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2025 Supreme(Online)(ITAT) 2433
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD “A” BENCH, AHMEDABAD
BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND
SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER
IT(SS)A No.181/Ahd/2024
Assessment Years: 2014-15
Assistant Commissioner of
Income Tax,
Central Circle – 2(3),
Ahmedabad,
3
rd Floor, Aayakar Bhavan,
Ashram Road,
Ahmedabad - 380009
Vs.
Dharnidhar Developers,
A/102,
Sapath-IV, Opp. Karnavati
Club, S. G. Highway
Ahmedabad,– 380 015.
[PAN – AAHFD 3533 C]
(Appellants) (Respondents)
Assessee by Shri Vijay Mehta, AR
Revenue by Shri Ritesh Parmar, CIT-DR
Date of Hearing 17.02.2025
Date of Pronouncement 28.02.2025
The amount recorded as an unsecured loan in prior years cannot be treated as forfeited income under Section 68 of the Income Tax Act.
Headnote:(A) Income Tax Act - Section 68 - Appeal against order of CIT(A) deleting addition of Rs. 8,00,00,000/- made as unexplained cash credit - The CIT(A) found that the amount was recorded as unsecured loan in previous years and not forfeited income. (Paras 1, 7)
(B) Forfeiture of amount - The Revenue argued that the forfeited amount should be taxed, but the CIT(A) established that the transaction was genuine and documented. (Paras 5, 7)
(C) Change of accounting - The Revenue contended that the assessee changed the nature of the transaction to avoid tax, which the CIT(A) refuted based on evidence. (Paras 3, 7)
Facts of the case:
The Revenue challenged the CIT(A)'s decision to delete an addition of Rs. 8 Crores made under Section 68, claiming it was unexplained cash credit from a land transaction. The assessee argued it was a previously accepted unsecured loan.
Findings of Court:
The CIT(A) correctly determined the amount had been recorded in prior years, dismissing the Revenue's claims of forfeiture.
Issues: The main issues were whether the CIT(A) erred in deleting the addition and the nature of the Rs. 8 Crores entry.
Ratio Decidendi: The court upheld the CIT(A)'s ruling that the amount was not forfeited income and was properly classified as an unsecured loan in the assessee's accounts.
Result: Appeal dismissed.
ORDER
PER SUCHITRA KAMBLE, JUDICIAL MEMBER:
The appeal filed by the Revenue against the order dated 07.10.2024 passed by the CIT(A)-12, Ahmedabad for the Assessment Years 2014-15 2. The Revenue has raised the following grounds of appeal :-
1) “Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 8,00,00,000/- made u/s. 68 of the Income Tax Act , being forfeited amount, out of total sales consideration of Rs.20,00,00,000/- with respect to land at Survey No. 415/4, Makarba Village, which the assessee has failed to bring forfeited amount to taxation under the head “Income from other Sources” in the year of forfeiture i.e., A.Y. 2014-15.”
2) “Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the draft banakhat found from the digital evidences (image / document No. 6ff84c7-e3be-49dd-801c-bfc53d8ba7b6, page No. 13 to 19, as per Annexure – A dated 17/10/2019) in the form of Mobile phone / Email Data, found and seized from the residence of Shri Dhiren Bharwad. In the said draft banakhat, it was categorically mentioned that, after the payment of Rs. 8Cr as advance towards purchase of property, if the buyer failed to pay the balance amount of Rs. 12 Cr, then the seller will forfeit the advance money of Rs. 8 Cr. Accordingly, on failure of payment of balance amount of Rs. 12 Cr, the seller i.e., the advance money of Rs 8 Cr but had not offered such forfeited amount to taxation under the head “Income from other Sources” in the year of forfeiture i.e., A.Y. 2014-15.”
3) “Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the change of accounting undertaken by the assessee in their books of accounts, wherein, the assessee in order to avoid the payment of taxes had changed the nature of transaction of Rs 8 Cr from “Advance against sale of Property” to “Unsecured Loan” and thus, this change of accounting has been routed through Balance Sheet only and thus avoided to bring forfeited amount of Rs. 8 Cr for taxation under the head “Income from other Sources” in the year of forfeiture i.e., A.Y. 2014-15.”
4) “The Revenue craves leave to add / alter / amend and / or substitute any or all of the grounds of appeal.”
3. During the year, the assessee has shown Profit and Gain from business and profession. Original return was filed on 30.09.2014 u/s 139(1) declaring total income at Rs. 87,22,060/-. A search action u/s 132 of the Income Tax Act was carried out in the case of “Land Broker and Financer” Group on 15.10.2019 and subsequent dates. The assessee i.e. Dharnidhar Developers is flagship entity of subgroup namely “Shri Dhiren R Bharwad”. During the course of search, the residence of the assessee was also covered u/s 132 of the Act. Consequent to search action, notice u/s 153A of the Act was issued on 19.10.2020 and served upon the assessee. In response to the same, the assessee filed the return of income on 18.11.2020 declaring total income at Rs. 87,22,060/-. Subsequently, a notice u/s 143(2) of the Act was issued on 07.12.2020 as well as notice u/s 142(1) was also issued along with questionnaire on 28.01.2021. in response, the Chartered Accountant of the assessee filed the details.
3.1 During the year, the assessee has shown Profit and Gain from business and profession. During the course of search proceedings u/s 132 of the Act at the residence of Shri Dhiren R Bharwad digital data found and seized as per Annexure A dated 17.10.2019, in the form of Mobile Phone(s)/Email data. From the said data, the Assessing Officer observed that the same are MOU for sale of land situated at Makarba Village by Shri Dhiren R Bharwad to M/s Vidhyutnagar Township, M/s Shiv Ugti Developers and M/s AB Technobuild. The total sales consideration was fixed at Rs. 20,00,00,000/- and as per the terms of Banakhat, the amount of Rs. 8,00,00,000/- which was received in the books of the assessee
