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TMI Blog2011 (3) TMI 1771X X X X Extracts X X X X X X X X Extracts X X X X ..... red in maintaining disallowance/addition of payments of work contract out of payments to Shri Shyam Sunder Ahuja, Shri Kamal Ahuja and Mrs. Archana Ahuja of ₹ 14,88,218/- @ 25% at 3,72,055/- arbitrarily. 4. The ld. CIT(A) has erred in maintaining addition of creditors of ₹ 6,72,500/- arbitrarily. 5. The order of ld. CIT(A) is unjustified, improper and warranted. In ITA No. 269/Ind/2010 the revenue has taken the following grounds of appeal :- 1. On the facts and circumstances of the case the ld. CIT(A) erred in deleting the addition of ₹ 56,75,350/- made by the A.O. being trade advance u/s 68 of the IT Act. 2. On the facts and circumstances of the case the ld. CIT(A) erred in deleting the addition of ₹ 1,13,500/- made by the A.O. being the capital introduced by a partner in the firm to be added in his hands u/s 69 of the IT Act. 3. On the facts and circumstances of the case the ld. CIT(A) erred in deleting the addition of ₹ 34,000/- made by the A.O. being the capital introduced by a partner in the firm to be added in his hands u/s 69 of the IT Act. 3. Rival contentions have been heard and records perused. 4. The facts of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that during the course of scrutiny assessment, the AO asked the assessee to produce these persons for verification. However, the assessee could produce only Shri Shyam Sunder Ahuja. It was observed by the AO that Smt. Kamal Ahuja was the wife of Shri Shyam Sunder Ahuja and Smt. Archana Ahuja is the. daughter-in-law of Shri Shyam Sunder Ahuja. It was further observed by the AO that there' were no written agreements entered with these contractors and no details of quantum of work carried out by them in sq. ft. was given to him. However, observing that the assessee must have incurred expenditure on contract, the AO disallowed on ad hoc basis a sum of 25% of such expenditure, total amounting to ₹ 37,91,070/- and thus disallowance of ₹ 9,47,767/- was made. 8. By the impugned order, the ld. CIT(A) deleted the disallowance of ₹ 5,75,712/- against the total payment of ₹ 9,47,767 made to three contractors. Thus, he has confirmed the disallowance of ₹ 3,72,055/-. Against this order of ld. CIT(A), the assessee and Revenue both are in appeal before us. 9. We have carefully considered the rival contentions and found that the assessee has furnished the ful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it was also observed that he had deposited ₹ 2.22 lakhs in his bank account out of which ₹ 1 lakh was given by account payee cheques to the assessee firm. On the basis of documents placed on record, we found that the assessee has discharged all the three ingredients of cash credit with regard to identity of lender, genuineness of loan transaction and creditworthiness of loan creditor. We do not find any infirmity in the order of the CIT(A). for deleting the addition. 14. Next grievance of the Revenue relates to CIT(A) s action for retaining addition of ₹ 6,72,500/- out of total addition of ₹ 63,47,850/- made by the Assessing Officer u/s 68 in respect of the creditors. Revenue is aggrieved for deleting addition of ₹ 56,75,350/- and the assessee is aggrieved for sustaining addition of ₹ 6,72,500/-. In this regard, it was observed by the AO that the assessee had shown liability of ₹ 62,51,500/- on account of advances from the prospective buyers. It was noticed by him that the so called buyers have made the payments in cash and cheques. To prove their genuineness, the assessee was given opportunity to produce them for examination. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der consideration. The CIT(A) observed that even after all the creditors were considered as non genuine by the AO, the additions in respect of earlier years' advances viz. 13,83,300/- and ₹ 21,90,700/- was not justified in this year and the AO was free to take necessary action in respective years if such advances were found non-: genuine by him. Out of the advances of ₹ 26,77,500/- received during the year, the CIT(A) observed that as per the chart submitted by the assessee from page 24 to 32 of written submissions, in some cases the registered sale deed has been executed and in remaining cases the agreement to sale has been undertaken. By observing that in respect of some of the buyers even though advances initially for the said plot. Such refunded amounts were through bearer cheques in many of the cases and therefore, the genuineness of such advances and their refund was not reliable. In such circumstances it would be justified and appropriate to consider only those cases as non genuine in agreement of sale has been executed but the assessee failed to produce such persons before the AO. From the list, submitted by the assessee, the following persons come in this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 1,71,000/- 17. Accordingly, the CIT(A) confirmed the addition of ₹ 6,72,500/- (5,01,500 + 1,71,000) in the hands of the assessee. Regarding the list of the persons who were shown as Not attended by the AO in the assessment order, the CIT(A) observed that except the three persons namely Shri Rajesh Chouhan, Smt. Daljit Kaur W/o. Prithvilal and Smt. Bharti Babbar; other persons were either produced or the copies of sale deeds executed by them have been furnished. However, no such names are figuring in the list of 156 persons submitted by the assessee in its written submissions. It clearly establishes the fact that the assessee used to change the names of the prospective buyers. However, no adverse view is being taken in respect of these three persons as reliance has been placed on the list of 156 persons submitted by the assessee during the appellate proceedings and such list does not contain these three names. 18. Both assessee and Revenue are in appeal against the above decision of CIT(A) before us. 19. It was argued by the ld. Authorized Representative that in view of its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce was received, total area of the plot/house so agreed to sale and date of agreement entered with the buyers. This chart also indicated the date on which registry was got executed in favour of the customers booking flats. We had also verified the respective registry placed on record and the details of payments mentioned in the registry, which is duly tallied with the details of payment shown by the assessee in its books of account and also in the chart placed on record. It is not in dispute that the assessee was engaged in the business developing and selling plots/houses. The advances were received from the customers against the booking of plot/flats which was either paid in cash or by cheques. In some cases, advance was received in installments. As per the terms of booking, the registry was to be got done only after receipt of entire amount of sale consideration. Thus, the amount so received for booking the land/house was not strictly in the nature of cash credit, in so far as normally the assessee was not under obligation to return the same and such booking payment/installment was got converted into income in the year of receipt of entire amount of sale consideration of the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her persons were either produced or the copies of sale deed executed by them have been furnished. This finding of the CIT(A) has not been converted. 22. In respect of addition of ₹ 5,01,500/- sustained by CIT(A) in respect of ten persons, we found that Smt. Neelkamal Pramod Kumar Gupta had duly filed agreement, which is placed at pages 289 290 of the paper book. Amount was refunded through account payee cheques no. 725212, 725213 drawn on Oriental Bank of Commerce, which was duly reflecting in the Bank statement of the assessee. In respect of Smt. Sarika Manish Jain, agreement was executed and placed at 291 293 of paper book. She was refunded the amount by way of cheque no. 24356 drawn on Oriental Bank of Commerce. Similarly, in case of Satishchandra Balkishan, we have verified agreement executed with him, which found place at page nos. 299 302 of the paper book. Refund was given by cheques no. 47231 drawn on Punjab National Bank. Similarly, in respect of Kailashchandra Shivnarayan Goyal, Smt. Mangla Kailashchandra Kambli, Shri Rangbhari Prafullji, Shri Ramesh Chandra Chouhan, Shri Ramchandra Daksharam and Smt. Sangeeta Rajendra, we found that agreements were duly ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harma at ₹ 11,000/-,Shri Gopalsingh Pratapsingh Gaur at ₹ 25,000/- and Shri Alkesh Dwivedi at ₹ 60,000/-, we found that the assessee has refunded advances to these parties, however, no agreement, was found in the paper book to establish the genuineness of the transaction of installment having been paid in advance. Total of all these transactions work out to be ₹ 1,71,000/-. Accordingly, we confirm the addition to ₹ 1,71,000/- and delete the balance addition as made by the Assessing Officer. We direct accordingly. 25. The Revenue is also aggrieved for deletion of addition of ₹ 34,000/- in the name of Shri Kesarimal Jain. 26. We have carefully considered the rival contentions and found that the AO had examined Shri Kesarimal Jain on oath who had deposited ₹ 4,000/-, ₹ 9,000/- and ₹ 26,000/- totalling to ₹ 34,000/- in the assessee's firm. In the appellate proceedings it was submitted that Shri Kesarimal Jain was a Govt. employee retired in 1996. ₹ 4,000/- was got verified by the AO as withdrawn from the bank account. However, ₹ 30,000/- which he received from his family members was not accepted by the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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