Ita/870/2011 Of Sweta Estates Pvt Ltd v. Assistant Commissioner Of Income Tax

J,' o/o16.O8.2011 Present: Mr. Rajat Navet, Adv. for the assessee.Mr. N.P. Sahni, Sr. Standing Counsel for the Revenue. +ITA No.87Ol2O11* * Admit. The following substantial question of law is framed for adjudication: "Whether in the facts and circumstances of the case,the Tribunal was correct in law in remanding [the]matter back to the file of the Assessing Officer [with ][a]direction to decide the issue of additions underSection 68 of the Income Tax Act, de novo?" With the consent of learned counsel for the [parties, ][we]have finally heard the matter. To recapitulate the facts in brief, it may be [pointed ]out that the case relates to the Assessrnent Year 2005-06. While carryingout the assessment, the Assessing Officer (AO) found that theassessee had taken a tune of total amount of 72t,70,34,294/- onaccount of advance money towards booking of flats from 447 parties.The AO, out of these 447 parties, randomly picked up 38 parties onthe basis of scrutiny. Notices were sent to these parties. Twelveparties gave confirmation directly and nine persons gave theconfirmation to the appellant stating that they had booked the flatsand paid the advance. The AO was, however, not satisfied with theexplanation, as according to the AO, source of those funds, /aat. Signature Not Verified v t,l.n'l creditworthiness of the [persons ]etc. on account of [advances ][received]against booking of flats/space were not furnished [by ][the ][party. ][He]accordingly made additions of entire amount of t21,70,34,294l- [to ][the]income of the assessee in respect of all 447 [parties, ][as ][the ][appellant-]assessee had failed to discharge its onus under Section 68 of [the]Income Tax Act (hereinafter referred to as'the Act'). The appellant-assessee filed appeal against the order [of]the AO before the CIT (A). The CIT [(A) ]called remand report from [the]AO. The AO, in his remand report, accepted that the [confirmations]were received. However, the copies of the bank accounts of theapplicants who had booked the flats and [purportedly ][paid ][the]advances were not filed and on this basis, the AO stated in his remandreport that the confirmations given . by those [persons ]could not becross-tallied. The CIT (A), however, on the basis of said confirmationand after recording that the records of the assessee in the form ofbank accounts, etc. disclosed that the [payments ]were receivedthrough banking channels, deleted the additions made by the AOstating that the assessee was able to discharge his onus by showingthe identity of the persons who had booked the flats as well ascreditworthiness in the form of addresses, particulars of payments,PAN numbers as well as confirmation. The Revenue preferred appeal against this order of the CIT(A) before the Income Tax Appdllate Tribunal ('ITAT'for brevity). The { ((t :l Tribunal vide impugned order had remanded the case back to the AOfor further investigation. According to the Tribunal, the CIT (A) hasgiven a negative finding whereas in test check, the AO had noted thatthe persons who had been shown as booked the flats had notresponded to the enquiry. The Tribunal has , inter alia, observed asunder: (1) It is not clear whether the amount was receivedthrough account payee cheque or by bank drafts.through account payee cheque or by bank drafts. (2) The assessee has to prove the identity of personsfrom whom the amounts had been received as wellas creditworthiness from whom the credit has beenreceived.from whom the amounts had been received as wellas creditworthiness from whom the credit has beenreceived. The assessee had given some addresses to the AO on theAO issued letters, which remained un-complied with and the assesseefailed to produce full particulars before the AO. Booking of 447 flatswas shown and the AO had selected only 30 flats for test check andthe assessee had not discharged the onus completely even in respectof these 30 persons. On the aforesaid basis, the matter was remitted back for (1) It is not clear whether the amount was receivedthrough account payee cheque or by bank drafts.through account payee cheque or by bank drafts. (2) The assessee has to prove the identity of personsfrom whom the amounts had been received as wellas creditworthiness from whom the credit has beenreceived.from whom the amounts had been received as wellas creditworthiness from whom the credit has beenreceived. The assessee had given some addresses to the AO on theAO issued letters, which remained un-complied with and the assesseefailed to produce full particulars before the AO. Booking of 447 flatswas shown and the AO had selected only 30 flats for test check andthe assessee had not discharged the onus completely even in respectof these 30 persons. On the aforesaid basis, the matter was remitted back for fresh adjudication observing that no prejudice would be caused to theeither side. In view of this matter and in the interest of justice andequity, the issue should be decided de novo.either side. In view of this matter and in the interest of justice andequity, the issue should be decided de novo. (a . Challenging this order, the [present ]appeal [is filed ][by ][the]assessee. The neat contention [raised ]by [the ][learned ][counsel ][for ][the]assessee is that the entire material was before the Tribunal, which [was]placed even before the CIT (A) on the basis of which the CIT [(A)]recorded positive findings and not negative findings as stated by theTribunal. He has drawn our attention towards various observationsmade by the CIT (A) in this behalf discussing the matter at length onthe basis of material submitted before the CIT (A) on which remandreport was called for. Learned counsel also referred to the [said]remand report. He has categorically pointed out that there is a clearfinding recorded by the CIT (A) that the payment was received byaccount payee cheque and not by bank drafts. To support this, theassessee had filed the bank statements of its own account.We find force in the aforesaid submissions of the learnedcounsel for the assessee. In fact, the Tribunal has discussed thematter on the basis of the exercise done by the AO while carrying outthe assessment. What is not appreciated by the Tribunal is that beforethe CIT (A), documents were filed on which remand report wasobtained, this related to all 447 flats and [not ]in [respect ]of 37 [persons.]Therefore, the position had completely changed, insofar as material onrecord is concerned, at the appellate stage before the CIT (A). TheTribunal is not correct while holding that the CIT (A) deleted theaddition by negative finding. We are not commenting upon the order r()a of the CIT (A) is sustainable or nor, insofar as merits are concerned.What we emphasize is that it was not a case where the matter wasrequired to be remitted back to the AO for fresh adjudication. Theentire and complete material which was relied upon by the assesseewas before the Tribunal. In the remand report, the AO had specificallystated that the confirmations given by the persons, who hadpurportedly booked the flats and the payments shown by the assesseein its account, could not be verified because of non-production of thebank statements of those applicants, who had booked the flats.Whether non-production of the bank statements of the said applicantswould lead to any adverse inference, etc. is the matter which is to bejudged by the Tribunal on merits. Thug, we answer the question in favour of the assesseeand against the Revenue setting aside the impugned order to thisextent and remit the case back to the Tribunal to decide this issue onmerits on the basis of material on records produced or whether theorder of CIT (A) was sustainable on merits or not. This appeal is disposed of in the aforesaid terms. A.K. SrKRr, J.M.L. MEHTA, J. AUGUST 7,6, zOLt/pmc