaveer Chand, HUF. He has referred to the bank statement of the assessee and submitted that the assessee refunded Rs.14 lakhs on 25.9.2014. Thus the learned Authorised Representative has submitted that against the advance rent of Rs.12,50,000 the assessee refunded Rs.14 lakhs which includes interest and compensation. As regards the rental advance of Rs.5 lakhs received from Mr. Yashveer Chopra, the learned Authorised Representative has submitted that the amount was received through cheque as reflected in the bank statement of the assessee. He has also referred to the legal notice issued by the assessee to the said party for taking the premises and recovery of outstanding rent. Finally the assessee refunded the said amount in two instalments of Rs.2,80,000 on 6.3.2014 and Rs.3 lakhs on 22.2.2014 total amounting to Rs.5,80,000 which includes interest and compensation. The learned Authorised Representative has submitted that when the assessee has returned the rental advance in the subsequent year and the authorities below has not considered the same then the matter may be remitted to the file of the Assessing Officer for verification.
On the other hand, the learned Departmental Representative has vehemently opposed to the claim of the assessee and submitted that the nature of the transaction is relevant as whether the assessee has actually received these amounts as rental advance or not. He has further contended that even at the time of refund the assessee has not received any receipt to explain the purpose and the nature of transaction. He has also referred to the bank account of the assessee and submitted that prior to the issue of cheque there is a cash deposit and further the payment to one of the party claimed by the assessee is nothing but through a bearer cheque and therefore it cannot be ascertained from the bank statement who has received this amount. He has relied upon the orders of the authorities below.
Having considered the rival submissions as well as the relevant material on record, it is noted that despite the repeated opportunity given by the Assessing Officer as well as CIT (Appeals), the assessee neither produced any documentary evidence in the shape of rent agreement or otherwise nor produced the confirmation from the parties to substantiate its claim of advance rent. Further the assessee has now claimed as refund of the amount with interest and compensation which is also not a practice in the case of advance rental as it does not carry any interest and only the principle amount is refunded at the time of expiry or termination of tenancy. Therefore the entire explanation of the assessee is contrary to the prevailing practice of advance rent received in the case of letting out of property. Further this advance claimed by the assessee is not reflected being the multiple of the monthly rent.
As in the case of Mr. Yashveer Chopra the assessee has claimed a monthly rent of Rs.6,600 whereas the advance claimed to have been received of Rs.5 lakhs which is also not an acceptable claim of advance as per the practice in the Bangalore city is 10 months rent. All these facts show that the assessee has failed to establish this claim of advance rental in respect of these amounts amounting to Rs.17,50,000 from these two parties. Accordingly, in the facts and circumstances of the case, I do not find any error or illegality in the orders of the authorities below.