DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCEL-2(1), NAGPUR vs. M/S. SHREE SHAKTI REALTORES & INFRA, NAGPUR

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ITA 161/NAG/2023Status: DisposedITAT Nagpur31 July 2024AY 2019-20Bench: SHRI V. DURGA RAO (Judicial Member)15 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the appeal filed by the Revenue. Regarding the addition of Rs. 1,29,21,196 under Section 69C, the Tribunal upheld the CIT(A)'s decision. The CIT(A) had found that the cash was paid by customers who booked plots through the assessee and was entered in the assessee's name in the cash book of M/s Tirupati Developers. The Tribunal agreed that the impounded documents from a third party were not conclusive evidence and that the AO had not brought any corroborative evidence. The assessee had provided documentary evidence showing that these cash payments were made by customers to M/s Tirupati Developers, against which sale deeds were executed. The Tribunal noted that the assessee acted as an agent and handed over the money to the principal, and the expenditure was not incurred from the assessee's own resources. The Tribunal found the invocation of Section 69C to be fragile and misconceived, as the assessee had not incurred any expenditure. The Tribunal also upheld the deletion of the addition of Rs. 1,41,750 on account of marketing income, agreeing with the CIT(A) that the impounded documents were not conclusive and that the assessee had disclosed its share of income which was more than what was mentioned in the impounded documents. The Tribunal found no interference called for in the CIT(A)'s order.

What were the facts?

The Revenue, represented by the Deputy Commissioner of Income Tax (DCIT), has appealed against an order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] dated March 29, 2023. The appeal pertains to Assessment Year 2019-20 and challenges the deletion of additions made by the Assessing Officer (AO). The AO had made additions on account of unexplained expenditure under Section 69C of the Income Tax Act, 1961, amounting to Rs. 1,29,21,196, and marketing income of Rs. 1,41,750. These additions were based on documents impounded during a survey under Section 133A at the premises of M/s Tirupati Developers, where the assessee, M/s Shree Shakti Realtors & Infra, was involved in marketing plots. The assessee is a partnership firm engaged as a real estate agent and marketing agency.

What were the issues?

1. Whether the CIT(A) erred in deleting the addition of Rs. 1,29,21,196 on account of unexplained expenditure under Section 69C of the Income Tax Act, 1961, by holding that the cash was paid by customers and entered in the assessee's name in the cash book of M/s Tirupati Developers, and that impounded documents were not conclusive evidence. - Revenue's contention: The AO's findings were not appreciated, as the cash register maintained by M/s Tirupati Developers recorded all unaccounted cash receipts and payments against various expenditures, and the payments made by the assessee to M/s Tirupati Developers related to cash expenditure. The impounded documents were found during a survey and contained records of unaccounted cash receipts and payments in respect of the assessee. - Assessee's contention: Not recorded in the judgment. 2. Whether the CIT(A) erred in deleting the addition of Rs. 1,41,750 on account of marketing income, despite the addition being supported by impounded documents and the assessee not showing the amount as marketing income in its Profit & Loss account. - Revenue's contention: The AO's addition was supported by documents impounded during the survey at M/s Tirupati Developers' premises. The assessee had not shown this amount as marketing income in its P&L account for the year under consideration. - Assessee's contention: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 69C,Section 133A,Section 250,Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR

Before: SHRI V. DURGA RAO & SHRI K.M. ROY, ACCOUNTANT, MEMBER

For Appellant: Shri Suren Duragkar, CA
For Respondent: Shri Abhay Y. Marathe, Sr. DR

Date of Hearing – 29/07/2024 Date of Order – 31/07/2024

O R D E R PER K.M.ROY, A.M.

The present appeal has been preferred by the department challenging the impugned order dated 29/03/2023, passed under section 250 of the Income Tax Act, 1961 ("the Act") by the learned Deputy Commissioner of Income Tax, Central Circle-2(1), Nagpur [“learned DCIT”], for the assessment year 2019-20. 2. The grounds of appeal raised by the department are as follows:

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