IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD D BENCH, AHMEDABAD

I.T.A. No.: 2992/Ahd/2011 Assessment years: 2003-04
Income Tax Officer (Appellant) vs. Sapna Land Developers (Respondent)
Date of Order: 28-12-2015

ORDER

Per Pramod Kumar AM:
1. This appeal, filed by the Assessing Officer, challenges correctness of the order dated 1st August 2011 passed by the learned CIT(A), in the matter of assessment under section 143(3) r.w.s. 147 of the Income Tax Act, 1961, for the assessment year 2003-04.

2. Grievance of the appellant is that “on the facts and in the circumstances of the case and in law, learned CIT(A) has erred in deleting the addition of Rs 1,03,06,705 on account of cash credit under section 68 of the Act”.

3. Briefly stated, the relevant material facts are as follows. The assessee before us is engaged in the business of development of land and building and it is a case of reopened assessment. It was noticed by the Assessing Officer that the assessee has shown creditors of Rs 1,03,06,705 being advance instalments from the customers. Even though it was explained by the assessee that these amounts represent the advance instalments received by the assessee, that the transfer of plot was done only after receiving all the instalments, and that identical issue taken up in the immediately preceding assessment year has been decided in favour of the assessee by the Tribunal. It was also pointed out that complete details, alongwith supporting evidences, were filed in the course of assessment for the year 2005-06. Brushing aside these submissions, the Assessing Officer concluded that “the assessee has not proved genuineness and credit worthiness, on account of cash credit received from the members of Rs !,03,06,705, which was shown by the assessee as creditors”. The entire amount was added back as unexplained credits in the hands of the assessee. Aggrieved, assessee carried the matter in appeal before the CIT(A). Learned CIT(A) upheld the grievance of the assessee and observed that “there is no denial of the fact that similar addition made in appellant’s own case for the assessment year 2005-06 has been deleted by the CIT(A) and Hon’ble ITAT, Ahmedabad, has confirmed the CIT(A)’s view” to conclude that “following the above quoted Hon’ble ITAT order, the addition made is hereby deleted and the appeal is allowed”. The Assessing Officer is aggrieved of the relief so granted by the CIT(A) and is in appeal before us.

4. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position.

5. We find that a coordinate bench of this Tribunal, speaking through Hon’ble Vice President Easwar (as he then was) and in assessee’s own case for the assessment year 2005-06, decided the same issue in favour of the assessee and observed, inter alia, as follows:

10. We have carefully considered the rival contentions. The facts narrated in the preceding paragraphs would show that the assessee did file the relevant details regarding the members who paid the advance instalments and the booking amounts before the AO. Copious details including ledger account extracts have been filed by the assessee. They were all filed before 24-12- 2007. In fact most of the details were filed under cover of letter dated 26-10- 2007. The details called for by letter dated 24-12-2007 were filed on 26-12- 2007. The assessee is in the business of buying and selling lands and its modus operandi is to buy plots of land in villages which had scope for development, take members who are willing to buy the plots, collect monthly instalments from them as also an initial booking amount and transfer the land to them once the instalments are fully paid. When the land is transferred, the advances are treated as sales and taken to the trading account. The AO, as pointed out by the CIT(A), has not disputed the modus operandi of the business and has even proceeded to estimate the profits of the Ilahi Park scheme. The CIT(A) has held that the AO has failed to keep in mind the nature of the assessee's business while examining the contribution made by the members in monthly instalments, even though he was fully aware of the business of the assessee. We are inclined to agree with the decision of the CIT(A) and also with his observation that the AO has taken contradictory stands. If he accepts that the business of the assessee involved taking of monthly advances from the members and booking amounts from them and that the income arose from the sale of the plots in the year in which the plots were registered in the names of the members and possession given, then it follows that the amounts shown as advances or instalments from the members stood proved. The AO has not disputed the fact that the advance instalments stood transferred to the sales account when the plot was transferred in the name of the member. Thus, the credits in the accounts of the members are nothing but advance payments or instalments in anticipation of the sale pursuant to the booking of the plot in the particular scheme. During the relevant accounting year, there were 57 sales and the assessee has contended before the AO in its letter dated 26-12-2007 that the instalment and booking amounts standing to the credit of these members were transferred to the sale of plots account which was taken to the trading account. If this claim is not disputed, as it has not been disputed by the AO, then it follows that the amounts shown in the accounts of the members cannot be assessed as cash credits under Section 68 of the Act. This aspect of the matter has also been highlighted by the CIT(A) and we are in agreement with his view on this aspect. The papers compiled in the paper book also show that all the details which are relevant and which show the nature and source of the amounts credited in the advance instalments account and the members booking account have been filed before the AO. In these circumstances, we are unable to differ from the view taken by the CIT(A). We are also not inclined to accept the submission of the learned CITDR that the CIT(A) erred in not following the procedure prescribed by Rule 46A. It has not been pointed out by him as to what was the additional evidence adduced before the CIT(A) by the assessee. Since complete details were filed before the AO himself, there is also no need to send back the matter for fresh consideration. Even if the AO did not have the time to examine those papers, the CIT(A) whose powers are co-terminus with those of the AO has examined them and has taken the decision. It is therefore unnecessary to restore the matter for fresh examination. Thus, the first two grounds taken by the department are dismissed.

6. The view so taken by the coordinate bench have been approved by Hon’ble jurisdictional High Court, vide judgment dated 29th June 2011, and the matter has thus attained finality. There is also no dispute that all the material facts of the issue in appeal are the same as in the assessment year 2005-06. IN this view of the matter, and respectfully following the views of the coordinate bench, we approve the conclusions arrived at by the CIT(A) and decline to interfere in the matter.

7. In the result, the appeal is dismissed. Pronounced in the open court today on 28th day of December, 2015.

S S Godara                  Pramod Kumar
(Judicial Member)        (Accountant Member)