Genuineness of advances received towards booking by the various persons in the earlier years

It is not in dispute by either of the parties that the provisions of section 41(1) are not applicable. The issue here now remains as to whether advances received towards booking by the various persons in the earlier years and as reflected in the balance sheet are genuine or not. From a perusal of the balance sheet for the earlier years which have been placed in the paper book and as pointed out by the learned Counsel, it goes to show that these liabilities are towards advance booking at the time when appellant tried to carry out the housing project.

These liabilities are coming from the earlier years which is quite evident from the balance sheet of all the years. Thus they cannot be held to have appeared for the first time as wrongly held by the learned CIT(Appeals). The learned CIT(Appeals) has completely misdirected herself and came to a wrong conclusion after referring to the balance sheet of appellant in his individual capacity rather than the balance sheet of the proprietary concern which carried out the business. In the interest of natural justice, the matter needs to be restored back to the file of the learned CIT(Appeals) who will consider the actual balance sheets of the earlier years of the proprietary concern, wherein these liabilities have been shown. Further the learned CIT(Appeals) will also examine the fact that the part of the liabilities have been discharged not only in this year but also in the subsequent year as given in page 4 to 10 of the appellate order. After considering these aspects, the learned CIT(Appeals) is required to give a proper finding on the issue involved.

INCOME TAX APPELLATE TRIBUNAL, MUMBAI

ITA No. : 3429/Mum/2011 – Assessment Year: 2007-08

Shri Mukesh Baldevraj Bajaj Vs. ITO

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