TaxTMI 
TaxTMI 
2014 (4) TMI 20
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....nt to the search in the residential premises of the Director and survey proceedings at the office premises of the Assessee proceedings under section 153A were initiated. In the re-assessment proceedings, the A.O. amongst various other issues made an addition of Rs.91,26,000/- on account of unaccounted cash payment made in the A.Y. 2009- 2010 consequent to seizure of duly signed and stamped cash receipt dated 27.11.2008. The assessee entered into an agreement for development of property with one Mr. M. Suveer Reddy and Mr. B.L. Shankar Lal Yadav who were considered to be confirming parties of their land of ac.40.00 owned by 20 parties in Lothukunta village, Malkajgiri Mandal, Secunderabad. The said land was purchased by the owners in the year 1955. Subsequently, the land owners had entered into an Agreement of Sale with Mr. M. Suveer Reddy and Mr. B.L. Shankar Lal Yadav. The assessee company entered into a development agreement with the said parties under which 57% of the share of the developed area was to go to the developers (assessee-company) and 43% of the share will go to the consenting parties viz., Mr. M. Suveer Reddy and Mr. B.L. Shankar Lal Yadav. In the course of search pr....
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....that the agreement holders of the land, Mr. Yadav and Mr. Reddy, who were the main beneficiaries, offered to mediate and strike a deal with the 20 land owners to ensure smooth possession to the developers. In order to obtain consent of the 20 original land owners to become a party to the development agreement, as a matter of abundant caution, it was agreed that payments shall be made to the satisfaction of the land owners in accordance with the terms of settlement as decided by the consenting parties with the land owners. Accordingly, it was agreed to pay Rs.4 crores to the consenting parties at the time of registration of the development agreement and the balance of Rs.1 crore was to be paid at the time of obtaining sanction from the concerned authorities for development before which the occupants of the land were to give vacant possession. It was submitted that the developers, i.e. the assessee and 4 others, duly paid the part amount of Rs.3,62,00,000/- as against the agreed amount of Rs.4 crores and the balance amount of Rs.1.38 crores was deferred, as in the course of survey of land, it was realized that a portion was being claimed by the railway authorities and revenue authori....
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....eal, had approached the appellant's office with the same after signing the same in the presence of land owners only with a view to gain the confidence of land owners and the developers. It is also claimed that after subsequent discussions, they decided not to make any cash payments in view of the disputes involved, however, that the said "cash receipt" was inadvertently left with the appellant company. 09.1 On going through the explanation of the appellant, however, it can be clearly seen that the same is devoid of any merit. Though the appellant has made an effort to deny the payment of cash of Rs.91,26,000/- to the recipients, it is clear that the very denial is against human probabilities. It cannot be logically accepted that any prudent person will give a proper receipt on a stamp paper without actually receiving the amount mentioned therein, Moreover, except for such denial of payment, the appellant has not been able to discharge the primary duty of showing that no such transaction had actually taken place and that the "cash receipt" was not given in token of completion of transaction of payment of cash. On the other hand, the seized cash receipt duly showed that there ....
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.... need for any "gaining confidence" when the parties have already entered into development agreement. The explanation given by the assessee is not only sketchy but also unbelievable. Since the transaction pertain to the development of a property and there is an agreement to pay the amounts, the payment of receipt has to be accepted as genuine. If the receipt is only an advance receipt, why the same was kept with the assessee unless it is an evidence genuinely obtained for payment of amount. The argument of assessee is not possible on human probabilities and the amount was certainly paid by the assessee towards the transaction of acquiring the property. 7. Learned A.R. in reply submitted that most of payments were made by cheques and there were no further payments and certainly when the transaction was in dispute, no person would pay any cash. It was further submitted that with a spontaneous reply given by the Managing Director of the Company vide question No.10 at the time of search and further a denial by the other party indicates that no payment has been made. It was further submitted that company has disclosed incomes consequent upon the search and since no payment was made, t....
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.... as owners have already received substantial amount as deposit/ consideration. As seen from the financial statements placed on record, assessee is not in need for obtaining or arranging for funds as the assessee is having sufficient cash flow during the year. Therefore, the explanation given that it was advance receipt cannot be accepted at face value. With reference to the statements given from both the parties, those statements are considered by AO/CIT(A) as self-serving. As seen from the statement of money paid to the parties placed at pages 73 and 74 of the paper book, various payments have been made by cheques from various accounts. As per that statement, assessee company M/s. Shanta Sriram Constructions Pvt. Ltd. paid Rs. 12,00,000/-, Mr. Kishore Kumar Tulla paid Rs. 2,00,00,000/-, Mr. Ashwanth Kumar Tulla paid to Mr. B.L. Shankar Lal Yadav Rs. 50,00,000/-, Mr. M. Avinash Reddy paid to Mr. M. Suveer Reddy Rs. 50,00,000/- and M/s. PVSM Enterprises paid to Mr. B.L. Shankar Lal Yadav Rs. 50,00,000/-. Therefore, out of Rs.3,62,00,000/- paid, assessee contribution initially was only Rs.12,00,000/- but has got 55% share in the constructed area out of the devolopers share. All other....
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....estate transactions and evidencing them is generally not possible, unless there are receipts given by the parties affirming the receipt of cash. When parties have finally negotiated and concluded the transaction, the corresponding cash receipts are generally destroyed so that there is no trace of evidence unless, the parties are still continuing the disputes and there will expectation of litigation so various payments are generally preserved. More so when cash was paid outside books of accounts. As seen from this transaction, even though a development agreement was entered in October, 2006, the transaction was not concluded and the owners who were supposed to get developed area towards their share could have asked for as a compensation or for further payment in view of the enhanced values in the market. Whatever may be the reason, the agreement entered indicate that if there is a delay of the transaction, developers have to pay rent at Rs.4/- per sq. feet to the owners, vide clause No.12(a) of the agreement. As admitted by the assessee, there could be re-negotiations and as part of that assessee could have paid the amounts. Since assessee admits that there was re- negotiations/sett....
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.... A.R. submitted that break-up of the revenues from various projects and profits and reconciled amounts mainly to submit that shortfall has arisen because of statutory deduction in house property income. Learned CIT(A), however, did not agree with the assessee's contentions and dismissed the same by stating as under : "12.0 I have gone through the facts of the case and the submissions of the appellant. From the discussion above, it is clear that in order to address the issue of low profitability, the appellant had voluntarily admitted additional income of Rs.70 lakhs irrespective of set off of any loss in future years for the Financial Year 2009-10. Such additional income was admitted as undisclosed income from infrastructure projects. In the subsequent proceedings, however, it is claimed that the same was not offered to tax as the arbitration proceedings did not get concluded as expected. It has been subsequently claimed that admission of higher of income was based on the assumption of the appellant that it would receive compensation in the course of arbitration. However, it cannot be denied that by not adhering to the disclosure of additional income of Rs.70 lakhs from infr....