M/S. BEST CITY PROJECTS (INDIA) PVT. LTD.,NEW DELHI vs. ACIT, NEW DELHI

The only ground raised by the assessee reads as under:-

“The ld.CIT(A) has erred in law & facts of the case by ignoring the submissions made by the assessee company and in confirming the additions of Rs.90,00,000/- as unexplained credit u/s 68 of the Act, which is not based on seized material and is merely based on surmises, estimates and is highly arbitrary, unjustified, bad in law, uncalled for and merely on presumption of the ld.A.O.”

At the time of hearing before us, it is stated by the learned counsel that during the accounting year relevant to assessment year under consideration, the assessee entered into an agreement to sell 10 acres of land at Village Shimla Maulana, Panipat, Haryana for a sum of `20,96,32,500/- to M/s Greencity Buildtech Limited. The assessee had received the advance of `90 lakhs against the agreement to sell. However, by mistake, the sum of `90 lakhs was shown as loan and advance. That during the assessment proceedings, the Assessing Officer asked the assessee to produce the confirmation of the said party. That the said party viz., M/s Greencity Buildtech Limited was avoiding the payment of balance amount and getting the land registered in its name and, therefore, it avoided the assessee. Therefore, the assessee could not furnish any confirmation from the said party. That during the proceedings before the CIT(A), the assessee submitted the copy of agreement to sell between the assessee and M/s Greencity Buildtech Limited. The CIT(A) admitted the same. However, he sustained the addition on the ground that the assessee has not submitted the original agreement to sell and it is humanly improbable that a person who has given `90 lakhs to other will become untraceable to the person who has to repay the same. He stated that probably at the relevant time, M/s Greencity Buildtech Limited was not in a position to pay `20 crores to the assessee and, therefore, they avoided the assessee. Learned CIT(A) ignored this important fact and has only considered the advance paid by M/s Greencity Buildtech Limited which was even less than 5% of the total sale consideration. He stated that now the assessee has been able to trace M/s Greencity Buildtech Limited and if the matter is set aside to the file of the Assessing Officer, the assessee will be able to furnish not only the confirmation but all other evidences on record.

Learned DR, on the other hand, relied upon the order of the learned CIT(A) and he reiterated that it is highly improbable that a person who has given the sum of `90 lakhs to the assessee will become untraceable. It is always possible that a person who has received the money will become untraceable because he has to pay back the money but it can never happen that a person who has paid the money will disappear. He also stated that since adequate opportunity has already been allowed by the Assessing Officer, the addition made by the Assessing Officer should be sustained.

We have considered the rival submissions and have perused the order of the Assessing Officer and learned CIT(A). We find that learned CIT(A) has admitted the agreement to sell between the assessee and M/s Greencity Buildtech Limited as additional evidence. However, after admitting the same, learned CIT(A) failed to consider the same in its totality. On one hand, learned CIT(A) admitted the same but, at the same time, he doubted the authenticity of agreement to sell. He also failed to notice the important fact that as per agreement to sell, the assessee had agreed to sell 10 acres of land for a sum of `20,96,32,500/-. Though M/s Greencity Buildtech Limited had given the advance of `90 lakhs but they had to pay more than `20 crores to the assessee. Therefore, the presumption that the assessee was to pay the amount and M/s Greencity Buildtech Limited was to receive the amount is contrary to the agreement to sell. In our opinion, it would meet the ends of justice if the orders of lower authorities are set aside and matter is restored to the file of the Assessing Officer. We order accordingly and direct the Assessing Officer to allow adequate opportunity of being heard to the assessee. We also direct the assessee to produce all the evidences before the Assessing Officer in support of its contention that the sum of `90 lakhs was received as advance from M/s Greencity Buildtech Limited. It will also produce

In the result, the appeal of the assessee is allowed for statistical purposes. Decision pronounced in the open Court on 11.08.2016.