The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the income tax disallowance cannot be made for non-submission of flat buyer’s PAN details.
The bench of Anubhav Sharma (Judicial Member) and S.Rifaur Rahman (Accountant Member) has observed that the AO made the addition by observing that the assessee has not provided the PAN details of the buyers of 14 flats. Mere non submission of the PAN details will not lead to disallowance under section 68 of the Income Tax Act.
Section 68 of the Income Tax Act relates to cash credits. It aims to ensure individuals and corporations transparently disclose their income by addressing unexplained cash credits in their books of accounts, placing the responsibility on the taxpayer to prove the legitimacy of credits.
The respondent/assessee is a company engaged in the business of real estate development. It was continued to run the construction project in collaboration with M/s Gopal Das Estates and Housing P. Ltd. and M/s Ardee Mechanical Industries Delhi P. Ltd. The project for development is located in Ardee City at Gurugram. All the parties had pooled their land.
The PAN Numbers of certain flats buyers not having been provided and for that lapse, an addition during assessment was made of Rs. 7,00,27,585/-. The AO found that fourteen parties named in the assessment order, bought the flats for an aggregate sum of Rs. 7,00,27,585/-, had failed to provide any justification for not adducing their PAN numbers. The AO opined that the sale figure remained unexplained due to the mandatory TDS not having been discharged. The AO added that the creditworthiness, genuineness and identification were missing which would result in an addition.
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The assessee preferred an appeal before CIT(A) and filed detailed submissions before him. Section 68 of the Income Tax Act could not be invoked for not mentioning the PAN numbers. It was further submitted that before the AO the evidence of PAN with regard to the fourteen flats buyers named in the assessment order had indeed been filed twice over which he had not considered the same and ignored. The aggregate amount could not be added in the hands of the Assessee in view of its having only 7.79% share in the total 15% sale value of the flats.
The CIT(A) after verification of the material on record directed to delete the addition proposed by the AO in assessment order.
The department appealed against the order of the CIT(A).
The assessee contended that the addition as made by the AO was ex facie erroneous and unwarranted. It was made due to non-application of mind. The deletion of the same by the NFAC is fit and proper and so that order may please be confirmed while rejecting the ground raised in this behalf.
The tribunal dismissed the department’s appeal and held that since the assessee had already brought on record the relevant details before AO as well as CIT(A), there is no reason to disturb the findings of CIT(A).
Case Title: ACIT Versus Ardee Infrastructure Pvt. Ltd.
Case No.: ITA No.3584/DEL/2023
Date: 06/09/2024
Counsel For Appellant: K. Sampath
Counsel For Respondent: Amisha Gupta
