The Income Tax Appellate Tribunal (ITAT) Delhi bench held that payment made by the assessee as shareholder of the company for construction of building on a plot should not be unexplained under Section 69 of the Income Tax Act,1961
Assesee , Ajay Sharma, entered into a collaboration agreement with M/s Yamuna Builders on behalf of M/s Shalu Construction for construction of building on a plot . Accordingly, the assessee received Rs. 1.95 crore in cash and Rs.5 lakhs in cheque from Yamuna Builders for this construction. This was found during a search action conducted in the premises of assessee. However in the assessment proceedings AO held that the amount received by assessee unexplained under Section 69 of the Income Tax Act and brought it under the income of assessee.
Aggrieved by the order assesee filed an appeal before the CIT(A) ,who allowed the appeal of the assessee . Thereafter the revenue filed an appeal against the CIT(A) order before the tribunal.
Amit Katoch, Counsel for Revenue submitted that the Assessing Officer was right and quite correct in making addition in the hands of assessee by observing that the contents and text of collaboration agreement seized during search and seizure operation is same and every word of both the agreements were identical.
Further the receipt of payments made through cheques furnished by Ms/ Yamuna Builders P Ltd. and seized during course of search were also the same which clearly proved that the assessee has made cash payment of Rs. 1.95 crores to M/s. Yamuna Builders P Ltd. during the year under consideration. Hence the Assessing Officer was right in making addition in the hands of assessee treating the same as unexplained investment under Section 69 of the I.T Act
Miraj D. Shah. Counsel for the assessee argued that assessee is shareholder of Shalu Construction the and collaboration agreement was entered by assessee on behalf of M/s Shalu Construction for construction of building on a plot with M/s Yamuna Builders .
Thus payment made by the assessee as shareholder of the company for construction of building on a plot should not be unexplained under Section 69 of the Income Tax Act
It was observed by the tribunal that assessee was a shareholder in the M/s. Shalu Construction P. Ltd. and he signed the collaboration agreement on behalf of said company with M/s. Yamuna Builders P Ltd.
Further the bench noted that CIT(A) observed the said agreement was entered between said two companies and the assessee merely signed the same on behalf of M/s. Shalu Construction P. Ltd. and not in the personal or individual capacity.
After considering the facts submitted and circumstance , the two member bench of Dr. B.R.R. Kumar,(Accountant Member) and Chandra Mohan Garg, (Judicial Member)held that payment made by the assessee as shareholder of the company for construction of building on a plot should not be unexplained under Section 69 of the Income Tax Act
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