2018 (12) TMI 1512 - AT - Income Tax

Addition for unexplained cash credit - identity, genuineness and creditworthiness as the sale deeds - Held that - Sale consideration received by the assessee has been duly offered to tax in the year when sale deeds were registered and due taxes have been paid thereof. It is also evident from the record that the excess amount left with the assessee, if any was also refunded to the respective parties and the same is verifiable from going through para 13 of the registered sale deeds where the purchaser accepts to have received any excess amount received as advance and it has been duly admitted that the advanced amount have been received. So in nutshell there seems to be no loss to the revenue as regards to sale consideration received. Identity is already not disputed. Sale consideration received in cash as well as the cheque has also been accepted by the alleged cash creditors. We find merit in the contention of Ld. Counsel for the assessee that the alleged cash credits of ₹ 43,12,250/- are duly explained with regard to the identity, genuineness and creditworthiness as the sale deeds have been registered in the name of the four persons accepting the transactions. Therefore no addition was called for u/s 68 - Decided in favour of assessee. Disallowance for cash expenditure - Held that - We find that before the first appellate authority necessary details were placed and remand report was called for but Ld. A.O objected to acceptance of additional evidence. We find that statements of some of vendors Shri Gyanswaroop Vishwakarma who did the electrification work, Shri Firoz Khan who did the labour work and Shri Narendra Kumar Thakur who had did the labour work gave their statements on oath stating that they received the amounts from the assessee for various works provided by them. All necessary vouchers have also been placed on record of which major are cash expenses. Books of accounts have been maintained. 10% disallowance of the impugned expenditure will be justified.

Summary

Issues Involved:

1. Addition of unexplained credits from four individuals.
2. Disallowance of cash expenditure.

Detailed Analysis:

1. Addition of Unexplained Credits from Four Individuals:

The assessee, engaged in the business of construction and colonization, received advances for plot booking from various parties. The Revenue added ?43,12,250/- as unexplained cash credits from four individuals: Shri Ram Kumar Gangrade, Late Vinod Thakkar, Shri Arun Bhatt, and Shri Ravish Patel. The assessee argued that these amounts were received as advances for plot bookings, which were later converted into sales revenue and offered for tax in the relevant assessment years.

The Tribunal examined the records and found that the sale deeds were registered in the names of these individuals, confirming the transactions. The Tribunal noted that the identity of the cash creditors was established, and the genuineness and creditworthiness were verified through registered sale deeds. The Tribunal concluded that there was no loss to the Revenue as the sale consideration was duly offered to tax. Therefore, the addition of ?43,12,250/- as unexplained cash credits was deleted, allowing Grounds No. 1 to 4 of the assessee’s appeal.

2. Disallowance of Cash Expenditure:

The Revenue disallowed ?13,54,680/- out of total expenditures of ?24,43,811/- due to the lack of necessary vouchers and records. The assessee contended that the vouchers were submitted before the first appellate authority, and statements from vendors confirmed the receipt of amounts for services provided.

The Tribunal reviewed the evidence, including statements from vendors and vouchers, and found that the expenditures were genuine. However, to balance the interests of justice, the Tribunal deemed a 10% disallowance of the impugned expenditure justified. Consequently, the disallowance was reduced to ?1,35,468/-, partly allowing Ground No. 5 of the assessee’s appeal.

Conclusion:

The Tribunal partly allowed the appeal, deleting the addition of unexplained credits amounting to ?43,12,250/- and reducing the disallowance of cash expenditure to ?1,35,468/-. The order was pronounced in the open Court on 26.12.2018.