ACIT, CC- 16, New Delhi V. Magic Info Solutions P. Ltd., New Delhi

ITA 7746/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5495 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2021
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 26-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AGAINST DATED PASSED
• Keywords: Search and seizure; Principle of natural justice; Set aside
• Section: 131; 68

Judgement Text

1 ITA NO. 7746/DEL/2017 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL ME MBER AND SH. PRASHANT MAHARISHI, ACCOUN TANT MEMBER I.T.A. NO. 7746/DEL/20 17 (A.Y 2013-14) (THROUGH VIDEO CON FERENCING) ACIT CENTRAL CIRCLE-16 NEW DELHI (APPELLANT) VS MAGIC INFO SOLUTIONS P. LTD. D-13, DEFENCE COLONY, NEW DELHI AAFCM2504F (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER DATED 29/09/2017 PASSED BY CIT(A)-25, DELHI FOR ASSESSMENT YEAR 20 12-13. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE HAS TH E CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF TRADE ADVANCES AGAINST BOOKING AMOUNTING TO RS.30,92,25,084/- WITHOUT APPRECIATING THAT ASSESSEE MISERABLY FAILED TO OFFER SATISFACTORY EXPLANATION ABOUT THE NATURE AND SOURCE OF THE AMOUNT CREDITED. APPELLANT BY MS. PRAMITA M. BISWAS, CIT DR RESPONDENT BY SH. TARUN KUMAR BATRA, CA DATE OF HEARING 28.07.2021 DATE OF PRONOUNCEMENT 22.09.2021 2 ITA NO. 7746/DEL/2017 3. ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF C ONSTRUCTION AND DEVELOPMENT OF LAND FOR COMMERCIAL AND RESIDENTIAL PURPOSE. THE ASSESSEE FILED ITS RETURN OF INCOME ON 31.03.2015 DECLARING TOTAL INCOME AT NIL. THE SEARCH AND SEIZURE WAS CONDUCTED ON SANYA GROUP OF COMPANIES ON 17.09.2010 WHICH IS ENGAGED IN VARIOUS FIELDS RANGI NG FROM REAL ESTATE DEVELOPMENT, AUTOMOBILES, HOSPITALITY AND FMCG GOOD S. THE ASSESSEE COMPANY WAS ASKED TO PROVIDE THE COMPLETE DETAILS A ND SUPPORTING DOCUMENTS IN RESPECT OF REFUNDABLE BUSINESS COLLABORATION ADV ANCE MENTIONING THE NAME OF THE PERSON/ENTITY, HIS PAN, COMPLETE POSTAL ADDR ESS WITH RESPECTIVE PHONE NUMBERS, BANK ACCOUNT STATEMENT ALONG WITH COPY OF AGREEMENT REGARDING SUCH ADVANCES ON 05.11.2015 BY THE ASSESSING OFFICE R. THE ASSESSEE VIDE LETTER DATED 20.11.2015 ONLY PROVIDED THE NAME, ADDRESS, P AN AND OUTSTANDING AMOUNT BEFORE THE ASSESSING OFFICER AS OBSERVED IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER ISSUED SUMMONS DATED 29.02.2016 U NDER SECTION 131 OF THE ACT TO DIRECTORS OF THE ASSESSEE COMPANY TO RECORD THEIR STATEMENTS. HOWEVER, NONE APPEARED BEFORE THE ASSESSING OFFICER. THEREFO RE, THE ASSESSING OFFICER MADE ADDITION OF RS. 33,53,01,983/-. THE ASSESSING OFFICER FURTHER MADE ADDITION OF RS. 30,9225,084 ON ACCOUNT OF TRADE ADV ANCES AGAINST BOOKING. THE ASSESSING OFFICER ALSO MADE DISALLOWANCE OF EXPENSE S SHOWN TO HAVE BEEN PAID AS FEE/CHARGES PAID HARYANA TOWN AND COUNTRY PLANNI NG AND OTHER EXPENSES AMOUNTING TO RS. 3,99,42,327/-. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL O F THE ASSESSEE. 5. THE LD. DR SUBMITTED THAT THE CIT(A) ERRED IN DE LETING THE ADDITION ON ACCOUNT OF TRADE ADVANCES AGAINST BOOKING AMOUNTING TO RS. 30,92,25,084/- WITHOUT APPRECIATING THAT THE ASSESSEE MISERABLY FA ILED TO OFFER SATISFACTORY EXPLANATION ABOUT THE NATURE AND SOURCE OF THE AMOU NT CREDITED. THE LD. DR RELIED UPON THE ASSESSMENT ORDER. 6. THE LD. AR RELIED UPON THE ORDER OF THE CIT(A). 3 ITA NO. 7746/DEL/2017 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE ASSESSING OFFICER HAS MADE ADDITION UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 WITH R ESPECT TO ADVANCE RECEIVED BY THE ASSESSEE AS A BUILDER FROM BUYERS OF REAL ES TATE TO WHOM SALE COULD NOT BE EFFECTED DURING THE FINANCIAL YEAR. THERE IS NO DOUBT THAT PROVISION OF SECTION 68 DOES NOT MAKE ANY DISTINCTION BETWEEN LO AN AS WELL AS TRADE ADVANCE RECEIVED. THE SECTION IS TRIGGERED AS SOON AS ANY SUM CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IRRESPECTIVE OF FU RTHER CLASSIFICATION OF SUCH CREDITS. IN FACT, THE ASSESSING OFFICER ASKED THE A SSESSEE TO PRODUCE SUCH PERSONS WHO HAS MADE DEPOSIT FOR PURCHASE OF REAL E STATE, BUT THE ASSESSEE COULD NOT PRODUCE THE SAID PERSONS. THE CIT(A) WITH OUT MAKING ANY EFFORTS TO EXAMINE THE CREDITORS DELETED THE ADDITION. THEREFO RE, WE FAIL TO UNDERSTAND THAT HOW THE OBSERVATIONS MADE BY THE ASSESSING OFF ICER WERE MET BY THE ASSESSEE BEFORE THE CIT(A). THE ASSESSING OFFICER H AS CATEGORICALLY STATED IN REMAND REPORT ALSO THAT THE ASSESSEE HAS MERELY FUR NISHED LIST OF PERSONS ONLY. THE ASSESSING OFFICER HAS ALSO HELD THAT WHEN MANY PERSONS DO NOT RESPOND TO THE SUMMONS, REVENUE CAN DRAW ADVERSE IN FERENCE. THE CIT(A) HAS NOT TAKEN COGNIZANCE OF SUCH FINDING OF THE ASSESSI NG OFFICER. THERE IS NO REASON GIVEN IN THE ORDER OF THE CIT(A) THAT HOW TH E ASSESSEE HAS DISCHARGED ITS INITIAL ONUS, WHEN THE ASSESSING OFFICER CATEGORICA LLY ASKED THE ASSESSEE TO PRODUCE THE BUYERS INSTEAD OF APPEARING BEFORE THE ASSESSING OFFICER. MERELY SUBMITTING LIST OF PERSONS, WITHOUT PROVING CREDITW ORTHINESS AND GENUINENESS OF THE TRANSACTIONS, THE CIT(A) HAS DELETED THE ADD ITIONS WHICH IS NOT PROPER. IN VIEW OF THE ABOVE FACTS AND IN VIEW OF THE SPECIFI C SUBMISSIONS OF THE LD. AR THAT ALL THE PARTIES ARE BUYERS OF REAL ESTATE FROM THE ASSESSEE, WE SET ASIDE THIS ADDITION TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO THE ASSESSEE TO SHOW BEFORE THE ASSESSING OFFICER THAT THE PARTIES MENTIONED HAVE PAID ADVANCES AGAINST SALE OF PROPERTIES AND IN SUBSEQUE NT YEARS, SALES OF PROPERTIES HAVE BEEN MADE TO THESE PARTIES. THE ASSESSING OFFI CER MAY EXAMINE THE DETAILS AND IF IN SUBSEQUENT YEARS, IT IS FOUND THA T THE ASSESSEE HAS SOLD THE PROPERTIES TO THEM, NATURALLY DUAL SUM HAS BEEN CRE DITED TO THE INCOME OF THE 4 ITA NO. 7746/DEL/2017 ASSESSEE AND ADDITION IN THIS YEAR MAY BE DELETED A CCORDINGLY. IN CASE OF ANY ADVERSE OBSERVATION, THE ASSESSING OFFICER MAY GRAN T OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLES OF NATURAL JUSTICE TO THE ASSE SSEE AND DECIDE THE ISSUE ON MERITS. THE ASSESSEE IS ALSO AT LIBERTY TO PRODUCE EVIDENCES AS WELL AS DEPOSITORS BEFORE THE ASSESSING OFFICER. GROUND NO. 1 OF THE REVENUES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 8. IN RESULT, THE APPEAL OF THE REVENUE IS PARTLY A LLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22ND D AY OF SEPTEMBER, 2021 IN PRESENCE OF BOTH THE PARTIES. SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED: 22/09/2021 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI