Case Law Details
ITO Vs M/s. Necleus Steel Private Limited (ITAT Delhi)
In this case, assessee received an amount of Rs.67.50 crores from M/s. Unitech Ltd., as advance against the sale of the property. The assessee filed confirmation from M/s. Unitech Ltd., along with its bank statement and acknowledgment of filing of the ITR with balance sheet. The amount in question is received against the sale of the property through RTGS, through banking channel. M/s. Unitech Ltd., appeared before the A.O. in response to the notice under section 133(6) of the I.T. Act, in which, they have confirmed the same facts before A.O. for making advance payment to the assessee against sale of the property. The copy of the balance-sheet of M/s. Unitech Ltd., is also filed to show that they have given loan and advance for Rs. 1729.97 crores to different parties. It would show their worth and creditworthiness. It is not in dispute that assessee is owner of the property in question against whom advance was received. The Agreement to Sell was recorded on 12th March, 2010 on plain paper. However, according to the explanation of assessee, in order to safeguard the interests of both the parties, Agreement to Sell was executed on a Non-Judicial Stamp Paper in the year 2012, on which, inadvertently the date of Original Agreement was mentioned. This has created a doubt in the mind of the A.O. to reject the explanation of the assessee. The A.O. recorded the statement of Stamp Vendor etc., in order to arrive at the finding of fact against the assessee. However, the A.O. has forgot to note that the entire amount was received in 04 installments through RTGS, through banking channel, in March, 2010. If the stamp paper was purchased later on in March, 2012, such entries in the bank account of the assessee could not have been recorded in March, 2010. Therefore, on mere purchase of the stamp paper or recording Agreement to Sell in March, 2012, is of no consequence. Further, assessee need not to resort to any irregularity or illegality because law permits that even oral agreement could have been entered into, which, itself is sufficient to believe the explanation of assessee. The assessee, apart from that the creditor directly confirmed the transaction with the assessee, in response to notice under section 133(6) of the I.T. Act, filed confirmation of the creditor, their affidavits, their ITR and balance sheet, which proved the identity of the creditor, their creditworthiness and genuineness of the transaction in the matter. All the corresponding entries are recorded in the books of account of the assessee as well as in the books of account of the creditor. The assessee explained that the Original Agreement was executed on plain paper on 12th March, 2010 and in order to safeguard the interests of both the parties, later on, Agreement to Sell was executed in March, 2012, but, inadvertently, date of Original Agreement have been mentioned. The explanation of assessee should not have been rejected in this regard because such mistake is obvious because original transaction were completed in March, 2010. The witness to agreement also confirmed in their statements genuineness of the transaction between the parties. The assessee also explained that the creditor is a listed and public owned and reputed company which fact has also not been disputed by the A.O. The A.O. rejected the contention of assessee because Non-Judicial Stamp Paper was purchased later on, on which, Agreement to Sell was executed. The Ld. CIT(A) noted in his findings that the fact that land was purchased by the assessee originally has been confirmed by Additional DIT (Investigation) for a consideration of Rs. 48.44 lakhs. The assessee filed copy of the confirmation, bank statement and income tax return of the creditor, in the paper book, which support the explanation of the assessee that assessee received genuine amount from M/s. Unitech Ltd. Later on, on cancellation of the Agreement to Sell, the amount in question, was returned to the creditor through banking channel. The A.O. did not doubt existence of creditor and its creditworthiness. Thus, A.O. accepted identity of creditor and its creditworthiness and genuineness of the transaction. For proving case under section 68, assessee is required to prove identity of creditor, its creditworthiness and genuineness of the transaction, which assessee has proved in this case. The valuation of property may not be relevant to discard the explanation of assessee particularly when amount is returned in subsequent year. These facts supports the findings of the Ld. CIT(A) that there was no justification to make the addition under section 68 of the I.T. Act. Thus, the assessee, proved the identity of the creditor, its creditworthiness and genuineness of the transaction in the matter. According to Section 68 of the I.T. Act, assessee has to prove only the source of the credit. In this case, it is not an ordinary credit, but, assessee has received advance against sale of the property. Therefore, the explanation of assessee should not have been doubted by the A.O. The Ld. D.R. merely relied upon the order of the A.O. without pointing-out any infirmity in the order of the Ld. CIT(A) in deleting the addition. In the absence of any serious challenge to the findings of fact recorded by the Ld. CIT(A), we do not find any merit in the Departmental Appeal. The Ld. CIT(A), on proper appreciation of facts and material on record, correctly deleted the addition. The Departmental Appeal fails and is dismissed.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
This appeal by Revenue has been directed against the order of the Ld. CIT(A)-XVI, Delhi, dated 31st October, 2014, for the A.Y. 2010-2011, challenging the deletion of addition of Rs. 67,50,00,000/- under section 68 of the I.T. Act, 1961.
2. The brief facts of the case are that from perusal of the balance sheet, the A.O. noticed that assessee has shown M/s. Unitech Ltd., as fresh sundry creditor of Rs. 67.50 crores under the head “Current Liabilities”. The assessee was asked to furnish details of sales/purchases or any other type of transaction with evidence with M/s. Unitech Ltd., which is terming as ‘Creditor’ in the books of account of the assessee. The assessee filed reply before the A.O. and also filed required details and confirmation from the creditor. It was also explained that amount have been received on different dates through RTGS. The A.O. noted that assessee did not explain the nature of transactions with M/s. Unitech Ltd., for which, the money was credited in the books of account of the assessee. In response to notice under section 133(6) of the Act, the Ld. A.R. of M/s. Unitech Ltd., have attended the assessment proceedings and filed requisite details before the A.O. in which it was explained that M/s. Unitech Ltd., has paid advance amount of Rs. 67.50 crores for purchase of lands situated at village Savroli and Dhamini, Taluka Khanpur, District Raigad, Maharashtra to M/s. Nucleus Steel Pvt. Ltd., (assessee). They have filed Agreement to Sell for purchase of the land as mentioned above. It was submitted that due to shortage of funds and huge repayments obligations of the debts, the Company is unable to pay the balance amount. The assessee also explained the same facts that Agreement to Sell Dated 12th March, 2010 was executed for sale of the above property, for a sum of Rs.135 crores, out of which, a sum of Rs. 67.50 crores was received as advance from M/s. Unitech Ltd., who have also confirmed the same facts to the A.O. The A.O, therefore, noted that assessee received advance of Rs.67.50 crores from M/s. Unitech Ltd., as against the land in Maharashtra. The Agreement to Sell was executed on 12th March, 2010 between the parties. Agreement to Sell was made on Non-Judicial Stamp paper on 12th March, 2010. The stamp paper was issued to M/s. Unitech Ltd., on 03rd March, 2010 by Shri Sandeep Kumar, Stamp Vendor, New Delhi. The A.O. made investigation from Stamp Vendor etc. The A.O. recorded the statement of Stamp Vendor etc., and made further inquiry into the matter and noted that stamp paper was issued by the Delhi Treasury on 22nd March, 2012 i.e., 02 years after the date of execution. Valuation of property was found at lessor amount. The A.O, therefore, doubted the entire transaction and made the addition under section 68 of the I.T. Act, for a sum of Rs.67.50 crores.
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