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Income Tax Appellate Tribunal, “D” BENCH: KOLKATA
Before: Shri M. Balaganesh, AM & Shri S. S. Viswanethra Ravi, JM]
ORDER Per Shri M. Balaganesh, AM:
This appeal by assessee is arising out of order of CIT(A)-7, Kolkata vide Appeal No. 69/CIT(A)-7/W-26(1)/14-15 dated 14.01.2015. Assessment was framed by ITO, Ward- 53(1), Kolkata u/s. 144 of the Income tax Act, 1961 (hereinafter referred to as the “Act”) for AY 2006-07 vide his order dated 15.12.2008.
The first issue to be decided in this appeal is as to whether the addition u/s. 68 of the Act could be made in the sum of Rs.13,94,925/- in the facts and circumstances of the case.
The brief facts of this issue are that the assessee is a developer engaged in purchasing of land, developing it and selling to customers. The assessee received advance for sale of lands to the tune of Rs.18,16,925/- which were remaining outstanding as on 31.03.2006 and the same was duly reflected in the Balance Sheet of the assessee as pending liability and out of that the AO accepted Rs.3,50,000/- as genuine and the remaining sum of Rs.14,66,925/- was added as unexplained cash credit u/s. 68 of the Act as there was no compliance by the assessee in furnishing the requisite details. Before the Ld. CIT(A), the assessee filed the details i.e. names and addresses of persons from whom advances were received together with their mode of receipt to the tune of Rs.14,66,925/- as under:
4 Shri Bharat Naskar , AY 2006-07 4. The Assessee also filed confirmations from various parties. The assessee also filed confirmation from one party viz., M/s. Desire Agro Resort Development Pvt. Ltd. from whom assessee had received Rs. 10 lacs by cheque which was also supported by a Memorandum of Understanding dated 07.03.2006 entered into with that party. Since this is an additional evidence the Ld. CIT(A) rightly called for remand report from the AO. The Ld. CIT(A) on obtaining remand report confirmed the addition to the tune of Rs.13,94,925/- made by the AO after giving relief of Rs.72,000/- in respect of two parties which were accepted by the AO in the remand proceedings. Aggrieved, assessee is in appeal before us on the following ground no.1:
1. That on the facts and circumstances of the case, the Ld. CIT(A), Kolkata erred in confirming the addition of Rs.13,94,925/- u/s. 68 of the Act, being the amount of advance received from eleven parties against his project at “Janapriya Park Abasan.
The ld AR argued that the AO called for information u/s. 133(6) of the Act from nine parties. Out of that the notice u/s. 133(6) of the Act could not be served on two parties i.e. Monoranjan Naskar and Shyamal Kayal. With regard to the remaining seven parties, no replies were received from them in response to section 133(6) of the Act. The Ld. CIT(A) observed that the addresses given by the assessee, the Postman who is an independent authority could not serve the notice u/s. 133(6) of the Act. He argued that the AO could have invoked procedure of issuing summons u/s. 131 of the Act or deputed Inspector to ascertain the present addresses of the parties as due to effluxion of time the assessee had lost touch with those parties. With regard to amount received in the sum of Rs.10 lacs from Desire Agro Resort Pvt. Ltd., the Ld. AR placed reliance on the copy of MOU dated 07.03.2006, which is enclosed in the paper book pages 28 to 40. He also stated that the assessee received another cheque of Rs.10 lacs as stated in the MOU vide cheque No.464611 dated 21.03.2006 drawn on HDFC bank, Golpark Branch but the said cheque got dishonoured due to insufficient funds and the same got finally cleared on 05.04.2006 which falls in next AY 2007-08. These facts are very much evident from the bank statement enclosed in assessee’s paper book pages 59. The Ld. AR also stated that confirmations were filed by these nine parties before the Ld. CIT(A) together with their mode of payment to the assessee. He further stated that some parties like Monoranjan Halder and Tamali Mukherjee had obtained refund of their amounts due to their urgent financial commitment which were also refunded back by the assessee. These facts were also stated in the confirmation and in 5 Shri Bharat Naskar , AY 2006-07 the replies filed by the assessee before the AO in the remand proceedings. He stated that the parties had filed their confirmation together with their respective identity and hence, the veracity of their payment to the assessee could not be doubted or questioned. All the payments made were small amounts in installments which got converted into sale proceeds in future and accordingly, prayed for deletion of the addition u/s. 68 of the Act.
In response to this, the Ld. DR argued that the assessee extended no cooperation either in the original assessment proceedings or in the remand proceedings. All the confirmations filed from ten parties could not be relied on as they were all in the same format. With regard to the sum received from Desire Agro resort Development Pvt. Ltd. to the tune of Rs. 10 lacs the assessee had never proved the existence of this company. He vehemently relied on the order of the Ld. CIT(A).
We have heard the rival submissions and perused the materials available on record. We find that the assessee had given complete list of names and addresses of the parties from whom advances were received for sale of land, mode of receipt, confirmation of parties together with their Voter Identity or other identity proof and MOU for receipt of Rs.10 lacs from Desire Agro Resort Development Pvt. Ltd. We find that some parties had been refunded their advances by assessee in subsequent years in order to meet their financial exigencies and these have been duly confirmed by those parties. For others, the advances were converted into sales in subsequent years and these facts were not controverted by the revenue before us. Hence, we hold that there is no case made out for making an addition u/s. 68 of the Act and is accordingly deleted. This ground of appeal of assessee is allowed.
8. The second issue to be decided in this appeal is as to whether the Ld. CIT(A) is justified in upholding the addition of Rs.1,24,205/- made towards unexplained expenditure in the facts and circumstances of the case.
The Ld. AO found from the cash book that certain payments were made on the following dates: “Dates Expenditure amount 1. 03.02.06 Rs. 16,270/- 2. 10.03.06 Rs. 25,963/- 3. 11.03.06 Rs. 30,660/- 4. 16.03.06 Rs. 30,000/- 5. 17.03.06 Rs. 19,209/- 6 Shri Bharat Naskar , AY 2006-07 6. 18.03.06 Rs. 2,200/- Rs.1,24,205/-”
The Ld. AO observed that on these dates, the assessee did not possess the requisite cash balance and in the back of those vouchers the recipients have duly signed and had put a different date than the date mentioned in the voucher on the front side. On the second date i.e. the date mentioned in the back of voucher, the Ld. AO observed that the cash balance was available with the assessee. It was explained that assessee only had part time accountant who used to come once in a week and prepare the accounts and all the vouchers including the vouchers for payment to be made in future on a direction to some officials of assessee to get signature from the respective payees at the back of the vouchers with dates mentioned thereon. While entering in cash book, instead of recording the payments on the second date i.e. the date mentioned in the back of vouchers, the accountant had erroneously entered the date of voucher i.e. the date mentioned in the front side of the voucher, thereby leading to deficit in cash balance. The AO did not agree with this explanation and found that it is only an afterthought. Accordingly, he made addition u/s. 69C of the Act as unexplained expenditure in respect of the said payments in the sum of Rs.1,24,205/-. Before the Ld. CIT(A), the assessee explained as follows: Voucher Dt. Name of the parties Amount Date of payment 03.02.2009 Sk. Jahur Rs. 15,000/- 04.02.2006 -do- Anil Krishna Naskar Rs. 15,000/- -do- 07.03.2006 Sahadeb Pandit Rs. 20,000/- 18.03.2006 -do- Kalipada Santra Rs. 10,000/- -do- -do- Sadhan Saha Rs. 15,000/- 20.03.2006 11.03.2006 Monoranjan Halder Rs. 15,000/- -do- -do- Sadhan Saha Rs. 15,000/- 21.03.2006 15.03.2006 Debasish Naskar Rs. 10,000/- 18.03.2006 -do- Sahdan Saha Rs. 15,000/- 25.03.2006 17.03.2006 Abul Kasem Mondal Rs. 10,000/- 20.03.2006 -do- Manoranjan Halder Rs. 15,000/- 21.03.2006 -do- Sadhan Saha Rs. 15,000/- 27.03.2006
The Ld. CIT(A), however, ignored the aforesaid explanation and confirmed the addition made by the AO. Aggrieved, the assessee is in appeal before us on the following ground no. 2:
2. That on the facts and circumstances of the case, the Ld. CIT(A), Kolkata erred in confirming the addition of Rs.1,24,205/- u/s. 69C of the Act, being the amount of advance paid to land owners against taking over the possession of their land by the appellant for the purpose of his business.”
7 Shri Bharat Naskar , AY 2006-07 12. We have heard rival submissions and gone through facts and circumstances of the case. It is not in dispute before us that the assessee was not conversant with accounting and tax matters. It is not in dispute before us that the assessee had engaged a part time accountant for recording his vouchers and entering the accounts. It is not in dispute before us that the assessee indeed has been maintaining books of account regularly and the same were also furnished before the AO. The instant addition is made only based on mis-match of dates. The explanation offered by the assessee that the part time accountant who comes once in a week prepares the vouchers for the transactions already entered during the week and also for transactions to be entered in the next week and also directing the concerned official of the assessee to obtain the signature of the payees in the back side of the vouchers together with the respective dates, is satisfactory. It is not in dispute that the assessee indeed had sufficient cash balance on the second date mentioned in the voucher i.e. the date at the back of the vouchers. Hence, the same cannot be considered as an afterthought and accordingly the addition made u/s. 69C of the Act is hereby deleted. This ground of appeal of assessee is allowed.
In the result, the appeal of the assessee is allowed.
Order is pronounced in the open court on 18.11.2016. Sd/- Sd/- (S.S. Viswanethra Ravi) (M. Balaganesh) Judicial Member Accountant Member Dated : 18th November, 2016 Jd.(Sr.P.S.) Copy of the order forwarded to: 1. Appellant – Shri Bharat Naskar, Village-Krishna Rampur, P.O. Amgachia, Bishnupur, Dist. 24 Pgs (S), 2 Respondent –ITO, Ward-26(1), Kolkata 3. The CIT(A), Kolkata 4. CIT , Kolkata DR, Kolkata Benches, Kolkata 5. /True Copy, By order,