Advance received against booking of flats are not Unexplained Amount: ITAT deletes Addition [Read Order]

The Income Tax Appellate Tribunal (ITAT), Kolkata bench, held that advances received against booking of flats are not an unexplained amount. Consequently, the bench deleted the addition made by the assessing officer. The assessee, Anil Kumar Paik, is an individual engaged in various businesses, including property development, a liquor shop, a medicine shop, and rental income. After filing the return, the assessee’s case was selected for scrutiny.

During the scrutiny proceedings, the AO observed that in the financial statement, sundry creditors included an advance of Rs. 5,95,04,920/- received by S. Paik & Co., a sole proprietorship concern of the assessee, against the sale of flats. In the absence of satisfaction regarding the genuineness of the transactions, the AO added the advance of Rs. 48,00,000/- from three parties to the income of the assessee.

Aggrieved, the assessee filed a further appeal before the CIT(A), but it was dismissed due to non-appearance. Subsequently, the assessee filed a second appeal before the tribunal. During the proceedings, Somnath Ghoshi, Counsel for the assessee, argued that parties, namely, Amalendu Barik, Debanjan Chakraborty, and Indumati Panchali, did not reply to the notice u/s 133(6) of the Act. However, conveyance deeds were executed with these parties, duly registered with the Registering Authority, reflecting genuine transactions for the sale of flats. Hence, no addition was called for.

P.P. Barman, Counsel for Revenue, submitted that the assessee failed to appear before the CIT(A), and the Assessing Officer made detailed findings, asserting that the submissions filed by the assessee would not support its grounds.

The tribunal observed that the amount was received in preceding years as advance against the sale of immovable property. Further details of the conveyance deed were filed, proving that the advances received from the mentioned parties were adjusted against the sale consideration for the flats.

After reviewing the facts and records, the two-member bench, consisting of Dr. Manish Borad (Accountant Member) and Sanjay Garg (Judicial Member), held that advances received against booking of flats are not an unexplained amount. Therefore, the bench deleted the addition.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates