DREAMS ESTATE,PUNE vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, PUNE, PUNE

PER SATBEER SINGH GODARA, J.M. :

This assessee’s appeal for assessment year 2017-2018,

arises against the National Faceless Appeal Centre [in short [the

“NFAC”] Delhi’s Din and Order No. ITBA/NFAC/S/250/2023-

24/1060840299(1), dated 13.02.2024, involving proceedings u/s.144

of the Income Tax Act, 1961 (in short “the Act”).

Heard both the parties. Case file perused.

raised in the instant appeal challenges both the learned lower

authorities action confirming sec.41(1) cessation of liability addition

of Rs.1 crore in the course of assessment dated 20.11.2019 as

2 ITA.No.403/PUN./2024 upheld to the extent of Rs.7,94,669/- in the CIT(A)-NFAC’s detailed

discussion reading as under :

“6.2.(ii). As per the Assessment Order dated 20.11.2019, para-

8 it is stated that the total Current liabilities of the appellant stood

120s 10.0768,284/- and due to non- compliance of the appellant

the AO treated Rs. 10.076 of Rs.100,00,000/- as unverifiable

current liability which was not genuine. Further, during the

remand proceedings with the Assessing Officer, the AO issued

letter to 31 sundry creditors on test check basis, where the

outstanding liability was of Rs.4 lakh and above. Out of the 31

creditors which were verified by the AO, one creditor, namely

Jayantilal and Co, whose balance was Rs.794669/-, stated that

he had written off this amount as bad debt in his books. Since,

this amount was written off by the creditor, it is treated as

cessation of liability u/s 41(1) of I.T. Act, 1961, and the amount of

Rs.794669/- is the income of the appellant for which the benefit

will not to be given to the appellant. The AO has verified all the

other creditors as appearing in Table no.2 of the remand report.

Therefore, the addition on account of unverified sundry creditors is

reduced from Rs.1,00,00,000 to Rs.7,94,669/-. Hence, this ground

of appeal is partly allowed.”

(iii) (Ground No.(c)- Addition of Rs.78,50,000/-on account of

unsecured loans- A perusal of the Record and Remand report

reveals that the following unsecured loans have been verified by

the Assessing officer, during the remand proceedings :

3 ITA.No.403/PUN./2024

As per the remand report the unsecured loan of Rs.37,50,000/-

has been verified by the Assessing officer. Hence the amount of

Rs.37,50,000/- is held as verified. With respect to loan

advanced by Sh. Dipali Santosh Kanade, it is seen that since

the lender has filed the return of income and has advanced the

loan of Rs.4,00,000/- through bank, it is held as genuine. As

regards, the loan advanced by Sh. Yash Vijay Sarda, it is seen

that there was an opening balance of Rs. 13.25 lakh and during

the year further sum of Rs.7,00,000/- was advanced. This

entire amount of Rs.20.25 lakh was returned to the lender

during the year through bank. Hence, this amount is held

explained, as the identity, creditworthiness and genuineness of

the transaction is established. Therefore, out of the total

addition of Rs.78,50,000/-, addition of Rs.30,00,000/-

(Rs.78,50,000- 48,50,000) is upheld. Therefore, the addition of

Rs.78,50,000/- on account of unsecured loans is reduced to

Rs.30,00,000/-.”

foremost argument before us is that it has already added back the

4 ITA.No.403/PUN./2024 very sum of Rs.7,94,669/- in it’s books pertaining to assessment

year 2022-2023. Faced with this situation, we accept assessee’s

contention herein in principle and direct the learned Assessing

Officer to verify this clinching fact and then ensure that the

impugned addition is not made twice in it’s hands. We further

clarify that in case it is found that the assessee’s books have

actually written off the amount in assessment year 2022-2023; the

addition made herein in assessment year 2017-2018 shall stand

deleted in absence of actual write-off in herein very terms.

made in the course of above stated assessment and restricted to

Rs.30 lakhs only in the lower appellate discussion.

corresponding 31 sundry creditors all along coupled with the

corresponding confirmations and other relevant details thereof. The

fact remains is that the learned lower authorities have prima facie

adopted pick and choose method in partly accepting it’s explanation

than rebutting the corresponding documentary evidence(s) filed. We

thus deem it appropriate in these peculiar facts and circumstances

that larger interest of justice would be made in case the learned

Assessing Officer re-examines this issue of Rs.30 lakhs unsecured

loan afresh. We make it clear before parting that it shall be the

assessee’s own risk and responsibility only to plead and prove all

the relevant facts within three effective opportunities before the

5 ITA.No.403/PUN./2024 Assessing Officer in consequential proceedings. Ordered

accordingly.

in above terms.

Order pronounced in the open Court on 29.08.2023.

Sd/- Sd/- (RAMA KANTA PANDA) (SATBEER SINGH GODARA) VICE PRESIDENT JUDICIAL MEMBER

Pune, Dated 29th August, 2024

VBP/-

Copy of the Order forwarded to :

BY ORDER,

// TRUE COPY //

Senior Private Secretary ITAT, Pune.