ITO, WD-2(4), KOLKATA, KOLKATA vs. M/S SHREE GURU REALTORS PVT. LTD., KOLKATA

This appeal is preferred by the Revenue against the order of ld. Commissioner of Income Tax (Appeals)-4, Kolkata dated 16.07.2015.

The common issue involved in Grounds No. 1 & 2 relates to the deletion by the ld. CIT(Appeals) of the addition of Rs.19,20,000/- made by the Assessing Officer on account of unexplained cash deposit found to be made in the Bank account of the assessee with HDFC Bank.

The assessee in the present case is a Company, which is engaged in real estate business. The return of income for the year under consideration was filed by it on 28.09.2012 declaring total income of Rs.6,16,090/-. In its Bank account maintained with HDFC Bank, cash deposits aggregating to Rs.19,20,000/- were made by the assessee- 2 Assessment Year: 2011-2012 company during the year under consideration. During the course of assessment proceedings, the assessee was required by the Assessing Officer to explain the source of the said cash deposits. According to the Assessing Officer, the assessee, however, could not produce the cash book in order to explain the said cash deposits made in its Bank account. He, therefore, treated the said cash deposits as unexplained and made addition of Rs.19,20,000/- to the total income of the assessee.

The addition of Rs.19,20,000/- made by the Assessing Officer on account of unexplained cash deposits made in its Bank account was challenged by the assessee in the appeal filed before the ld. CIT(Appeals) and after considering the submissions made by the assessee, the ld. CIT(Appeals) deleted the said addition made by the Assessing Officer for the following reasons given in paragraph no. 4.2 of his impugned order:- “4.2. I have considered the oral as well as the written submission of the AR of the appellant on the matter in coming to a decision. The assessment order is also considered. I find from the material facts on record that requisite details to explain the impugned cash deposits were filed before the AO vide submission dated 03.02.2014 containing the cash flow statement as well as the cash book for the period 01.04.2010 to 30.03.2011. The AO has simply brushed aside these material documents as mentioned in the assessment order as being not produced by the assessee inspite of several opportunities given in this regard. I find the action of the AO to be fraught with untenable premise. Moreover, on going through the cash book of the appellant, I find that the impugned amounts are all accounted for. Hence I find that the action of the AO in making the impugned addition is without any legal or accounting basis. The AO has not come to a logical conclusion with conclusive material proof in making the said addition. Under the facts and circumstances, I am unable to endorse the action of the AO which is now directed to be deleted. The AO is directed accordingly. This ground is allowed”.

We have heard the arguments of both the sides on this issue and also perused the relevant material available on record. The main contention raised by the ld. D.R. is that the relevant details to explain the impugned cash deposits were not furnished by the assessee before the Assessing Officer and the finding recorded by the ld. CIT(Appeals) while 3 Assessment Year: 2011-2012 giving relief to the assessee on this issue is contrary to the observations made by the Assessing Officer in the assessment order. However, as pointed out by the ld. counsel for the assessee from the submissions made before the Assessing Officer vide letter dated 03.02.2014 (copy at page no. 1 to 3 of the paper book), the relevant details to explain the impugned cash deposits were duly furnished by the assessee during the course of assessment proceedings before the Assessing Officer and even the copy of cash book was also filed along with the said letter to substantiate the said explanation. He has also pointed out from page 3 of the assessment order that there was a specific mention made by the Assessing Officer to the written submission filed by the assessee. Keeping in view this submission made by the ld. counsel for the assessee, we find no infirmity in the impugned order of the ld. CIT(Appeals) treating the cash deposits found to be made in the Bank account of the assessee with HDFC Bank as explained and deleting the addition made by the Assessing Officer on this issue. The same is, therefore, upheld dismissing Grounds No. 1 & 2 of the Revenue’s appeal.

The issue raised in Ground No. 3 of the Revenue’s appeal relates to the deletion by the ld. CIT(Appeals) of the addition of Rs.55,24,450/- made by the Assessing Officer on the basis of stamp duty valuation of the property sold by the assessee.

The property viz. Unit-E 304, City Centre, Salt Lake lying in its stock was sold by the assessee-company during the year under consideration for Rs.93,56,000/-. Since the fair market value of the said property as on the date of sale was determined by the concerned authority for stamp duty purpose at Rs.1,48,80,450/-, the difference of Rs.55,24,450/- (Rs.1,48,80,450/- minus Rs.93,56,000/-) was added by the Assessing Officer to the total income of the assessee as business profit.

The addition of Rs.55,24,450/- made by the Assessing Officer was challenged by the assessee in the appeal filed before the ld. CIT(Appeals)

We have heard the arguments of both the sides on this issue and also perused the relevant material available on record. It is observed that the immovable property sold by the assessee during the year under consideration was not its capital asset, but the same constituted its stock- in-trade. The provisions of section 50C thus were not applicable in the case of the assessee and the addition on the basis of valuation made for the purpose of stamp duty could be made only as per the provisions of section 43CA of the Act and not section 50C. However, the provisions of section 43CA having been introduced in the Statute only w.e.f. Assessment Year 2014-15, the same were not applicable to the year under consideration, i.e. A.Y. 2011-12 and, in our opinion, the addition made by the Assessing Officer on this issue, was rightly deleted by the ld. CIT(Appeals) by holding the same to be unsustainable. In that view of the matter, we uphold the impugned order of the ld. CIT(Appeals) on this issue and dismiss Ground No. 3 of the Revenue’s appeal.

In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on 7th day of February, 2018.