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TMI Blog2020 (8) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... advance paid by assessee to landlord was adjusted with current account balance of sister concern M/s. Capital Construction Assessee in fact had shown the same under the head Loans and Advances and has included the amount in Advances recovered in cash or in kind in its balance sheet as on 31.03.2005 and the payment had been made by cheque for Golf Club Road Project. So, no addition was warranted u/s. 69B (undisclosed investment) of the Act. It is trite law that method of accounting cannot determine the true character of a transaction CIT Vs. MESSRS. SHOORJI VALLABHDAS AND CO [ 1962 (3) TMI 6 - SUPREME COURT ]. Assessee has given advance for the property which was taken over by assessee s sister concern and shown by assessee in its balance s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he action of Ld. CIT(A) in confirming the addition of ₹ 3,87,000/- as made by the AO treating the same as undisclosed investment. 3. Briefly stated facts as observed by the AO are that the assessee had invested a sum of ₹ 3,00,000/- (by cheque No. 524125) and ₹ 87,000/- (by cheque No. 709002) on 09.02.2005 and 11.02.2005 respectively in booking/advancing against a plot of land, [which is termed as Kalibari Lane Project ]. According to AO, those cheques were issued from the assessee s bank account with Standard Chartered Bank, Kolkata. As no such investment was reflected in the assessee s relevant balance sheet as on 31.03.2005, the assessee was asked to explain the matter. The assessee vide written explanation dated 27.08. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve. Apart from that assessee also added that since both the assessee/M/s. Claridge Commercial M/s. Capital Construction are closely held wherein Mr. Subash Paul is the owner, no formal agreement was made and M/s. Capital Construction did not pass any entry for this transaction. Assessee also confirmed that there was no question of doing any business and/or earning any income out of this booking amount paid during the FY 2004-05. However, according to AO, the said explanation of the assessee does not hold any merit. According to AO, the status of the assessee is a company and it had accepted the fact that it had invested the said amount of ₹ 3,87,000/- to M/s. Capital Construction during the relevant FY 2004-05 and the said investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Club Road Project. So, no addition was warranted u/s. 69B (undisclosed investment) of the Act. It is trite law that method of accounting cannot determine the true character of a transaction CIT Vs. MESSRS. SHOORJI VALLABHDAS AND CO (1962) 46 ITR 144 (SC). In the present case, the assessee has given advance for the property which was taken over by assessee s sister concern and shown by assessee in its balance sheet and squared up in later year so no addition under section 69B of the Act is sustainable and therefore directed to be deleted. 5. The next ground of appeal of assessee is against the action of Ld. CIT(A) in confirming the additions of ₹ 3,85,000/- (the correct amount is ₹ 3,55,000/-) to the total income of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, according to AO, since the assessee failed to produce the parties he added the same u/s. 69C of the Act. On appeal, the Ld. CIT(A) confirmed the action of AO citing the reason that assessee failed to prove the creditworthiness of the six parties from whom the cash was taken. According to assessee, it had made the payment of ₹ 3,55,000/- to six parties on 3 (three) different dates which were routed through cash book, which is evidenced by receipt of individual six parties. And since there was a condition in the agreement of sale to pay interest on late payment, the assessee incurred the interest expenditure. We note that the AO accepted these facts however he was not satisfied with the cash payment of ₹ 3,55,000/- and made t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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