TaxTMI 
TaxTMI 
2013 (6) TMI 350
X X X X Extracts X X X X
X X X X Extracts X X X X
....iii) The learned CIT(A) ought to have appreciated that the appellant has invested Rs. 90,40,000 in acquiring the new asset viz., a residential house bearing No. 1-50/3, in Block No. 8, Sy. No. 102/ Part A at Kokapet having built up area of 600 sq. ft which is evidenced by sale deed dated 15-12-2006 duly registered in favour of the appellant and by furnishing clinching evidence in support of construction of a house together with compound wall. (iv) Having found as a fact that the appellant has made payments of Rs. 1,06,00,000/- towards additional investment and also having found that additional construction was also admittedly made, the learned CIT(A) erred in negating the claim of additional investment in toto. (v) On the facts and in the circumstances of the case, the learned CIT(A) ought to have held that any amount of capital gain held as not appropriated towards acquisition of the new asset is to be assessed in the previous year in which the period of three years from the date of transfer of the original asset expired. (vi) For the above grounds and such other grounds that may be urged at the time of hearing, the appellant prays t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bout 200 sq. ft. only, and not 666 sq. ft, as mentioned in the sale deed. It was found that the construction was covered with a sheet of asbestos roof and the entrance was covered with an iron door. There was no lock or hinge to the said door, and therefore, the construction was open to all. It was also noticed that there was an open window, without any iron grill or door to close it. The construction did not have any electricity or water facility. Besides, there was no indication of fire place therein to suggest any cooking activities. The Inspector, on an examination of the surroundings, concluded that nobody was residing there. He also mentioned that nobody was available at that site on the day of his visit and that there were no houses in and around half kilometre radius of the site. He also observed grass growing over the entire site, besides some bushes. Accordingly, he concluded that the place was not a habitable one. The Inspector also enclosed photographs taken by him of the above mentioned construction. He also reported that he could not find any signs of demolished construction in the south west corner of the site, where, originally, a building should have been existing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Officer further noted that though the assessee did not avail the opportunity of the second visit offered by him, she filed a letter dated 23.12.2009, wherein the claimed for additional construction appeared to have been taken back. The assessee had requested to allow the deduction to the extent of the value mentioned in the sale deed, along with the stamp duty. The Assessing Officer, therefore, opined that the assessee was not in a position to establish the existence of a residential house, having a plinth area of 600 sq. ft., nor the additional works undertaken by her. He opined that had the works really been undertaken, as claimed, nothing would have prevented her from arranging a second visit and explaining the indications of the preliminary works executed and the existence of the said 600 sq. ft house. 3.6 In view of the above, the Assessing Officer concluded that the assessee had only tried to hoodwink the Department from all angles. It was only after her claim regarding additional works was questioned with reference to the site visit report and the statements of the persons claimed as having done the works, that the assessee took back her claim regarding additional works ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in was 600 sq. ft. only. He noted that the site was situated about 1 Km from Kokapet village and there were no houses in and around half a kilometre thereof. Accordingly, in his view, the construction admeasuring 600 sq. ft. had no value and therefore, it could be concluded that the assessee had paid the sale consideration towards purchase of land only and not for any construction. However, he noted that in the annexure attached to the sale deed, the 'house' had been stated to be 'new'. Accordingly, he opined that this proved that the description so given proved that the sale deed had been got registered as a 'sale deed' in respect of purchase of a house of 600 sq. ft only for the purpose of getting deduction under sec. 54. He observed that the assessee had claimed having incurred additional construction charges after the purchase of the site, which, in fact, were received back by her, as stated by the persons concerned. 3.9 Accordingly, the Assessing officer did not allow the deduction u/s. 54 of the Act for the purchase of the house property, after rejecting the claim of the expenditure towards construction charges. Since the assessee failed to furnish any evidence regarding t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f certain judicial precedents. In this connection, it is seen that in the case of Manoharlal v. ITO (Taxation 76(6)-52), the Delhi Tribunal had opined that the plot of land, surrounded by a boundary wall, and having a room, with a roof constructed thereon, was to be considered as a 'house property', even though there was no latrine or bathroom therein. However, it is clear that the said decision had been rendered in connection with the erstwhile sec. 53 of the IT Act, 1961. As against this, the legislative intention of granting exemption under sec. 54F is to give encouragement to housing. In fact, the Tribunal Hyderabad Bench in the case of ITO v. Rohini Reddy (122 ITD 1) have opined that since the expression "Residential House" is not defined under the Act, the purposive meaning has to be adopted to such expression, instead of going by the technical meaning assigned under various enactments or by the meaning given in the dictionary. They opined that the totality of the circumstances in the said case indicated that the property purchased was never intended to be used as a 'residential house', either by self occupation or for letting out. In view of the said decision of the Tribunal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t, the amounts had indeed been returned by them. Though it is claimed that the amounts were returned due to certain disputes, the assessee has not brought any evidence on record to the effect that she intended them to resume the work after settling the alleged dispute. Accordingly, the CIT(A) concluded that despite the fact that there was outflow of such amounts, as evidenced by cheque payments made to the contractors, the same did not amount to either investment or 'appropriation' of such amounts for a new residential house. He was of the view that the decision in the case of Jagannath Singh Lodha vs. ITO , relied upon by the representative of the assessee, it is not applicable to the assessee's case, as in assessee's case, no new house has been acquired by the assessee within the stipulated time. 4.4 In view of the above discussions, the CIT(A) held that he found no infirmity in the computation of capital gains by the Assessing Officer without allowing any deduction claimed under sec. 54 for the purchase of new house property, as also, the rejection of the assessee's claim regarding incurrence of additional construction charges. Accordingly, He rejected the grounds raised by t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er with the amount so deposited shall be deemed to be the cost of the new assets. The AR submitted that as per the proviso to sec. 54(2), if the amount deposited under that sub section is not utilized wholly or partly for the purchase of construction of a new house within a period specified in sub sec. (1), then the amount not so utilized shall be charged under sec. 45 as the income of the previous year in which the period of 3 years from the date of transfer of original asset expires. 5.2 The learned AR submitted that in view of the evidence regarding payments made by the assessee to various contractors for building construction and the findings of the enquiries made by the Assessing Officer, if the Assessing Officer decided to act upon the information gathered by him and to use the same against the assessee, he should have put the same to the assessee for rebuttal. He claimed that the conclusions drawn by the Assessing Officer are one sided, without observing the principles of natural justice. 5.3 The AR also submitted that the cases relied upon by the Assessing Officer are distinguishable, as in the case of ITO vs. Pawan Kumar Garg (97 ITD 575 (Chd), there was no construct....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al held that the technical violation of not depositing the amount did not come in the way of the assessee and directed to allow the deduction. 5.6 The AR submitted that in the case of the present assessee also the amount meant for additional construction had been paid by means of cheques to the contractors and, therefore, in the light of the above decision, the payments to contractors ought to have been held as having satisfied the stipulations of sec. 54(2), as those were only for the sake of further construction of the property purchased by the assessee at Kokapet. He submitted that the Assessing officer should have allowed the deduction to the extent of investment made in purchase of the house bearing number 1-50/3, Kokapet and should have directed that the amounts not utilized would be liable for assessment in the assessment year 2010-11. 5.7 The AR further submitted that the Assessing officer omitted to exclude the commission of Rs. 30,000 paid by the assessee in connection with the sale of her house at Punjagutta, which constituted expenditure incurred wholly and exclusively in connection with the transfer and was eligible for deduction as per sec. 48(i) of the Act. He ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....idential house, other than the new asset, on the date of transfer of the original asset; or (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or (iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property".] Explanation.-For the purposes of this section,- "net consideration", in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. (2) Where the assessee purchases, within the period of [two years] after the date of the transfer of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,- (i) the amount by which- (a) the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of the new asset as provided in clause (a) or, as the case may be, clause (b) of sub-section (1), exceeds (b) the amount that would not have been so charged had the amount actually utilised by the assessee for the purchase or construction of the new asset within the period specified in sub-section (1) been the cost of the new asset, shall be charged under section 45 as income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw the unutilised amount in accordance with the scheme aforesaid." 8. As seen from the above provisions of section 54F, the assessee is required to purchase with a period of one year before or two years after....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ming to the additional investment of Rs. 106 lakhs said to be made on the construction of the above property as the payment has been made by cheque. It is brought on record by the Assessing Officer that the assessee has received back majority of the amount from the contractor to whom payment has been made. The contention of the assessee's counsel is that the contractor Sri K. Eswar Reddy has confirmed the construction of AC sheets shed with two rooms and compound wall for the entire site area. Even if there is construction of a shed that construction cannot be considered as residential house so as to grant deduction u/s. 54F. As we discussed earlier, a residential house means, the house which is fit for habitation. Further a property not fit for residential purpose and which is only a temporary structure cannot be construed as residential house. In other words, we do not mean that a house means a palatial house. On the other hand, a house means a habitable building. Considering the facts of the present case, whatever construction shown by the assessee cannot be considered as "residential house" u/s. 54F of the Act. The popular meaning of the word "house" is a place or a building us....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2010, the AR of the assessee contended that the property sold was a residential property only, as evidenced from the purchase documents. Explaining the reasons for not offering the income from the said house property to tax, it was argued that even though said property had been let out in the initial years, the same became vacant later, as no person took the same on lease. It was also contended that since the assessee was residing at a place other than the above said house property due to his employment, he could not occupy the same for his residence. Therefore, it was contended that as per sec. 23(2)(b), the Annual Value of such property is to be taken at 'Nil'. 12.3 The AR further submitted that the condition for deduction u/s. 54 is "chargeability" of income from such property under the head 'Income from the House Property' and that the section never prescribes that the income from such property should have been assessed to tax in earlier years under the said head. He averred that such qualification has been put to determine the nature of the property only and nothing else, and therefore, even if no income from such property was actually offered to tax in earlier years, this ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n order to be a residential house, the structure should have the character of a residential unit, with the bare minimum amenities which make it a liveable unit. He felt that in a small structure of 350 sq. ft., such bare minimum amenities could not be present, and therefore, the same cannot be considered as a liveable residential unit. 12.6 The AR submitted that the property sold had been assessed by the Municipal Authorities. A tax payment receipt for the year 2010-11 was also filed. However, the Assessing Officer observed that this could not change the character of the property, as the tax receipt pertained to the year 2010-11, whereas the property had been sold in the year 2003- 04 itself. He also observed that the present status of the property was not known. In addition to this, the Assessing Officer observed that the assessee had himself stated that the property was being used by the employees of the owners, who were in charge of security. Accordingly, he felt that the property could not be treated as a residential building. 12.7 The Assessing Officer observed that the very structure of the constructed area was such as showed that the assessee did not intend to use the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lot bought by the assessee consisted of two rooms. However, the Assessing Officer wondered as to how two rooms could be constructed in the built up area of 100 sq. ft. and even if those are so constructed, whether those would be habitable. He also noted that the plot admittedly fell within the Green Zone of Jubilee Hills, wherein no housing plans were being approved. Accordingly, he concluded that this also showed that there was no construction of residential building in the new property, as claimed by the assessee. 12.10 With regard to the reliance of the assessee on Board's Circular No. 667 dated 18.10.1993, the Assessing Officer noted that despite being given repeated opportunities no details/proof of investment were filed by the assessee. He observed that had the assessee made any such investment, such details/proof would have been produced. In the absence thereof, he held that the assessee did not make any investment for being eligible for exemption u/s. 54. On appeal the CIT(A) confirmed the order of the Assessing Officer. Against this the assessee is in appeal before us. 13. The learned AR submitted that the CIT(A) ought to have considered the fact that the property so....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Sec. 54. The provisions of sec. 54 and 54F being similar in this regard, the AR submitted that exemption claimed u/s. 45 may be allowed in A.Y. 2004-05. 14. The learned DR submitted that the term "Residential House" has not been defined in the Income-tax Act, 1961. The meaning of the term, therefore, has to be appreciated in terms of the common parlance. That a 'residential house ' would mean a building or a hut, which is meant for human habitation and is fit for the same. In this case, it had not been specifically established that the shed existing on the plot of land was fit for human habitation, a super structure on any piece of land can be fit for human habitation if it is having facilities like water, electricity, etc. 14.1 The DR submitted that the structure of 350 sq. ft. existing on 980 sq. yards of the land sold by the assessee on 4.2.2004, which comprised of 3 rooms of 10 ft. x 10 ft. each, cannot be considered as fit for human habitation. In fact, despite relying on the specific finding of the Tribunal in the above case, the assessee has not been able to furnish any evidence to the effect that the said built up area was fit enough to be used for human habitation....
X X X X Extracts X X X X
X X X X Extracts X X X X
....id structure had two rooms, it can be clearly envisaged that such structure could not have been used as a liveable unit. Under the circumstances, it is clear that the claim of the assessee u/s. 54 fails even on this account. 14.5 As regards the assessee's reliance on Board's Circular No. 667 dated 18.10.1993, the learned DR submitted that in the assessment proceedings for the A.Y. 2007-08, the assessee could not establish having incurred any expenditure for construction of any building on the plot under reference. The findings of the Assessing Officer have been upheld in the appellate order dated 31.1.2011 too. The assessee has not been able to furnish any further evidence to take a different view of the matter. Accordingly, the DR submitted that the reliance of the assessee on the said circular, as also the judgement of the Madras High Court in the case of CIT vs. Sardarmal Kothari (302 ITR 286), therefore, is of no consequence. 15. We have heard both the parties and perused the material on record. In this case also regarding claim u/s. 54, the assessee made investment in 980 sq. yards of land with a small shed claiming that it is measuring 350 sq. ft. But on verification by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....disallowance of the appellant's claim for deduction u/s. 48 in spite of explanations offered by the appellant apart from evidence produced in the form of approved municipal plans, property tax receipts, confirmations from contractors, receipts issued by contractors who undertook improvements to the properties and statements recorded from some of the contractors. (iii) On the facts and in the circumstances of the case, the CIT(A) ought not to have disregarded the evidence adduced by the appellant as to the cost of improvement in respect of the properties situated at Road Nos. 36 and 44, Jubilee Hills, Hyderabad in toto. (iv) The CIT(A) erred in upholding the addition of Rs. 47 lakhs made under Sec. 69 of the IT Act. (v) The CIT(A) ought to have held that the appellant has discharged the onus cast on him in adducing evidence as regards the identity of the creditors by producing pattedar pass books and land holding certificates, the genuineness of the loan transactions by filing confirmations from the creditors and the genuineness of their sources by filing extent of land holdings and income certificates and consequently, the Assessing O....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../- in the F.Y. 2005-06. Considering the above, the Long term capital gain from the first property was finally shown by him at Rs. 4,35,47,738/-. 18.3 With regard to the property at Sr. No. (ii) above, the Assessing Officer noted that the same also consisted of two plots and the assessee has received sale consideration of Rs. 2,21,00,000/- and Rs. 1,89,00,000/ totalling to Rs. 4,10,00,000/ - for both of them. The date of sale was declared as December, 2006. The assessee had shown the cost of acquisition thereof at Rs. 81,48,010/- and had also claimed cost of improvement for the same at Rs. 91,06,500/- in the F.Y. 2005-06 and that of Rs. 1,25,85,000/- in the F.Y. 2006-07. Considering the above, the Long term capital gain from the second property was finally shown by him at Rs. 93,61,881/-. 18.4 It is further seen that the Assessing officer informed the assessee that as per the information collected from the Sub Registrar of property, the sale consideration for the two plots in the first property was Rs. 4,94,46,000/- and Rs. 4,83,96,000/- for 2nd plot. While that for the two plots in the second property of Rs. 1,89,76,000/- and Rs. 2,31,46,0001 respectively, showing an overall ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....que of Rs. 70 lakhs during 26.6.04 to 3.12.04. 3. Demolition of old building situated at pot No. 700 & 700/1. 69.50 lakhs P. Subba Rao Rs. 65 lakhs by way of cash and cheques between 15.4.04 to 31.10.04. At plot No. 854-S/S-1, Jubilee Hills, Road No. 44, Hyderabad: S. No. Description Cost (Rs.) Contractor Payment made 1. Construction of double storied building of 2400 sq. ft. each floor including cellar floor, parking, water proofing for all slabs, plastering, premium class vitrified tiles, granite flooring, plumbing, electrical works, sump, overhead tank, bore-well, misc. 1.25 crores P. Bujanga Bhushanam of BB Projects Constructions. Cash and cheque. 2. Soil excavation for cellar and floor and rock cutting, etc. 91 lakhs Venkataiah Cash and cheque 18.7 Whereas the description of improvements given above showed that the assessee had constructed huge houses of the area of 4,500 sq. ft. and 4,800 sq. ft. on the above plots, the assessing officer found that there was no mention of the building/house constructed by the assessee, in the sale deed. In respect of plot No. 700 and 700/1, Road....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of little or no significance for the entire deal, no care was taken to map exact area of their construction. However, the sale deed clearly did not exhibit the house of an area of 4,500 sq. ft on it. 18.9 With regard to the plot No. D No. 8-2-293/82/A/854-S and S/1, Jubilee Hills, Road No. 44, Hyderabad, the Assessing Officer noted that a total cost of improvement of Rs. 2,16,91,500/- had been claimed in the original, as also in the revised return. However an examination of the purchase and sale documents revealed that there was no mention of any building/house constructed by the assessee thereon. The assessee had purchased the said property vide two sale deeds and in the purchase deeds for the total area of 1041 sq. yards, a total built up area of 400 sq. ft. had been mentioned in the annexures. She noted that the said two purchase deeds were separate documents relating to two parts of contiguous area of land. Therefore, the properties were very small units of 200 sq. ft. Pictures of annexures of the purchase deeds showing the location and size of these dwellings, annexed to the purchase documents, have also been enclosed to the Assessment order. 18.10 The Assessing Officer ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lf and a copy thereof had been handed over to him for execution of the work. He submitted that he did not meet any architect for this purpose, besides, he also claimed that he had purchased the entire construction material like bricks, wood, cement, sand himself from the broker visiting the site. He, however, did not have any details of any of the brokers and admitted that he did not have details or bills for such expenses. 18.13 The Assessing Officer observed that construction of a house of 4000 - 5000 sq. ft., costing about Rs. 1.5 crores, could not have been possible through an un-experienced contractor. Besides, the complete absence of any bills/materials and details of expenses, and the claim of the purchases from the brokers visiting the work site, showed the falseness of the claim and established that no such work was undertaken. Further, on being shown the receipt for Rs. 1,58,75,000/ - submitted by the assessee, he disowned the signatures appearing therein on a revenue stamp. Though he owned the second signature, made a bit away from the stamp, he stated that he did not remember when and where he had signed the document and who got it signed by him. 18.14 The Assessi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....roperty had been sold by the assessee in the year 2006 itself and the present work was being done by the current owner, for verifying the claim of the assessee regarding construction of a building of about Rs. 2 crores on the said land, the Assessing Officer called Smt. K Usha Rani, attorney holder/mother of the assessee at the site and recorded her statement there itself. In her statement Smt. Usha Ran claimed that a small house had been built thereon. However, the details given by her were very different from the claimed construction of a two storied house of 4800 sq. ft. She, in fact, stated that for regularization from the municipal authorities, they had constructed a temporary slab house of around 2500 sq. ft., which was in the form of a hall, two rooms and a pooja room, to complete the formality for permission. She also said that no painting was done. 18.18 The other three persons, to whom the expenses towards improvement were contendedly made and who could not be produced by the assessee, were S/Shri P. Bhujang Bhushanam, Venkataiah and P. Subbs Rao. The Assessing Officer carried out a verification of the cheque payments made to them and others. It was found that they wer....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... stating that the MCH had stopped issuing building permissions on the plots from 1991 to 2007, shows that there was no construction of any double storied building thereon. (ii) The information received from Sri P. Narendra Chowdary did not convey anything more than what was mentioned in the GPA concerned, so as to strengthen the assessee's claim. (iii) There was no merit in the assessee's contention that the residential property was not mentioned in the sale deed as it was of no use for the purchaser, or there was no MCH permission for the same. (iv) There is no explanation regarding the discrepancy in the statements of Smt. Usha Rani. (v) The assessee had failed to discharge onus of production of various persons for evidencing his claim. (vi) The Assessing officer disallowed the cost of improvement of Rs.2.93 crores and Rs. 2.16 crores, claimed in respect of the above two plots, after summarizing her conclusions in the assessment order as under: (vii) There is no proof of improvement and construction of huge houses in sale deeds. (viii) Not a single bill/evidence of purc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lso submitted back to back sale agreement executed for the property purchased. Further, on 16.9.2009, the assessee also explained as to why the said agreement of sale was executed in the name of his mother and mother-in-law. It was claimed therein that the Agreement of Sale had been entered into by the assessee from two vendors. However, the same could not be registered in his favour, as he went to USA. For taking possession of the property in his absence, the agreement of sale cum GPA was registered in favour of Smt. K. Usha Rani and S. Padmavathi. The name of Smt. S. Padmavati was included, as the property other than that of Shri K.Bala Vishnu Raju was also involved (there being 3 vendors other than the two mentioned in the sale agreement). It was stated that the regular registration of the property in the name of the assessee would be done soon after his return from USA. 19.4 The Assessing Officer noted that despite such submissions and claims, it was only during the field verification by the department that the properties were found to be open plots, with bushes and weeds, and not a residential property eligible for claim of exemption u/s. 54F. While the assessee had made sp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ficient stature and experience to carry out work of such magnitude and also that their claim of having purchased construction material from visiting brokers was neither convincing nor supported by bills and vouchers. As regards the other persons, viz., Sri P. Bhujanga Bhushanam, Sri Venkatayya and Sri P. Subba Rao , the fact that they had shifted their residence from the last known address and thus could not be produced, has been held against the assessee. Though the assessee explained the circumstances under which the description of the existing structures was not included in the deeds of purchase/sale, the CIT(A) failed to appreciate and take cognisance of the evidence produced before him and held that the claim regarding the cost of improvement cannot be accepted. 20.2 The AR submitted that the CIT(A) ought to have considered the permission for additional construction issued by the MCH and the payment of municipal taxes in substantial amounts i.e., Rs.27,087 in one case and Rs.6,643/.- in the other as conclusive evidence of existence of residential properties on the site (Property No.1). He ought to have considered the fact that payments were made into the bank accounts of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by the fact that the same was assessed by the Municipal Authorities as such. However, she found that the narration given in the deed of sale made to M/s. Mold Tech Technologies Ltd., thereof was identical to that appearing in the purchase deed of July, 2000. Besides, there was no mention of any construction or improvement in the sale deed made in the year 2006. She felt that the claim of the purchaser regarding absence of any house or building (apart from the small dwelling) at the time of sale in the year 2006 could not be rebutted by the assessee. Further, she felt that the claim of demolition, incurring an expenditure of Rs. 65 lakhs in cash, could also not been established by producing Sri Subba Rao. 21.2 The learned DR submitted that so far as the property at plot No. 854 S/854 S-1 is concerned, the purchaser/agreement cum GPA holder, Sri T. Naren Chowdary, by way of his letter dated 14.09.2009, had confirmed before the Assessing Officer that there was a building existing in the land at the time of its purchase by them. However, she did not find it acceptable that the building contendedly constructed thereon, and existing on the date of sale, was omitted to be mentioned in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted that the same had been signed on his behalf by some other person. The Assessing Officer also took the note of the fact that Smt. K. Usha Rani, mother of the assessee, in her statement recorded at the site, gave a different description of the house contendedly constructed thereon. Besides, it was also seen by her that Sri P. Bhujang Bhushanam, Sri Venkayya and Sri P. Subba Rao had withdrawn the amounts paid by the assessee into their accounts and the accounts were closed within a few months. The said persons could not be produced by the assessee. 21.4 The DR submitted that from the facts discussed above, it is clear that while the sale deeds executed by the assessee indeed do not show the constructions, the assessee has not been able to establish his claim of such construction/improvement by furnishing any acceptable or impeccable evidence. The documents also clearly show that the full value of consideration received by the assessee does not include any amount towards the value of any structure/building contendedly made by the assessee after purchase of the lands. In the absence of any evidence, therefore, the claim regarding cost of improvement/ construction fails at the thr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d in the sale deed with M/s. Mold Tech Technologies Ltd., is as the same as mentioned in the purchase deed of July, 2009. Further the assessee shown a sum of Rs. 65 lakhs for demolishing the existing structure which is beyond the scope of human probability. Had there been an existing house there should be mention of that fact in the sale deed. Without mentioning of existing house in the sale deed the assessee cannot claim that there was a house measuring 4500 sq. ft. in one plot and 4800 sq. ft. in another plot. Further there was a restriction in construction of these plots by MCH during the period 1991-2007. For the purpose of registration the assessee adopted that there is no building in the said plot. Later the assessee claimed that there was an existing building and the same was sold by vide sale deed with M/s. Mod Tech Technologies Ltd. Even, the Assessing Officer made enquiries regarding genuineness of the claim of the assessee during the assessment stage and issued notice to the parties who carried on improvement on these projects. Summons issued to these parties got returned due to non-availability of the persons at the given addresses. The Assessing Officer further insiste....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g Officer, it cannot be presumed that deposits made by such creditors are moneys of assessee itself. In order to fasten liability on assessee by including such credits as its income from unexplained sources, a nexus has to be established by revenue that sources of creditors' deposits flow from assessee. 24.1 The AR also relied on the decision of Madras High Court in the case of CIT vs Gobi Textiles Ltd. wherein the Assessing Officer found that the assessee-company had received certain amount as share application money and required the assessee to prove the genuineness of the transactions by producing persons who had deposited more than Rs. 1 lakh. The assessee produced salary certificates of some of the creditors and land holding papers of certain properties, but did not produce any person. On consideration of the said particulars the Assessing Officer was of the view that except one person, others were not capable of depositing money in cash out of their savings and hence he treated the share application money as unexplained cash credit under section 68 and added it to the income of the assessee. On appeal, the Commissioner (Appeals) upheld the order of the Assessing Officer. O....