Addition of security deposit sustained as not refunded to Developer even after seven years

Jindal Construction Vs ITO (ITAT Delhi)

ITAT Delhi held that addition of interest free security deposit sustained as the same is not refunded to the Developer even after lapse of more than seven years by merely stating that the Developer had not provided completion certificate.

Facts- The case of the assessee was reopened on the basis that the assessee had not filed any return of income, though it entered into transaction of large magnitude. Therefore, the case of the assessee was reopened u/s. 147 of the Income-tax Act, 1961. A notice u/s. 148 of the Act was issued and served upon the assessee. In response, the assessee filed return its of income on 10.4.2018 declaring income at Nil. Thereafter, a notice u/s. 143(2) was served upon the assessee. In response thereto CA/AR attended the proceedings. After considering the submissions the AO made addition of Rs. 25,00,000/- being security deposit treating to be forfeited by the assessee received from the Developer.

CIT(A) sustained the addition. Being aggrieved, the present appeal is filed by the assessee.

Conclusion- There is no dispute with regard to the fact that the assessee had entered into a transaction with the Developer. It is also not disputed that assessee had not filed return of income. The return of income was filed in pursuance to the notice issued under Section 148 of the Income Tax Act. Therefore, the grounds taken by the assessee, lack on merits. Same are dismissed.

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