ECO PROPERTIES PVT. LTD.,KOLKATA vs. DUPUTY COMMISSIONER OF INCOME TAX-CIR-2, KOLKATA, KOLKATA

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-I, Kolkata dated 08.10.2013. Assessment was framed by DCIT, Circle-2, Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 28.11.2008 for assessment year 2006-07.

Sole issue raised by assessee in its appeal is that Ld. CIT(A) erred in confirming the action of Assessing Officer by disallowing a sum of ₹3,52,056/- A.Y. 2006-07 Eco Properties Pvt. Ltd. v. DCIT, Cir-2, Kol. Page 2 on account of deposit received by assessee on behalf of purchaser / tenant of the office space / flat.

Brief facts of the case are that assessee in the present case a Private Limited Company and engaged in the business of building construction and rental business. During the year, assessee earned income from its business, house property, capital gains and filed its return on 12.03.2007 declaring total income of ₹ 14,40,645/-. Subsequently, the case was selected for scrutiny and thereto a notice issued u/s. 143(2) of the Act on 28.09.2007. The assessee in its balance-sheet has shown a liability for an amount of ₹3,52,056/- under the head “Municipal Tax Deposit”. The assessee submitted that said money was accepted by assessee on behalf of purchaser/tenant of the flat with a view to make the payment to the Municipal Corporation. However, Assessing Officer during the course of assessment proceedings observed that said deposit from flat owner/tenant has neither been paid to the municipal corporation nor refunded to the flat owner/tenant. Accordingly, AO treated the same as trading receipt and added back to the total income of assessee.

Aggrieved, assessee preferred an appeal before Ld. CIT(A) who upheld the action of AO.

Before us Ld. AR submitted that the liability towards municipal tax has been paid in the financial year 2007-08. In support of this assessee has filed additional evidence before us. The ld. AR requested the Bench for the verification of additional evidence to remit the matter to file of AO. On the other hand, Ld DR has raised no objection if the matter is restored back to the file of AO. A.Y. 2006-07 Eco Properties Pvt. Ltd. v. DCIT, Cir-2, Kol. Page 3 6. We have heard rival contentions of both the parties and perused the materials available on record. At the outset, it is observed that Ld AR submitted additional evidence and which is required to be verified at the level of Assessing Officer. We find that the AO made the addition for the money accepted from the flat owners and tenants towards the liability of Municipal Corporation which was not paid in the year of consideration. However before us the ld. AR submitted that Municipal tax has been paid in the financial year 2007-08. Accordingly we in the interest of natural justice and fair play are inclined to restore back the matter to the file of AO with the direction to examine the issue afresh as per law after providing reasonable opportunity of being heard to assessee. Hence, this ground of assessee is allowed for statistical purpose.