The Tax Publishers2021 TaxPub(DT) 0191 (Bang-Trib)

INCOME TAX ACT, 1961

Section 37(1)

Where no evidence was filed before lower authorities in respect of serious efforts made by assessee and on perusal of the legal notices and facts narrated by the assessee that these facts were not discussed by AO or CIT(A) and assessee firm could substantiate serious efforts made for recovery of advance amount, therefore, matter was remanded back to AO and one more opportunity should be provided to assessee to substantiate with the evidence before AO.

Business expenditure - Cancellation of sale agreement - Claim of expenditure by assessee as advance made for purchase of property forfeited - Allowability

Assessee was engaged in the business of development of real estate, purchase and sale of land and other related activities. AO on perusal of the Profit and Loss Account found, that the assessee has claimed an expenditure as advance made for purchase of property forfeited. AO called for the Agreement of Sale and found that assessee has agreed to purchase a property along with commercial building. AO issued summons to seller of the property to furnish return of income. Whereas, AO found that the seller of the property had not disclosed this advance receipt for income tax. The observations of AO was that the transaction had to be treated as Capital Asset and forfeiture loss cannot be allowed as deduction. Held: From facts which was narrated before the Tribunal and sequence of events as referred by the assessee did not find a place in the assessment order and there was no clarity with respect to details. CIT(A) had also observed that no evidence was filed before the lower authorities in respect of serious efforts made by the assessee. On perusal of the legal notices and facts narrated by assessee the Tribunal opined that these facts were not discussed by AO or CIT(A) and assessee firm could substantiate serious efforts made for recovery of advance amount. Therefore, one more opportunity should be provided to the assessee to substantiate with the evidence before AO.

Relied:Pr. CIT v. Khyati Realtors Pvt. Ltd. (2019) 108 Taxmann.com 449 (Bom-HC) : 2019 TaxPub(DT) 3506 (Bom-HC).

REFERRED :

FAVOUR : Matter remanded.

A.Y. :


INCOME TAX ACT, 1961

Section 37(1)

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