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TMI Blog2018 (11) TMI 996X X X X Extracts X X X X X X X X Extracts X X X X ..... rts are Ahuja’s that have brought the unaccounted money into circulation. In any event it cannot be said that the assessee had no clue about it. The conclusions drawn by the authorities below, however, are basing on the material that was collected behind the back of the assessee and it is not the case of the Revenue that copies thereof was furnished to the assessee and the assessee was given an opportunity of being heard. There appears violation of principle of natural justice - matter requires verification at the end of the AO after providing the copies of the material which they want to make a basis for their conclusions to the assessee and the assessee is at liberty put forth all have contentions, and, therefore, it is a fit case to set aside the impugned order and to remand the matter to the file of the Assessing Officer to furnish the material that was collected by them and intended to be the basis for any conclusions to be reached to the assessee and to pass orders after affording a reasonable opportunity to the assessee to put forth her case effectively. Appeals allowed for statistical purposes. - ITA No.4318/Del/2017 And ITA No.6035/Del/2018 - - - Dated:- 13-11-2018 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were not submitted and the source of ₹ 2.5 crore remained unexplained. The ld. PCIT directed the Assessing Officer to take action accordingly. 5. Pursuant to the directions of the PCIT in the order passed u/s 263 of the Act, the ld. A.O. conducted inquiry by issuing notice u/s 133 (6) of the Act to M/s Pranav Sports Academy. Said company, by way of reply, confirmed that the payment of 2.5 crores was made as an advance jointly to the assessee and her husband to purchase the property, but the same was forfeited by the assessee and her husband. However, in order to have the confirmation of the same, Ld. assessing officer deputed the income tax inspector to make an enquiry and submit report. The Inspector, after verifying the details, submitted a report stating that in the given address of the company, there is an employee by name Sunil, sitting on behalf of the company, entrusted with the work of receiving letters only regarding company and there was no signboard of M/s Pranav Sports Academy. Basing on that the Ld. Assessing officer opined that M/s Pranav Sports is a bogus company. Thereafter the ld. A.O. concluded the assessment proceedings u/s 263/143(3) of the Act by ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntries in the bank passbook as has been held in Mayawati vs. DCIT 113 TTJ (Del.) 178, CIT vs. Bhaichand H. Gandhi 141 ITR 67 (Bom.), ITO vs. Kamal Kumar Mishra 33 taxmann.com 610 (Lucknow-Trib.) and Roopak Jain vs. ITO (Del ITAT, ITA No.5592/D/2015, dated 30.08.2016). 10. Third limb of the argument of the ld. AR is that the only provision available in the Income-tax Act to deal with the advances received for sale of property is section 51 which says that where any capital asset was, on any previous occasion, the subject of negotiations for its transfer, any advance or other money received and retained by the assessee in respect of such negotiations shall be deducted from the cost for which the asset was acquired. Inasmuch as the assessee had accounted for the advance amount forfeited, there is sufficient compliance with section 51 of the Act and, therefore, no addition could have been made by the ld. A.O u/s 68 of the Act. On this premise, it is the argument of the ld. AR that when section 68 has no application to the facts of the case, the question of proof of the identity, credit worthiness or the genuineness of the transaction does not arise. 11. Lastly, it is contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the taxability of ₹ 2.5 crore said to have been paid to the assessee and her husband and without doing so, the ld. A.O. misguided himself in reaching the conclusion that the assessee brought his unaccounted money through this colourable device. 13. Per contra , it is the argument of the ld. DR that a mere wrong reference to a provision of law does not take away the jurisdiction of the ld. A.O. to make an addition of the amounts which were found to be the unaccounted money of the assessee and brought back to his accounts by devising a mechanism. Ld. DR submitted that M/s Pranav Sports Academy is only a paper entity as is established by the report of the Income-tax Inspector. As a matter of fact, section 69 of the Act is applicable to the facts of this case instead of section 68. However, it is always open for the appellate authorities not to take cognizance of such mistakes and to sustain the addition. 14. We have gone through the record. At the outset a reading of section 68 of the Act shows that such section is applicable where any sum is found credited in the books of the assessee maintained for the previous year and, in this case, no such question of maintaining b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounds. One is that as was found from the Profit Loss Account of M/s. Pranav Sports Academy, their income was only ₹ 13,448/- during the year which improbablises their deal with the assessee to purchase their property at ₹ 4.22 crore. Secondly, the Income-tax Inspector who was deputed to make inquiry, submitted a report stating that the first floor of the premises was occupied by M/s AFMG that is an academy for foreign medical graduation and at the given address of M/s Pranav Sports Academy, there was one employee by name Sunil sitting on behalf of M/s Pranav Sports Academy entrusted with the work of receiving letters only, and also that there were no sign board of M/s Pranav Sports Academy. Basing on these two aspects the authorities concluded that M/s Pranav Sports Academy was a bogus company. 17. It is explained before us that the circle rate of the property is even less than 1.72 crore, as such, the assessee is justified in selling the same at ₹ 1.72 crore to Ahujas, more particularly, in view of the fact that the assessee and her husband had ₹ 2.5 crores in their hands having forfeited this from M/s Pranav Sports Academy. It is further submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties. This situation justifies the stand taken by the revenue. However we are unable to agree with the revenue that this amount of ₹ 2.5 crores has to be taxed in the hands of the assessee or her husband. There is no denial of the fact that out of this ₹ 2.5 crores assessee got ₹ 1.25 crores and her husband got the balance of ₹ 1.25 crores. However at no point of time the revenue thought it fit to look into the inconsistency that having accepted the same transaction in the hands of the husband, they re disputing it in the case of the wife. If we accept the contention of the assessee, it would lead to the inference that either M/s Pranav sports are Ahuja s that have brought the unaccounted money into circulation. In any event it cannot be said that the assessee had no clue about it. 19. Further, the conclusions drawn by the authorities below, however, are basing on the material that was collected behind the back of the assessee and it is not the case of the Revenue that copies thereof was furnished to the assessee and the assessee was given an opportunity of being heard. There appears violation of principle of natural justice. In these circumstances we fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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