Carcanet Infra Projects Private Limited Vs ITO (ITAT Pune)
Section 68 Applies Even to Customer Advances: Pune ITAT Remands Real Estate Developer’s ₹15.95 Crore Addition
The Pune ITAT held that customer advances received by a real estate developer are not automatically immune from scrutiny under Section 68 and that the assessee must establish the identity, genuineness and creditworthiness of the parties from whom such advances are received.
The assessee, engaged in construction and development of plots, had received fresh advances of ₹15.95 crore during AY 2018-19. The Assessing Officer treated the amount as unexplained cash credits under Section 68 because the assessee failed to furnish complete details and supporting documents to establish the creditworthiness of the customers. The CIT(A) upheld the addition, observing that Section 68 does not distinguish between personal loans, business advances or customer advances, and therefore the statutory burden remained on the assessee.
Before the Tribunal, the assessee argued that the amounts represented advances from customers for purchase of plots/flats and that payments were received through banking channels. It also filed voluminous additional evidence, including agreements with customers. The Tribunal agreed with the CIT(A) that Section 68 can apply even to customer advances shown as liabilities in the balance sheet, and that the assessee must prove the creditworthiness of the persons making such payments.
However, considering that substantial additional evidence had been produced and that the CIT(A) had not obtained a remand report on those documents, the ITAT granted the assessee another opportunity. The matter was restored to the CIT(A) for fresh adjudication after examining the agreements, customer details and other evidence and after obtaining a remand report from the Assessing Officer.
Accordingly, while affirming the principle that Section 68 can be invoked in respect of customer advances, the Tribunal set aside the appellate order and restored the matter for fresh examination. The appeal was therefore allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT PUNE
The captioned appeal at the instance of assessee pertaining to the Assessment Year 2018-19 is directed against the order dated 25.06.2025 of National Faceless Appeal Centre, Delhi passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of the Assessment Order dated 19.03.2021 passed u/s.143(3) r.w.s.143(3A) & 143(3B) of the Act.
