The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has recently deleted an addition in respect of receiving refund of advance paid by the assessee under a sale agreement in installments.
The assessee, M/s Sasi Enterprises, is a resident firm and it has been assessed as an unregistered firm since it failed to file a partnership deed. The assessee received a refund of Rs.3.70 Lacs from one Mrs. Nagammal and produced confirmation letter given by Shri P.V.Padmanadhan (son of deceased Mrs. Nagammal). It was stated that Mrs. Nagammal entered into an agreement for sale of 25 acres of land and received an advance of Rs.11 Lacs from the assessee in March 1989. Since the transactions could not be completed, the amount was returned back in installments. The AO completed the assessment treating the refund amount as ‘income from other sources’ on the ground that no supporting evidence was submitted to prove the claim.
After hearing rival contentions, a bench of Shri Mahavir Singh, Vice President and Shri Manoj Kumar Aggarwal, AM allowed the claim of the assessee and held that “From the facts, it emerges that the assessee firm paid advanced to Mrs. Nagammal in earlier years pursuant to a sale agreement. However, the transaction could not be completed and accordingly, the money was received back in installment. This transaction has been confirmed by the son of deceased lender who expired in 1995. The assessee also filed confirmation letters from advocate who was aware about the transaction, Therefore, in the absence of any adverse evidence on record, the explanation was to be accepted.”
Shri T. Vasudevan (Advocate) appeared for the assessee.
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