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TMI Blog2021 (7) TMI 1404X X X X Extracts X X X X X X X X Extracts X X X X ..... proof of payments submitted by the assessee before him which were never produced before the AO in contravention to the provisions of' Rule 46A of the Income Tax Rules, 1962? - HELD THAT:- As on 31/03/2019, there were no amounts payable by the assessee to said party. This cannot be construed as any additional evidence as it is only submission of mere fact of repayments made to the said party which were submitted at the behest of the ld CIT(A). Even before us, the Revenue had not brought any contrary evidence to prove that the said liability was not repaid. In the first instance, the addition ought not to have been made u/s.41(1) of the Act in the facts of the instant case as we have already stated hereinabove that assessee has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 31/10/2017 by the ld. Asst. Commissioner of Income Tax, Circle 3(1)(1), Mumbai (hereinafter referred to as ld. AO). 2. The Revenue has raised the following grounds:- i. Whether, on the facts and circumstances of the case and in law, the Ld,CIT(A) was correct in accepting the proof of payments submitted by the assessee before him which were never produced before the AO in contravention to the provisions of' Rule 46A of the Income Tax Rules, 1962? ii. Whether, on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in holding that the AO has not established that the assessee had actually written off the outstanding liabilities i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... U. The clause 4 of the said MOU stated that if the consideration is not received as per the MOU, the vendor i.e. the assessee shall have option to terminate the MOU and earnest money paid by the purchaser shall be refunded without any interest. The said MOU was cancelled by the assessee vide letter dated 13/09/2008 as purchaser i.e. Art Advertising and Marketing (India) Pvt. Ltd., expressed their inability to complete the transaction. The assessee started repaying earnest money as per MOU from F.Y.2010-11. The balance outstanding as on 31/03/2015 payable by the assessee to Art Advertising and Marketing (India) Pvt. Ltd., was Rs.1,66,42,608/-. The assessee had also made payments to the said party subsequent to 31/3/2015 and that the balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y this action, the Revenue is in appeal before us. 5. We have heard the rival submissions and perused the materials available on record. It is not in dispute that the sum which is the subject matter of addition was nothing but advance received by the assessee for sale of his flat originally pursuant to MOU entered into with the purchaser. It is not in dispute that since the said purchaser expressed his inability to pay the remaining part of the consideration for the property, the MOU was cancelled by the assessee. As per the said MOU and pursuant to its cancellation, the assessee is bound to refund the advance received on sale of property without interest to the said purchaser. The assessee had explained that since he had no sufficient f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity in terms of Section 41(1) of the Act. Moreover, we also find that assessee had admittedly not claimed any deduction in the earlier years while creating this liability. Hence, the basic pre-requisite of invoking the provisions of Section 41(1) of the Act had not been fulfilled in the instant case, On this count also, the action of the ld. AO deserves to be dismissed and action of the ld. CIT(A) deserves to be upheld. The various case laws relied upon by the ld. AO in his assessment order are distinguishable and not germane to the facts on record before us. 5.1. We also find that Revenue has raised in one of the grounds that there was a violation of Rule 46A of the Income Tax Rules (in short Rules‟) wherein the ld. CIT(A) had m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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