Case Law Details
ITO Vs Antriksh Infrastructure Pvt Ltd (ITAT Delhi)
Introduction: In a significant ruling that impacts the interpretation of financial transactions under the Income Tax Act, the Income Tax Appellate Tribunal (ITAT) Delhi addressed the case of ITO Vs Antriksh Infrastructure Pvt Ltd. The focus of the dispute was on the deletion of additions amounting to ₹29201930/- made under Section 68 of the Act by the Commissioner of Income Tax (Appeals) [CIT(A)], which the revenue had challenged. This case delves into the complexities of assessing business transactions and advances received from customers, specifically in the real estate sector.
Detailed Analysis: The crux of the matter originated from the assessment year 2007-08, wherein Antriksh Infrastructure Pvt Ltd was accused of undisclosed income, represented by advances received from 34 parties for booking residential units in their Jaipur project. These advances were initially scrutinized following a search and seizure operation and further investigated upon reopening of the case based on information from the investigation wing.
The primary contention from the revenue’s side was the addition made under Section 68, implying unexplained cash credits. However, Antriksh Infrastructure contested this by presenting comprehensive details of the advances, including identity proofs and affidavits from the parties, asserting that these were legitimate transactions for booking residential flats and not undisclosed income.
During the proceedings, the Assessing Officer (AO) called for verification of certain parties, a request partially met by Antriksh Infrastructure due to practical constraints. Despite the production of some parties and refund evidence to several others, the AO proceeded with the addition, which was later deleted by the CIT(A) after detailed examination and verification of facts.
The ITAT, upon reviewing the submissions and evidence, highlighted several key observations:
- The advances were towards business transactions for booking residential flats, not mere loans.
- The CIT(A)’s deletion of additions was based on a proper appreciation of facts, including affidavits from the parties confirming their advances.
- There was no evidence to suggest that Antriksh Infrastructure paid for the demand drafts through unaccounted cash to the 34 parties.
- The Assessing Officer’s additions were primarily based on suspicion and conjectures without concrete evidence.
Given these observations, the ITAT upheld the CIT(A)’s decision, emphasizing the need for evidence-backed assessments and cautioning against reliance on mere suspicions or assumptions in making additions under Section 68.
Conclusion: The ITAT Delhi’s ruling in ITO Vs Antriksh Infrastructure Pvt Ltd sets a precedent in the interpretation of financial transactions and advances received in the course of business, particularly in the real estate sector. It underscores the importance of proper documentation, verification, and evidence in substantiating business transactions against allegations of undisclosed income under Section 68 of the Income Tax Act. This judgment not only provides clarity on handling advances received from customers but also reinforces the principle of fairness and evidence-based assessment in tax proceedings, offering a significant takeaway for businesses and tax practitioners alike.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the revenue is preferred against the order of the CIT(A)-1, New Delhi dated 20.12.2016 pertaining to A.Y. 2007-08.
2. The solitary grievance of the revenue is that the CIT(A) erred in deleting the addition of 29201930/- made u/s.68 of the Act.
3. Briefly stated the facts of the case are that the assessee is a private Limited company engaged in the business of Real Estate In furtherance of its objects the assessee received advance of Rs.29201930/- from 34 parties. These amounts were received as booking advances towards booking of residential unit in the project Antriksh Square at Jaipur, Rajasthan.
4. A search and seizure operation was carried out in the case of Antriksh and Dwarkadhish Certain documents were found and seized from the residential premises of the Director Rakesh Kumar Yadav pertaining to Antriksh Infrastructure Private Limited for the F.Y. 2006-07.
5. On the basis of information received from the investigation wing the case of the assessee was reopened and accordingly statutory notices u/s. 148 of the Act was issued and served upon the assessee.
6. In the reasons recorded for reopening the assessment it was stated that the advance of 28,00,000/- received by the assessee represent undisclosed income of the assessee.
7. The assessee during the course of the assessment proceedings submitted the copy of the ITR and audited balance sheet and the AO asked the assessee to provided the details of advance received from the customers of Rs.29201930/-. Assessee filed a detailed reply alongwith proof of income, offer letter, ledger accounts and ID proofs of all the parties to prove the genuineness of advance received.
8. The AO asked the assessee to produce five persons namely Manish, Swarn, Rampal, Shakti and Vijay Singh for verification. The assessee sought permission to produce other 5 persons and the AO accepted the prayer of the assessee and thereafter assessee produced Chattar Singh, Swarn, Jitender, Bimla and Munni Devi.
9. Their statements were recorded supported by the evidences which were discarded by the AO who completed the assessment by making addition of 29202930/- u/s. 68 of the Act.
10. Aggrieved, the assessee challenged the addition before the CIT(A) and explained that the advance received for the project Antriksh Square was received in demand draft from 34 parties towards booking of residential flats at It was further explained that due to recession and delay in the completion of the project 13 customers issued legal notice to the assessee claiming refund of the booking advance. It was pointed out that Rs.11904264/- has been refunded to 13 parties during F.Y. 2015-16 and 2016-17.
11. After considering the facts and the submissions and after verifying the facts the CIT(A) deleted the addition.
12. Before us the DR strongly supported the findings of the AO and referring to the statements the DR read operative part of the assessment order.
13. The Counsel for the assessee reiterated what has been stated before the FAA.
14. We have given a thoughtful consideration to the orders of the authorities below. It is not in dispute that the assessee has received the advance towards booking of residential flat in project Antriksh Square amounting to Rs.29201930/- from 34 parties. It is also not in dispute out of 34 parties amount has been refunded to 13 parties in Y.2015-16 and 2016-17 as under :-
15. This brings down the disputed amount to 17297666/- belonging to 21 parties. We find that the assessee has also submitted affidavits of all the persons who have given advance and in each affidavit the buyers have categorically stated that they have given advances towards booking of flat.
16. Appreciating the factual matrix in true perspective we find that the assessee has filed the details of advances received from customers and the impugned transactions are not loan simplicitor but business transaction has to be considered from that The AO has recorded the statements of only 5 parties out of which amount has been refunded to three parties namely Shakti Singh, Chattar Singh and Jitender.
17. No evidence has been brought on record to show that the assessee has purchased the demand drafts by paying cash to 34 The AO has also not brought any evidence to demolish the affirmations made in the affidavits of the persons who have given advances. It appears that the AO has made the additions on suspicion, conjecture and surmises without any evidence and the CIT(A) has deleted the impugned additions on proper appreciation of facts. We do not find any reason to interfere with the findings of the CIT(A).
18. In the result, the appeal of the revenue is dismissed.
Order pronounced in the open court on 03.01.2024.
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