TaxTMI 
TaxTMI 
2015 (10) TMI 2315
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.... Act, 1961 (in short 'the Act'). Further the Revenue has filed an appeal against the consolidated order of CIT (Appeals) dated 6.3.2013 relating to assessment years 2009-10 and 2010-11 against the order passed under section 153B(1)(b) r.w.s. 143(3) of Income Tax Act, 1961 in the case of sister concern M/s Hill View Promoters. 2. All the appeals relating to same assessee were heard together and are being disposed off by this consolidated order for the sake of convenience. ITA No.547/Chd/2013 :: Assessee's Appeal 3. The assessee has raised the following grounds of appeal : "1. That the Learned Commissioner of Income Tax (Appeal) has erred in law and facts is confirming the addition of Rs. 94500/- made by the assessing officer on account of entries contained in the hand written sheet marked A-l, page 81 and discussed in para 5 of the assessment Order. This amount of Rs. 94500/- is a part of the rotating capital investment by Sh. J.C Bansal forming part of the declared amount of Rs. 30.70 lacs before the Hon'ble Settlement Commission. 2. That the learned Commissioner of Income Tax (Appeal) has erred in law and facts in confirming the addition of Rs. 12307....
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.... of the assessment order. The assessee was asked to produce ledger account of Shri Sajjan Jain appearing in the books of account of the assessee and reconciles the transaction with regular books of account. Vide reply dated 8.11.2011 it was submitted that this document contained construction expenses and pertained to one of the contractor M/s Goel Construction company it was stated that the payments shown on the above documents were included in the total payments made to the contractor M/s Goel Construction Co. Pvt. Ltd. The Assessing Officer vide order sheet entry dated 8.11.2011 asked the assessee to produce Shri Mange Ram Goel of M/s Goel Construction Co. Pvt. Ltd. The assessee failed to produce Shri Mange Ram Goyal and also no explanation was offered by the assessee. Vide order sheet entry dated 24.11.2011, the assessee was asked to show cause why an amount of Rs. 12,30,767/- should not added back to the taxable income of the assessee. The assessee vide reply dated 2.12.2011 again did not offer any explanation on the above document and also the assessee again failed to produce Shri Mange Ram Goyal. It was simply stated in the written reply that the assessee has stringent relati....
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....assessee's/ not its employees. It was further stated that since the paper related to construction expenses it belonged to M/s Goyal Construction who had done work for the assessee but due to strain relationship thereafter Shri Goyal had left, which was also the reason why he could not be produced before the AO. 7.4 I find that the assessee had not disowned the seized paper during the course of assessment proceedings. In fact it was slated then that the amount was part of the total payment made to M/s Goyal Construction Company. This if correct could have been corroborated by the assessee which was not done even if the party could not be produced for examination. Copy of the account could have been produced with the books before the AO which was not done. The said document was found in the office premises. The amounts are clearly written as also the dates, and the narrations show that payments have been made for material, hydraulic mobile oil etc. The fact that the contractor worked for the assessee is an admitted fact. So it was pertinent on the part of the assessee to give cogent explanations when called upon by the AO, failing which the AO was well within his domain ....
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....asked to explain the entries on the said documents. One such document found during the course of search was page Nos.82 and 78 of Annexure-A-1 which were hand written sheets showing account of Shri Sajjan Jain, the payments in cash or by cheques with details. The expenditure on the said document totaled Rs. 12,30,767/-. The said document is scanned and is part of the assessment order at pages 5 and 6. The perusal of the said document reflects the expenditure being incurred both in cash and by cheque and the payments having been made for material and against various contracts are made in cash. The case of the assessee is that the said document does not relate to it and was not in the hand writing of the assessee or any of its employees. The assessee further stated that the said document belongs to an employee of M/s Goel Construction Company Pvt. Ltd. who was associated with the assessee for construction. The copy of the account of the said concern is placed at pages 25 to 27 of the Paper Book and the payments varied between 1.9.2006 to 17.3.2007. The perusal of the said statement reflects the assessee to have paid Rs. 5,61,200/- month-wise against construction charges to the said c....
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....rcumstances where the assessee has discharged his onus of establishing that he was not engaged in any contract work but on the other hand had employed contractors for carrying out the said work, there was no merit in holding that the said documents related to the assessee. Further the assessee had also claimed that the said hand written document did not belong to it but in fact belonged to an employee of M/s Goel Construction Co.Pvt. Ltd. The Assessing Officer had asked the assessee to produce said person but because of the stringent relation with him, the said person could not be produced. However, the assessee requested the Assessing Officer to summon the said person and record his statement. The Assessing Officer failed in his duty in not summoning the said person and thus not verifying the genuinity of the claim made by the assessee. Though under section 132 (4) of the Act the presumption is that the document found from the premises of the assessee belonged to the assessee but the said presumption is rebuttable one as held by various Courts. However, first onus is upon the assessee to establish the said document found from his possession, does not belong to him. In the facts of....
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....ee. The said document was hand written and reflected transaction in cheques and cash received from S/Shri Charanjit Lal and Rahul Chhabra. The assessee was asked to give complete transaction and also to reconcile the same. Vide reply dated 18.11.2011 it was stated by the assessee that the payment of Shri Rahul Chhabra were not regular and since the cheques bounced, he offered to pay Rs. 5 lacs as cash. It was further submitted that Shri Chhabra backed out and the payment of Rs. 5 lacs was never made. The Assessing Officer noted that the said fact does not support the contention of the assessee as the cheque payments were shown at Rs. 7,89,760/- and another cash payment of Rs. 5 lacs the total payment being Rs. 12,89,760/-. Consequently sum of Rs. 5 lacs was treated as undisclosed income of the assessee. 12. The CIT (Appeals) upheld the addition of Rs. 5 lacs as the assessee had failed to furnish any proof that the cheques issued by Shri Chhabra had bounced again and again. The CIT (Appeals) further held as under : "Even if assuming that the cheque of Rs. 2 lakhs bounced again and as such payment receivable remained at Rs. 7,84,760/- with balance payment due of Rs. 7,51,....
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....actually he again backed out. The assessee in the said reply further stated that this fact could be proved from the entries on the left side of the page where it is noted that he had been alloted flat for Rs. 15,36,100/- and he had only made payment of Rs. 7,89,760/- and balance payment due was Rs. 7,46,340/- and he had paid another sum of Rs. 1,95,000/-. The assessee further claimed that as the cheques of Rs. 2 lacs again bounced and the balance payment remained at Rs. 7,51,340/-. Though the assessee had tried to reconcile the entries but has failed to establish its case. The said document clearly reflects that there is cash of Rs. 5 lacs and commission of nil. He also mentioned against the amounts received from RC totaling Rs. 7,89,760/-, on the right side of the document. We find no merit in the claim of the assessee in this regard and in the absence of the assessee having furnished any evidence to prove its case that sum of Rs. 5 lacs was offered against cheuqes being dishonoured, does not establish the case of the assessee. In case the cheques were being dishonoured then how the total of Rs. 7,89,760/- has been taken and it does not talk of any dishonour of cheques. In the abs....
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....o the issue are that during the course of search carried out at the premises of the assessee and the residential premises of the Directors, certain documents were found and seized. Page No. 44 of Annexure A-1 was seized from residence of Shri J.C.Bansal, H.No. 2048, Sector 15, Chandigarh. These documents relate to receipts and payments by the Bansal Group. Page 44 contains account of Saraswati Trust Gohana while pages 46 and 47 are accounts of Maa Saraswati Trust. The scanned copies of the documents are reproduced by the Assessing Officer at page 3 of the assessment order. The said documents were confronted to Shri J.C.Bansal and his statement was recorded on 27.07.2009 'on oath' under section 132 (4) of the Act. The Assessing Officer has reproduced the relevant extract of the statement at pages 3 & 4 of the assessment order. The Assessing Officer noted that from the said document, certain amounts were invested by the assessee before us in M/s Saraswati Educational &Welfare Trust, totaling Rs. 19,95,000/-. The Assessing Officer asked the assessee to furnish the evidence as to whether the entries were reflected in the books of account. The assessee was also asked to furnish the sour....
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....ere furnished in respect of the balance sum of Rs. 5,11,373/-. The Assessing Officer thus, observed that the said investment has not been reflected in the books of account of the assessee. However, he further noted that the Trust i.e. Maa Saraswati Educational & Welfare Trust and Shri J.C.Bansal had filed application before the Settlement Commission and the matter had to be decided by the Settlement Commission. However, to protect the interest of revenue, sum of Rs. 511,373/- was added to the taxable income of the assessee as undisclosed income under section 69 of the Act. 20. The Commissioner of Income Tax (Appeals) vide para 14 has adjudicated the issue on addition of Rs. 19,95,000/- and in para 15 has adjudicated the issue relating to Rs. 511,373/-.The Commissioner of Income Tax (Appeals) upheld the order of the Assessing Officer rejecting the plea of the assessee that page No. 44 was part and parcel of page No. 46 and 47 of Annexure A-1 and further held that there was no indication in the statement recorded of Shri J.C.Bansal that the pages 44, 46 and 47 were inter-linked and they were common entries. The Commissioner of Income Tax (Appeals) noted that both the documents wer....
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....he entries on the said documents totaled to Rs. 15,11,373/-. However, sum of Rs. 10,00,000/- was reflected in the books of account of the assessee and hence, addition of Rs. 5,11,373/-was made on protective basis in the hands of the assessee, as the assessee claimed that the said income was offered as additional income by the Trust. The ld. AR for the assessee pointed out that in the statement of facts filed before the Settlement Commission also, it was pointed out that page No. 44 of Annexure A-1 seized from the residence of Director was part and parcel of page No. 46 and 47 of Annexure A-1 seized from his residence. Our attention was drawn to page 36 of the Paper Book where said fact is noted. The ld. AR for the assessee further pointed out that at pages 38 to 60 of the Paper Book, copy of order passed under section 245D(4) of the Act in the case of Maa Saraswati Educational and Social Welfare Trust passed by the Income Tax Settlement Commission, New Delhi on 10.05.2013, is enclosed. At page 47 of the Paper Book vide para 4.2, the Hon'ble Settlement Commission had noted the claim of the assessee that in the seized documents, there were certain entries which were either in dup....
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....n non-allowance of deduction under section 80IB of the Act at the amount declared during the course of survey as additional income amounting to Rs. 1.70 Cr. 26. The ld. DR for the revenue pointed out that the issue stands covered against the assessee by the ratio laid down by the Hon'ble Punjab & Haryana High Court in National Legguard Works Vs CIT and another (2007) 288 ITR 18, M/s Tudor Knitting Works Pvt. Ltd. Vs CIT ITA No. 440 of 2010 (O&M) order dated 08.08.2013 (P&H), M/s Kim Pharma (P) Ltd. V CIT ITA No. 106 of 2011 (O&M) order dated 27.04.2011 (P&H). 27. The ld. AR for the assessee, however submitted that the Hon'ble Gujrat High Court in CIT Vs Shilpa Dyeing & Printing Mills (P) Ltd. (2013) 39 Taxman 3 (Gujrat) had distinguished its decision laid down earlier and held that where income is declared in survey, then the same has to be taxed under one of the heads under section 14 and can not be taxed separately. 28. We have heard the rival contentions and perused the record. The brief facts relating to the issue are that during the course of survey at his premises, the assessee had offered additional income of Rs. 1.70 Cr on which the assessee had claimed the....
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....assessee and the reliance on the ratio laid down by the Hon'ble Gujrat High Court in CIT Vs Shilpa Dyeing & Printing Mills (P) Ltd.(supra) is misplaced. In view of the ratio being settled by the Hon'ble Punjab & Haryana High Court in the in National Legguard Works Vs CIT and another (supra), M/s Tudor Knitting Works Pvt. Ltd. Vs CIT (supra), M/s Kim Pharma (P) Ltd. V CIT (supra) we hold that the assessee is not entitled to the deduction under section 80IB of the Act on the surrendered income of Rs. 1.70 Cr. Ground of appeal No. 3 raised by the assessee is thus, dismissed. ITA No. 549/Chd/2013 :: Assessee's Appeal :: A.Y. 2009-10 31. The assessee has raised the following grounds of appeal : "1. That the ld. Commissioner of Income Tax (Appeals) has erred in law and facts in upholding addition of Rs. 59,43,115/- out of the total addition of Rs. 128,68,362/- made by the ld. Assessing Officer as para 5 of the order. The addition was made by wrongly interpreting the seized documents as per page 14 of the order. 2. That the ld. Commissioner of Income Tax (Appeals) has erred in law and facts in upholding the addition of Rs. 480000/- made by the ld. Asses....
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.... documents are scanned by the Assessing Officer and are reproduced at pages 4 to 7 of the assessment order. Page 61 of the Annexure A-2 and page 60 of Annexure A-2 are also scanned and are reproduced at pages 7 and 8 of the assessment order and page 62 of A-2 is the letter (e) 61, 60 and 62 are reproduced at pages 8, 9 and 10 of the assessment order. The said three pages i.e. 61, 60 and 62 of the seized documents were in respect of transactions at (e). Page 59 of A-2 is scanned and is placed at page 11 of the assessment order. The Assessing Officer noted from all the abovesaid pages that on each page the assessee has recorded the total amount and the balance amount after adjustments which are due to him and his family members. The Assessing Officer confronted the assessee with the said documents and asked the assessee to give details of each transaction mentioned on the said pages and whether the same were reflected in the books of account. In the written reply, the assessee stated that the figures on these pages were notional figures and not actual figures and he also filed page-wise reply of the said documents which are reproduced by the Assessing Officer at page 12 of the ass....
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....08.2008. The said letter talks of an account with approximate figures of the Mall building price and rest of the figures in respect of the Ashreya Studio Apartments, Hill View & M-1 Plaza. The letter further talks about advance lying with Mr. Lalit Jindal of Rs. 4,50,000/-. The person writing the letter has concluded by stating "Total receivable from you - Rs. 128,89,362/-, less already received from you - Rs. 13,00,000/- and balance due from you Rs. 115,89,362/-." To the said letter, Mr. Monga has further attached annexures i.e. transaction letter marked as (a) to (e) which incorporates the conclusion in respect of the different claims made in the letter dated 10.08.2008. The said letter is scanned by the Assessing Officer and is reproduced at page 3 of the assessment order and the same is not being reproduced for the sake of brevity. 38. The said letter was confronted to the Director Shri Lalit Jindal to whom it has been addressed and his statement was recorded on 29.07.2009. The relevant portion of the said statement is as under : Q I am showing you pages 67 and 72 of Annexure A-2 seized from the office of M/s Hill View Infrastructure which contains entries relating ....
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....ich sum of Rs. 13 lacs was already received and the balance due from the assessee was Rs. 1,15,89,362/-The presumption is to be drawn against the assessee where the assessee has failed to discharge the onus cast upon him. However, we are in conformity with the order of Commissioner of Income Tax (Appeals) in restricting the addition to Rs. 59,43,115/-, as against addition of Rs. 1,28,69,362/- made by the Assessing Officer because the said amount of Rs. 1,28,69,362/- depicts the amount receivable by Mr. Monga. The Assessing Officer at page 14 has tabulated the total amount of transaction page-wise and the amount shown as credit/payment and the balance outstanding amount. The notings at page 66 reflect the total value of investment at Rs. 79,60,250/- as against which there was a credit of Rs. 33,01,375/- and the outstanding was Rs. 46,48,875/-. At page 65, the transaction was of Rs. 36,00,000/- against which there was a credit of Rs. 1,43,000/- and balance was Rs. 34,57,000/-. Similarly at page 64, the transaction was of Rs. 57,50,000/- against which there was a credit of Rs. 16,00,000/- and balance was Rs. 41,50,000/-. At page 63, there was an advance lying with the assessee of Rs. ....
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....t earlier, the assessee was carrying on the business of Real Estate development. The Assessing Officer, on the perusal of the balance sheet for the year ending 31.03.2007 noted that the assessee had been booking revenue/income on percentage completion method. In view of the guidelines issued by the Institute of Chartered Accountants of India (ICAI) which had issued certain guidelines in 2006, the assessee was show caused to furnish details of estimated cost of project and the estimated revenue realization. The assessee was also show caused to explain as to why percentage completion method should not be adopted instead of project completion method in view of the Guidance Note on real estate developers of 2006. 43. The assessee vide reply dated 12.12.2001 stated that the document Guidance Note issued by ICAI was not an accounting standard and was issued to have uniformity in accounting specially in the case of listed companies. The assessee clarified that even on-date different companies were adopting different approaches for booking the revenue. The assessee was following the said Project Completion Method consistently for the past many years and hence, it was submitted that the ....
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....ot when a project is finished but continuously, in portion to the money spent by it on the project. The assessee company was incorporated on 9.11.2005 and so this is the first year of conducting its business as real estate developers. It has been contended that it has been consistently following the same system of accounting. The assessee in its submission has distinguished the observation of the A.O. regarding conditions for the application of percentage completion method. Reliance has also been place in the case of Prestige Estate Project Pvt. Ltd. vs. DCIT 129 TTJ 680 (Bangalore), Awadhesh Builders vs. ITD 37 SOT 122 (Mumbai). The AO has also relied on certain cases, including J.K. Industries, 297 ITR 176 (SC). It is however not the AO's case that the profits have been distorted by following the Project completion method. The impugned order is also silent as regards the position of the books of accounts. In other words the books have not been rejected, nor any defects pointed out. In the case of GIT vs. Bilahari Investment (P) Ltd., 299 ITR 1 (2008)(SC), the Apex Court held that the completion contract method adopted by the assessee for chit discount consistently....
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....accounting and either of the methods can be applied by the assessee. In the facts of the present case before us, the assessee had chosen to compute its income on the basis of project completion method i.e. recognizing the income on the completion of the project and not from year to year whereas the case of the revenue was that it should account for the income as it is generated in the hands of the assessee i.e. from year to year on the basis of the work completed being relatable to the revenue generated from year to year. 49. The Hon'ble Supreme Court in CIT Vs Bilahari Investment (P) Ltd. (supra) had held that, "recognition/identification of income under the 1961 Act is attainable by several methods of accounting. It may be noted that the same result could be attained by any one of the accounting methods. Completed contract method is one such method. Similarly, percentage of completion method is another such method." It was further held that "Every assessee is entitled to arrange its affairs and follow the method of accounting which the Department has earlier accepted. It is only in those cases where the department records a finding that the method adopted by the assessee r....