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Income Tax Appellate Tribunal, “A” BENCH, CHENNAI
Before: SHRI CHANDRA POOJARI & SHRI CHALLA NAGENDRA PRASAD
आदेश / O R D E R
PER CHANDRA POOJARI, ACCOUNTANT MEMBER
This appeal by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals)-5, Chennai, dated 04.03.2015 for the assessment year 2010-2011.
I.T.A.No.1438/Mds/2015 :- 2 -:
The first ground raised by the Revenue in this appeal is with regard to deleting the addition of �2,00,000/- being advance received for sale of land.
The facts of the case are that the assessee has received a sum of �2,00,000/- as advance towards sale of land. There was cancellation of sale agreement on 29.10.2010 wherein no mention of refund of advance. The Assessing Officer observed that the retention of advanced received after cancellation of the agreement of sale was unusual. The Assessing Officer stated that cancellation deed does not make any mention of the same nor the assessee able to provide any evidence for the repayment. From the perusal of the cancellation deed, the Assessing Officer observed that though both the parties have signed, no mention was found as to the repayment of the advance received of �2,00,000/-. It was found that the agreement for sale and cancellation deed were perused by the assessing officer. It was seen that both the deeds were registered with Registration Department, Government of Tamil Nadu. In the agreement dated 16.12.2009, it was noticed that the sale consideration was fixed at �27,20,100/- and a sum of �2,00,000/- was received by the assessee from Mr. R. Mani @ Raghavendramani on the date of agreement. In the cancellation I.T.A.No.1438/Mds/2015 :- 3 -: deed dated 29.03.2010, it was stated that the sale agreement dated 16.12.2009 was cancelled with the consent of both the parties as the purchaser acted contrary to the contents mentioned in the sale agreement. In the cancellation deed, nothing was mentioned about the return of advance money. Agreement for sale dated 16.12.2009 clearly reveals receipt of money by the assessee on 16.12.2009 and the same was shown as liability in the balance sheet of the assessee as on 31.03.2009. Though cancellation deed was dated 29.03.2010, it was contended by the assessee that the money was returned to the buyer of land in the next financial year.
The Assessing Officer nowhere doubted the receipt of �2,00,000/- by the assessee during the relevant to assessment year 2010-11.
That being the case, the Commissioner of Income Tax (Appeals) of the considered view that there was question of adding the sum as unsubstantiated liability. The Assessing Officer doubted the repayment by the assessee to the buyer of the land. But the transaction of repayment falls in the next financial year 2010-11 and it cannot be a ground to treat the receipt as unsubstantiated liability. No finding was given by the Assessing Officer to say that the assessee did not receive the advance from the purchaser of the land. In the absence of no finding, the addition cannot be I.T.A.No.1438/Mds/2015 :- 4 -: sustained. The Commissioner of Income Tax (Appeals) deleted the addition of �.2,00,000/- made towards unsubstantiated liability being land advance. Against this, the Revenue is in appeal before us.
We have heard both the parties and perused the material on record. In this case, the plea of the ld. Departmental Representative is that there was no evidence for the payment of refund of �2,00,000/- by the assessee to the concerned parties. However, the ld. Authorised Representative for assessee placed a copy of the receipt dated 15.05.2010 for the payment of �2,00,000/- to Shri.D. Umapathi which was produced before us and the Assessing Officer had no occasion to examine the same. The Commissioner of Income Tax (Appeals) has deleted the addition without any basis. In our opinion, it is appropriate to remit this issue back to the file of the Assessing Officer to make investigation and decide the issue afresh. This ground is partly allowed for statistical purposes.
The next ground raised by the Revenue is with regard to deletion of addition of �75,65,717/- made towards unsubstantiated liability.
I.T.A.No.1438/Mds/2015 :- 5 -:
The facts of the case are that there was difference between the outstanding liabilities in respect of some creditors as per balance sheet and the amounts reflected in the statements relating to those creditors furnished by the assessee and the same was brought to tax by the Assessing Officer. Aggrieved the assessee preferred an appeal before the Commissioner of Income Tax (Appeals).
Before the Commissioner of Income Tax (Appeals), the ld. Authorised Representative for assessee argued that the Assessing Officer was wrong in comparing the outstanding liabilities with the schedule of payments provided by the institutions from which loans were availed by the assessee. The ld. Authorised Representative for assessee also contended that in some of the accounts, no repayments were made and the opening balance was taken as closing balance as on 31.03.2010 but the Assessing Officer took the figures from the repayment schedule and miscalculated the difference. The Commissioner of Income Tax (Appeals) observed that from the details furnished, the assessee's contention was correct. He observed that a perusal of statements which are actually schedules reveals that the Assessing Officer took the dues as on 31.03.2010 which are not actual and compared them with I.T.A.No.1438/Mds/2015 :- 6 -: the balance outstanding as on 31.03.2010 in the balance sheet.
The Assessing Officer failed to take the actual figures from the books of accounts available in respect of those accounts. The method adopted by the Assessing Officer was not correct and cannot be correct. The addition was unwarranted and an exercise in vain. The Assessing Officer should have obtained accounts copy from the creditors and compared with the figures disclosed by the assessee in the balance sheet. The repayment schedule was mistaken by the Assessing Officer as actual account. It was seen that out of seven items, five are opening balances and there being no transactions with them in this year, no addition can be made in this year. According to the assessee, remission of liability in respect of which a deduction was allowed in any previous year can alone be brought to tax u/s 41(1) but not an alleged unsubstantiated liability. The ld. Authorised Representative for assessee also placed reliance on the decision of Gujarat High Court in the case of CIT vs Bhogilal Ramjibhai Atara (2014) 43 taxmann.com 55 in support of his contention. Since the loans to the seven parties are outstanding as on 31.03.2010 and continued to be carried on or repair in subsequent years, the outstanding liability stood proved and did not get remitted or ceased. The Commissioner of Income I.T.A.No.1438/Mds/2015 :- 7 -:
Tax (Appeals) deleted the addition of �75,65,717/- made by the Assessing Officer. Against this, the Revenue is in appeal before us.
We have heard both the parties and perused the material on record. There was difference between the amount reflected in the books of accounts of the assessee and amount shown in the respective parties account in their books of accounts which is as follows:
Sl. Details of loan Amount Amount as per Difference No creditor claimed by statement of � assessee the bank, Finl. � Institution etc Rs 1 Cholomandalam Finance 1,17,926/- 39,105/- 78,821/- 2 ICICI Bank 1,79,119/- Nil 1,79,119/- 3 ING VYSYA 5,28,559/- 3,12,298/- 2,16,261/- 4 Reliance 6,62,814/- 4,21,447/- 2,41,367/- 5 Sakthi Finance 12,93,400/- 9,90,966/- 3,02,434/- 6 Shriram Transport Finance 1,28,85,901/- 63,95,047/- 64,90,854/- 7 SREI Equipment Finance 1,23,052/- 66,191/- 56,861/- P. Ltd TOTAL 75,65,717/-
The assessee has not furnished the exact reason for the difference in his books of accounts. It is the duty of the assessee to file necessary reconcil statement with the assessee’s book of accounts and balance I.T.A.No.1438/Mds/2015 :- 8 -: appearing on parties books of accounts. If it is opening balance, the same should be proved with the earlier year balance sheet as on 31.03.2009. Without examining all these things the Commissioner of Income Tax (Appeals) deleted the addition. In our opinion, it is appropriate to remit the issue back to the file of the Assessing
Officer and with the direction to the assessee to place necessary evidence to pin point exact difference appearing with assessee’s books of accounts and respective parties account. The Assessing
Officer shall pass fresh order after examining the books of accounts alongwith parties accounts as appearing in their books of accounts.
The ground is partly allowed for statistical purposes.
The last ground raised by the Revenue in this appeal is with regard to deletion of addition of �15,00,000/- made towards advance
received for sale of vehicles.
The facts of the case are that the assessee received payments from parties who wanted to buy back the vehicles from the assessee was treated as unsubstantiated liability as the letters sent to those parties returned unserved and the confirmation letters from the parties obtained by the assessee lack veracity. The assessee stated before the I.T.A.No.1438/Mds/2015 :- 9 -:
Assessing Officer that the advance of �15,00,000/- received from the drivers who are the prospective buyers of the vehicle was adjusted in the next year against the hire charges payable to them because they did not buy the vehicles from the assessee. The assessee also contended that the amount of �15,00,000/- was received through cheques from one Mr. Ramu (�12,95,OOO by cheque + �2,05,OOO/- by cash). However, the Assessing Officer made an addition of �15,00,000/-. Aggrieved, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals).
The Commissioner of Income Tax (Appeals) observed that the Assessing Officer did not take the investigation to the logical end of proving the liability as bogus. In the of the assessment order, the Assessing Officer observed that the bank accounts particulars of the assessee were obtained and verified. But the ledger account in the name of Shri Ramu for new vehicle reveals receipt of �.15 lakhs (cheque & cash). The Assessing Officer did not make efforts to ask the assessee to produce the parties for examination when his letters to the creditors returned unserved. The Assessing Officer was content in stating that the confirmation letters of the creditors produced by the assessee are not genuine. Mere I.T.A.No.1438/Mds/2015 :- 10 -: suspicion on the part of the Assessing Officer cannot lead to the conclusion that the liability was bogus/ unsubstantiated. The onus of proving the confirmation letters of the creditors as bogus lies on the Assessing Officer as the assessee discharged his onus by furnishing confirmation letters from the creditors. The Assessing Officer failed to prove beyond doubt that the alleged credit was bogus. In the absence of clear cut finding and only based on doubt, the addition was not tenable. Hence, the Commissioner of Income Tax (Appeals) deleted the addition of �.15,OO,OOO/- made by the Assessing Officer. Against this, the Revenue is in appeal before us.
We have heard both the parties and perused the material on record. In the case, the Commissioner of Income Tax (Appeals) deleted the addition without carrying on any further enquiry neither by himself nor through the Assessing Officer. In our opinion, observation of the Commissioner of Income Tax (Appeals) that onus of proving creditors as bogus lies on the Assessing Officer which is not correct.
As the assessee failed to discharge the onus by producing relevant confirmations from the relevant parties, it is not tenable. Hence, we are inclined to remit the issue back to the file of the Assessing Officer for fresh enquiry and the Assessing Officer after conducting necessary I.T.A.No.1438/Mds/2015 :- 11 -: enquiry shall redo the assessment. This ground is partly allowed for statistical purposes.
In the result, the appeal of the Revenue in is partly allowed for statistical purposes.
12th Order pronounced on Wednesday, the day of August, 2015, at Chennai.