Itl/2/2015 Of Ashok Anandrao Dhapodkar v. Assistant Commissioner Of Income Tax Central Circle 2(1), Nagpur

IN THE HIGH COURT OF JUDICATURE AT BOMBAYNAGPUR BENCH, NAGPUR. INCOME TAX APPEAL No. 1 OF 2015 Ashok Anandrao Dhapodkar, Nagpur. -Vrs.- The Assistant Commissioner ofIncome Tax Central Circle 2(1) (Nagpur). INCOME TAX APPEAL No. 2 OF 2015 Ashok Anandrao Dhapodkar, Nagpur. -Vrs.- The Assistant Commissioner ofIncome Tax Central Circle 2(1) (Nagpur). INCOME TAX APPEAL No. 3 OF 2015 Ashok Anandrao Dhapodkar, Nagpur. -Vrs.- The Assistant Commissioner ofIncome Tax Central Circle 2(1) (Nagpur). INCOME TAX APPEAL No. 4 OF 2015 Ashok Anandrao Dhapodkar, Nagpur. -Vrs.- The Assistant Commissioner ofIncome Tax Central Circle 2(1) (Nagpur).Income Tax Central Circle 2(1) (Nagpur). INCOME TAX APPEAL No. 5 OF 2015 Ashok Anandrao Dhapodkar, Nagpur. -Vrs.- The Assistant Commissioner ofIncome Tax Central Circle 2(1) (Nagpur).Income Tax Central Circle 2(1) (Nagpur). INCOME TAX APPEAL No. 6 OF 2015 Ashok Anandrao Dhapodkar, Nagpur. -Vrs.- The Assistant Commissioner ofIncome Tax Central Circle 2(1) (Nagpur). INCOME TAX APPEAL No. 7 OF 2015 Ashok Anandrao Dhapodkar, Nagpur. -Vrs.- The Assistant Commissioner ofIncome Tax Central Circle 2(1) (Nagpur). _______________________________________________________________________ Office Notes, Office Memoramda of Coram,appearances, Court's orders of directionsand Registrar's Orders. Court's or Judge's orders. Mr. N.S. Bhattad, counsel for appellant. Mr. Anand Parchure, counsel for respondent. CORAM: B.P. DHARMADHIKARI AND P.N. DESHMUKH, JJ. DATED :13th OCTOBER, 2015 This Court heard respective parties initially on7.9.2015 and thereafter on 14.9.2015. Today we have heardAdvocate Bhattad for appellant - assessee and AdvocateParchure for respondent department. Question sought to be raised by advocate Bhattadon behalf of appellant -assessee is whether nature of receipts asearnest money paid to assessee by customers will undergo anychange merely because books of accounts are not maintained ?He submits that perusal of impugned order shows that the saledeeds are not registered, projects are still incomplete andpossession is not handed over by assessee to any of thecustomers. The transaction, therefore, itself is incomplete andhence as per the settled law earnest money needs to be treatedas capital income. He relies upon judgment of Hon'ble ApexCourt reported in 2000(243) ITR page 158 (TravancoreRubber and Tea Co. Ltd., Vrs. Commissioner of Income Tax. Heurges that the Hon'ble Apex Court held therein that forfeitureof earnest money does not make any change in its nature. Advocate Parchure, on the other hand, invitesattention to provisions of section 56(2)(ix) to urge that thesaid advances need to be treated as income from other sourceand have been rightly accordingly so treated. He furtherinvited attention to observation in assessment order to showthat on 25.10.2004 a Return declaring total income ofRs.1,48,410/- and agricultural income as nil was filed and itwas processed on 7.3.2005. Assessee then paid tax of Rs.4,682/-. Thereafter search and seizure action was taken on27.5.2008 and consequently after notice under section 153Aassessee has filed Return of income on 18.11.2010 declaringtotal income of Rs.1,48,410/- and has paid tax of Rs. 5,000/-.He highlights the fact that advances received by assessee fromvarious customers were not recorded in any books of account and assessee could not produce any material though severalopportunities were given to him by Assessing Officer. Hecontends that as advances were not recorded in books ofaccount and it is admitted position that books of account arenot at all maintained by assessee, the modification inassessment order by CIT(A) bringing down tax liability ofassessee as upheld by ITAT does not call for any interference. and assessee could not produce any material though severalopportunities were given to him by Assessing Officer. Hecontends that as advances were not recorded in books ofaccount and it is admitted position that books of account arenot at all maintained by assessee, the modification inassessment order by CIT(A) bringing down tax liability ofassessee as upheld by ITAT does not call for any interference. After hearing respective counsel we find that thoughassessee has received advances from customers and is inbusiness, he has not maintained books of account. Hiscontention that transactions were not complete and thereforenot maintaining books of account will not make any change isself serving argument. He is a developer doing business andincurring expenditure. In so far as receipt of earnest money isconcerned, it could have been examined in the light oftreatment extended by assessee in books of accounts. Theassessee filed Return before search and seizure action andthereafter on 18.11.2010. There is no explanation as to whybooks of account have not been maintained by him. In absence of books of accounts, the departmenthas after considering facts in totality reached a particularfinding. We are not in a position to accept oral assertion ofassessee that the deposit received by him ought to have beentreated as capital income and not as income from other source. Though provisions of Section 56(2)(ix) areamended with effect from 1.4.2015, going by argumentsadvanced by assessee, if the amount is accounted for aftertransaction is complete on mercantile basis, the said provision Hirekhan may be applicable. However, this issue has not been gone intoby ITAT and therefore we are not recording any bindingopinion and finding on the question. As we find no substantial question of law arising in these appeals, the appeals are dismissed. No costs. JUDGE JUDGE