INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Advances received for booking of commercial space - Assessee proved identity, creditworthiness and genuineness of advances

Assessee-company received advances from six companies. AO asked the assessee to prove identity, creditworthiness and genuineness of the said advances. In response, the assessee filed confirmations of the companies from whom advances were received. Assessee also stated that such advances were towards booking of space in a commercial building. Further, notices under section 133(6) were issued to investor companies for furnishing requisite details, which were duly complied by them. Later, the AO issued summons under section 131 to the directors of the investor companies and statements of two of the directors were recorded. In conclusion, the AO held that the companies did not have sufficient income to lend the advances and accordingly, made addition of such advances under section 68. Held: It was found that all the six parties from whom the assessee received advances appeared before the AO and filed confirmations, copies of their Income Tax returns, copies of their bank statements and copies of their Balance Sheets as required by the AO. Further, the directors of two of those companies appeared before the AO gave statements and confirmed making payment to the assessee for booking of space. Further, it was found that money paid by those entities was refunded by the assessee in a short period of time and evidences in respect of receipt of money and refund were filed and all the transactions of receipt of money and refund thereof were through banking channels. Further, Revenue failed to bring any tangible material on record to support the addition made under section 68 regarding the advances received by the assessee and hence, such addition was deleted.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2012-13

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