TaxTMI 
TaxTMI 
2005 (6) TMI 278
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....of the learned CIT(A) is contrary to law and facts and it is submitted that the entire addition on account of capital gain may kindly be deleted. 2. The learned CIT(A) has not considered in proper perspective the assessee's contention that the three letters of M/s Kolte Patil Enterprises, dt. 12th Jan., 2001. 31st Jan., 2001 and 8th Feb., 2001 were not corroborated by any independent evidence before the AO that the assessee denied about any transfer of FSI in the year under consideration was brushed aside and the request for cross-examination has unreasonably been denied on some untenable premises. 3. The learned CIT(A) was further swayed by the evidence submitted by the AO under his letter dt. 20th Feb., 2003 which was never given to the assessee in course of assessment proceedings. No cognizance has been taken by the learned CIT(A) of assessee's contention that the evidence tendered was false and fabricated obviously because even building plans were not passed till 5th June, 1998 and till that time transfer under s. 2(47) to prospective purchasers was impossible. There were many other legal informalities in the evidence tendered showing its non-genuine n....
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.... consideration from individual prospective purchaser, at the time of agreements and/or conveyance between owners and flat purchaser, and handover the same to the owners, as per actual collections." 4. The assessee signed a general power of attorney in favour of the builder/developer-M/s Kolte Patil Enterprises and gave possession of the property to the builder/developer. The assessee entered into yet another agreement with the builder/developer-M/s Kolte Patil Enterprises on 20th June, 1996 which is termed as 'Agreement (Complexes)'. In terms of this agreement the builder/developer was to construct certain amenities and complexes-Mangal Karyalaya, Garden Hotel, cinema hall, hotel residential bungalow, the cost of construction of which was agreed to be adjusted against the amount due and payable by the builder/developer to the assessee on account of sale/transfer of FSI at Rs. 550 per sq. ft. in terms of the agreement dt. 20th June, 1996. 5. A survey was conducted under s. 133A of the Act at the business premises of the assessee on 28th Jan., 2000 and during assessment proceeding, the AO conducted inquiries and received information from the builder/developer-M/s Kolte ....
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....torney dt. 20th June, 1996. • That the assessee had cancelled the agreement dt. 20th June, 1996 with M/s Kolte Patil Enterprises for construction of amenities like cinema hall, hotel, garden restaurant, Mangal Karyalaya, and a bungalow for assessee's use. • That no transfer of FSI had taken place within the meaning of s. 2(47) of the Act. • That there was no execution and the registration of bona fide deed of sale in favour of flat/tenement purchasers for sale of FSI rights. • That there was no transaction involving allowing of possession of entitled FSI rights to the prospective flats/tenements purchasers. • That no FSI was transferred as there were no registered sale deeds. • That the AO and the CIT(A) merely believed the contents of the letters submitted by M/s Kolte Patil Enterprises without asking them to substantiate the claim made in those letters. • That the request made by the assessee's counsel for permission to cross-examine the partners of M/s Kolte Patti Enterprises was rejected by the AO. • That the counsel for the assessee had requested before the AO and al....
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....d in part performance of a contract of the nature referred to in s. 53A of the Transfer of Property Act, 1882 (4 of 1882); or (vi) any transaction (whether by way of becoming a member of or acquiring shares in, a co-operative society, company or other AOP or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of any immovable property." 10. Clause (47) of s. 2 was amended by the Finance Act, 1987, w.e.f. 1st April, 1988 by inserting new sub-cls. (v) and (vi). These two new sub-clauses provide that 'transfer' includes (i) any transaction which allows possession to be retained in part performance of a contract of the nature referred to in s. 53A of the Transfer of Property Act; and (ii) any transaction entered into in any manner which has the effect of transferring or enabling the enjoyment of any immovable property. Therefore, under these two sub-clauses the capital gain would be taxable in the year in which such transactions are entered into even if the transfer of the immovable property is not effective or complete under the general law. 11. In the case of Chaturbhuj Dw....
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....til Enterprises so as to enable them to develop the land and complete their part of agreement of constructing the fiats". 13. The assessee entered into another agreement dt. 20th June, 1996 with the builder/developer M/s Kolte Patil Enterprises which stated that the assessee had allowed the builder/developer to develop the said land and construct building thereon and that the assessee will be getting substantial amount of purchase consideration from the builder/developer and that the assessee had decided to use and utilize the said amount for construction of the following commercial premises on the property retained by the assessee for itself : (i) the builder/developer will construct area admeasuring 6,000 sq. ft. on the land admeasuring about 25,000 sq. ft. which will be used as Mangal Karyalaya for an agreed cost of construction of Rs. 2,30,00,000; (ii) the builder/developer will construct Garden Hotel having built-up area of 2.700 sq. ft. on the land .admeasuring 50,000 sq. ft. at the agreed cost of Rs. 2,50,00,000; (iii) the builder/developer will construct cinema hall (theatre) having built-up area of 5,000 sq. ft. on the land admeasuring 40,000 ....
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....er/developer as under: "4(a)........ but actually I have received an amount of Rs. 48,00,000 only on different dates by cheques in the financial year 1997-98; 4(b)...... The amounts are overstated as the valuation of all the amenities/complexes as of 7th Jan., 1999 is only Rs. 38,11,934 (including further alleged amount of Rs. 1,26,00,000 adjusted on account of construction contract of amenities in the financial year 1998-99) as per valuation done by our valuer; 4(c) It is stated in the letter dt. 31st Jan., 2001 that the following undivided share in FSI was sold by the developer: Financial year FSI area Amount in Rs. 1996-97 1,02,570 5,64,13,500 1997-98 1,59,800 8,78,90,000 The above statement is not true as I have already explained hereinabove that no sale of FSI has taken place at all in the asst. yrs. 1997-98 and 1998-99 in the form of sale deed. Similarly, no possession of flats also was given to flat owners during the above years. The PMC had not given any completion certificate in the above years. 17. It is an admitted fact that the assessee entered into an agreement with the builder/developer-M/s Kolte Patil Enterp....
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....rs dt. 12th Jan., 2001, 31st Jan., 2001 and 8th Feb., 2001 and other information and documents submitted by them before the AO during assessment proceeding was not allowed. He placed reliance on the decision of P.S. Abdul Majeed vs. Agrl. ITO & Ors. and contended that in the circumstances of the case, refusal to allow cross-examination amounted to violation of the principles of natural justice. 19. In the case of P.S. Abdul Majeed, the original assessment for asst. yr. 1983-84 was completed estimating the yield of cardamom at 250 kgs. which was reduced in appeal to 240kgs. Thereafter, on the basis of information allegedly obtained from cardamom auctioneers, reassessment order was passed by the AO estimating the yield at 481 kgs. thereby making an addition of 241 kgs. to the yield. The assessee objected to the proposed reopening and prayed for an opportunity to cross-examine the auctioneer but the prayer was rejected by the AO. On a writ petition filed by the assessee, it was held by the Kerala High Court that when such a request was made by the assessee it was incumbent on the AO to afford the opportunity to the assessee to cross-examine the auctioneer. Failure to accede to the ....