2018 (5) TMI 1164 - HC - Income Tax

High Court upholds Tribunal's decisions on tax appeals related to land investment & shop sale income at Himalaya mall

The High Court dismissed all tax appeals, upholding the Tribunal's decisions on both issues related to additions made in respect of investment in land and ... Addition made in respect of investment in land - ITAT deleted the addition - Held that:- Assessee had paid through cheques a total sum of ₹ 22,02,100/to one Sherin Co. Op. Hsg. Soc. Ltd. during the period between 28. 7. 2003 to 31. 1. 2005. CIT(Appeals) also noted that entire amount was repaid by Sherin Co. Op. Hsg. Soc. Ltd. in different cheques during the period between 2.6.2005 to 5.12.2005. The Revenue did not have any further material to suggest that though the assessee might have exited from the land deal, Sherin Co. Op. Hsg. Soc. Ltd. had eventually sold the land to third party and in the process, the assessee had extracted its share of profit. The Tribunal therefore, accepted the assessees' contention that the loose documents did not refer to the actual receipt of onmoney since the documents itself carried a title “PROJECTIONS” and further that the Assessing Officer had nothing to discard the assessees' theory that these land deals did not eventually materialise. Essentially the Tribunal having referred to the materials on record and come to factual conclusion, in our opinion, no question of law arises. Addition made in respect of unaccounted income in the form of on-money from sale of shops at Himalaya mall - ITAT deleted the addition - Held that:- The assessee pointed out that many of these shops were not tenanted thereby suggesting that these shops did not have ready income generating potential. CIT(Appeals) and the Tribunal both accepted the assessees' viewpoint. There was no concrete material suggesting that in the sale of remaining shops also, the assessee had accepted the on-money. Merely because in rest of the sales, the assessee had admitted having received on-money, such admission cannot be projected for the remaining area where there was no such matching material found or admission made by the assessee. This was the view of the Tribunal. Significantly, the seized material did not include any reference of on-money with respect to these remaining shops. This issue therefore, is virtually factual. CIT(Appeals) and Tribunal having concurrently held in favour of the assessee, we do not entertain this issue. - Revenue appeal dismissed. Issues:1. Addition made in respect of investment in land.2. Addition made in respect of unaccounted income from the sale of shops at Himalaya mall.Analysis:Issue 1: Addition made in respect of investment in landThe tax appeals arose from common orders passed by the Assessing Officer, CIT(Appeals), and the Tribunal, where the Revenue challenged the Income Tax Appellate Tribunal's judgment. The assessees, engaged in land development and real estate activities, were subjected to a search operation resulting in notices under section 153A of the Income Tax Act for the assessment years 2003-2004 to 2008-2009. The Assessing Officer confronted the assessees with cash transactions in land deals, where the assessees explained the involvement of certain individuals for registration purposes. The principal defense was that many land deals did not materialize, hence no projected profit. The Tribunal held against the Revenue, emphasizing that the projected income was not generated due to unrealized land deals, supported by the affidavit of proposed sellers confirming the deals fell through.Issue 2: Addition made in respect of unaccounted income from the sale of shops at Himalaya mallThe second issue involved the sale of commercial space in Himalaya mall. The Assessing Officer made additions based on seized documents showing onmoney receipts for a portion of the sold carpet area. The assessees admitted cash transactions for the sold area but disputed onmoney receipt for the remaining unsold area. The CIT(Appeals) and Tribunal deleted the additions, considering factors like the location and tenancy status of the remaining shops. The Tribunal concluded that the Revenue failed to provide concrete evidence of onmoney receipts for the remaining shops, as the seized material did not support such claims. The issue was deemed factual, and both the CIT(Appeals) and Tribunal ruled in favor of the assessees, leading to the dismissal of the tax appeals.In conclusion, the High Court dismissed all tax appeals, upholding the Tribunal's decisions on both issues, emphasizing the factual nature of the disputes and the lack of legal questions for consideration.