AI Structured Summary
Not yet generated for this judgment
Judgment
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:
This appeal is filed by the Department against the order of Ld. NFAC dated 21.01.2026 arising from the assessment order dated 25.03.2022 passed under section 147 r.w.s. 144 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') for the Assessment Year 2014-15.
None appeared on behalf of the assessee. We accordingly decided to hear the case with the assistance of the ld DR. The ld DR appraised us with facts of the case and materials on record. The Department has raised the following grounds of appeal:
1)On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.3,26,11,060/- made by the Assessing Officer u/s 68 of the Income Tax Act, without properly appreciating that the assessee failed to substantiate the genuineness of the alleged sale transaction with reliable and verifiable documentary evidence during the assessment proceedings.
2)The Ld. CIT(A) has erred in ignoring the facts that the assessee failed to produce substantive documentary evidence and supporting confirmations to establish the genuineness of the alleged transactions during the assessment proceedings.
3)The appellant craves leave to add, alter OR amend any/all of the grounds of appeal before OR during the course of the hearing of the appeal.
Brief facts of the case are that the assessee is engaged in the field of Development of Real Estate and related activities and e-filed its return of income u/s 139 of the Act on 29.11.2014 declaring a loss of Rs.19,84,54,099/-. The case was selected for scrutiny and assessment order completed by the AO u/s 143(3) of the Act on 23.12.2016 at a total loss of Rs.19,84,39,720/- after making a total addition of Rs.14,381/-. Thereafter, assessment was reopened u/s 147/148. The Assessing Officer thereafter, passed final order under section 147 with 144B of the Act and made addition of Rs.3,26,11,060/-by treating the sales as unexplained and considered it as cash credit.
Aggrieved, assessee was in appeal before the ld. CIT(A) who allowed the appeal of the assessee.
Aggrieved, department is now in appeal before us.
Before us, ld. DR submitted that addition have been made by the ld. CIT(A) under section 68 of the Act without properly appreciating that the assessee failed to substantiate the genuineness of the sale transactions during the assessment proceedings and relied on the assessment order passed by the ld. AO.
We have heard the ld. DR and have perused the material available on record. We find that the AO in his order has added sale made by the assessee of Rs.3,26,11,060/- under section 68 of the Act doubting the genuineness of the sale transactions. The ld. CIT(A) has deleted the same by observing as under:
“On careful consideration of the assessment order, it is observed that the Assessing Officer has not disputed the fact that the appellant is engaged in real estate business and had acquired various parcels of land during the year. The addition has been made primarily on the ground that the sale deeds submitted by the appellant were allegedly unsigned by the buyer, and therefore the sales were treated as non genuine. During appellate proceedings, the appellant has furnished detailed submissions explaining the entire background of the transaction. It has been demonstrated that the land in question was originally purchased from farmers at village Shahberi, Greater Noida. Owing to agitation by farmers and subsequent litigation, the Hon’ble Supreme Court directed compulsory acquisition of the land by Greater Noida Authority at a predetermined rate. In pursuance of the directions of the Hon’ble Supreme Court, notifications were issued and the land was acquired by Greater Noida Authority, a statutory government authority.
The appellant has placed on record copies of registered sale deeds, notifications issued by the Authority, ledger accounts and bank statements evidencing receipt of consideration from Greater Noida Authority through banking channels. These documents establish that the transaction was carried out under statutory compulsion and involved a government authority, thereby significantly reducing any scope for a sham or colourable transaction.
It is also pertinent to note that the sale consideration was received through banking channels from Greater Noida Authority, whose identity and creditworthiness are beyond any doubt. Thus, the basic ingredients of section 68, namely identity, creditworthiness and genuineness of the transaction, stand fully satisfied.
The Assessing Officer has merely proceeded on a technical objection regarding signatures, without appreciating that registration of a sale deed by the Sub-Registrar itself presupposes compliance with statutory formalities, including execution and authentication of parties. The finding of the Assessing Officer that the documents were unsigned is contradicted by the material placed on record, and no independent inquiry or verification has been conducted to rebut the appellant’s evidences.
It is a settled legal position that section 68 cannot be mechanically applied to business receipts which are duly recorded in the books and supported by documentary evidence. The Hon’ble Delhi High Court in CIT v. Value Capital Services (P) Ltd. has held that once identity and genuineness are established, no addition can be made merely on suspicion. Similarly, courts have consistently held that receipts arising from disclosed business transactions cannot be treated as unexplained cash credits in absence of any material to prove falsity.
In the present case, the sale receipts are intrinsically linked to the appellant’s business activity, duly recorded in the books, supported by registered documents, and received from a government authority. The Assessing Officer has not brought any cogent material on record to establish that the transaction was bogus or that the money had emanated from the appellant itself.
In view of the above factual and legal position, the addition of Rs. 3,26,11,060/- made u/s 68 of the Act is found to be unsustainable in law.”
We find that the sale consideration received from transfer of land are from Greater NOIDA Authority, a fact acknowledged by the AO himself. We further note that the Revenue has not brought any cogent materials, evidence or arguments to deviate from the decision of the CIT(A). The only concern of the AO for disallowance is unsigned deeds.
In such factual matrix of the instant case, we are of the considered view therefore, that there is no reason to interfere with the decision of ld. CIT(A). The appeal is dismissed.
In the result, appeal filed by the Department in ITA No.2976/Del/2026 is dismissed.