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| The Tax Publishers2020 TaxPub(DT) 3035 (Kol-Trib) INCOME TAX ACT, 1961
Section 69B
Where initially assessee wanted to take over the project from its sister concern which did not materialize, so the advance paid by assessee to landlord was adjusted with current account balance of sister concern and assessee had shown the same under the head “Loans and Advances” and has included the amount in “Advances recovered in cash or in kind” in its balance sheet, therefore, no addition was warranted under section 69B.
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Income from undisclosed sources - Addition under section 69B - Unexplained investment - Assessee had given advance for property which was taken over by assessee's sister concern
Assessee had invested a sum in booking/advancing against a plot of land. As no such investment was reflected in assessee's relevant balance sheet, assessee was asked to explain the matter. Assessee stated that the project was booked in name of sister concern. According to assessee, it was initially planned that the assessee would take over the project and accordingly part payment was made to landlord from assessee's company account. However, the initial plan did not materialize and the project remained with sister concern and the advance paid by assessee to landlord was adjusted with current account balance of sister concern. According to AO, since neither the assessee company nor sister concern had shown respective sundry debtor and sundry creditor against this payment in their respective Balance Sheet and explanation of the assessee did not hold any merit. Thus, it was proved beyond doubt that assessee had undisclosed investment which was not disclosed in its books of account in terms of section 69B. Held: Assessee had given the amount as advance for the golf club road project, which was evidenced in the balance sheet of assessee. Initially assessee wanted to take over the project from its sister concern which did not materialize, so the advance paid by assessee to landlord was adjusted with current account balance of sister concern. Assessee, in fact, had shown the same under the head “Loans and Advances” and has included amount in “Advances recovered in cash or in kind” in its balance sheet and payment had been made by cheque for Road Project. Therefore, no addition was warranted under section 69B.
Followed:CIT v. Messrs. Shoorji Vallabhdas And Company (1962) 46 ITR 144 (SC) : 1962 TaxPub(DT) 0307 (SC)
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2005-06
INCOME TAX ACT, 1961
Section 69C
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