TaxTMI 
TaxTMI 
2015 (10) TMI 2430
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....nded that appeal for A.Y. 2006-07 (ITA No.3229/Mum/ 2011) may be taken first, by further submitting that issues in the impugned appeals are identical, therefore, we tend to dispose off this appeal first. 2.1. The crux of argument advanced by Shri N.P.Singh, ld. CIT-DR, is that the assessee is a builder/developer and search and seizure operation was carried out at different places at Rohan Group on 10/08/2006, wherein, certain incriminating documents were found and seized. The ld. CITDR, contended that there were certain old buildings, inhabited by tenants, wherein, assessee created bogus tenancy rights in two apartments. It was pleaded that one Mr. Harish Mehta and Ms. Joshi Choula admitted that version of the Department while recording their statements and further certain documents were recovered from residence from which the Assessing Officer rightly drew inference that cash was taken in other cases also, on the basis of which, addition was made. Our attention was invited to page 39 of the paper book. It was asserted that while granting relief the ld. Commissioner of Income Tax (Appeals) disregarded the statements recorded from aforementioned two persons. Our attention was invit....
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....sing Officer. It was pleaded that even the Assessing Officer mentioned incorrect figures for which our attention was invited to page 11 of the assessment order. The crux of argument is that the Assessing Officer just made the addition by multiplying the figures. Our attention was invited to 10 to 12 of the impugned order. Reliance was placed upon the decision of the Tribunal (ITA No.4735/Mum/2008) which was affirmed by Hon'ble jurisdictional High Court in ITA No.1196 of 2011 (R.R. Chaturvedi). So far as the statement of Shri Harish Mehta is concerned it was explained that there were different partners/persons in the different group, thus, no addition can be made on the statement of any person unless and until it is corroborated with effects. It was also pleaded that the statement of Ms. Choula Joshi was never given to the assessee and Ms. Choula Joshi was again examined pursuant to remand of the case. Before coming to any conclusion, we are reproducing hereunder the relevant portion and factual finding recorded by the ld. Commissioner of Income Tax (Appeals) for ready reference and analysis:- "28. I have considered the submissions of the appellant, comments of the A.O. on the rema....
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....e sale flats tenants certified by MHADA., the addition on account of receipt of on money cannot be made. 32. Considering the aforementioned facts, and, on examination, it is observed that no material has been found indicating that the appellant has received on money. On going through the agreements filed by the appellant, the response of the five parties to notice u/ s. 131 issued by the AO, and the comments made by the AO in the remand report dated 11.01.2011, it is observed that these five parties were actually in possession of the property and the appellant had to give them flats in lieu of surrender of the possession of the tenancy rights/ property. It was further observed that the entire addition in the assessment was made on the basis of the loose paper seized from the residence of Chaula Joshi, which is perused to be rough noting. It is observed that the area mentioned in the noting on the seized paper does not tally with the actual area allotted to those parties as per the agreement and the response letters to notice u/ s. 131. In fact, the AO has concluded in the remand report that the noting on the seized paper and the agreement does not tally and factually the parties h....
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....he assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, the facts, in brief, are that the assessee company is engaged in the business of redevelopment of cessed buildings by following project completion method. During the relevant period, the assessee company had three projects in hand i.e. Riddhi Siddhi apartment, Siddesh Villa, Siddesh Apartment, which were nearing completion. On 10/08/2006, a search and seizure operation was carried out, on Rohan Group of Companies, u/s 132 of the Income Tax Act, 1961 (hereinafter the Act) by the investigation wing of the Department. Consequently, notice u/s 143A of the Act was issued to the assessee to which return of loss of Rs. 1,54,71,811 was filed on 31/3/2008. The ld. Assessing Officer made addition of Rs. 1,40,39,036/- (net profit on account of money receipts) , Rs. 5,44,32,840 (net profit on sale of bogus tenancy of 22 flat in Siddesh apartment) and Rs. 66,03,316/-(net profit on sale of bogus tenancy of shop in riddhi apartment an dflat in Siddhesh Villa). 2.4. On appeal, ....
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....ized documents were claimed to be dumped documents and claimed that even in the statement of Ms. Chaula Johsi, there is clear cut denial of cash component/on money. It is pertinent to mention here that the tenants/occupants certified by MHADA are more in comparison to the claim of the assessee, therefore, the contention of the ld. DR as well as of the ld. Assessing Officer that bogus tenancy was created is not substantiate, because the MHADA is not going to gain anything by providing list of more number of tenants. 2.5. We further note that certain additional evidences were filed before the ld. Commissioner of Income Tax (Appeals), with respect to alleged five parties, therefore, the additional evidence was remanded back to the file of the ld. Assessing Officer with a direction to cheque the actual area allotted to this five parties. The Assessing Officer carried out verification and vide remand report dated 11/01/2011 did not raise any objection to the admission of additional evidence and rather vide remand report (received in the office of the ld. Commissioner of Income Tax (Appeals) on 18/01/2011.) annexed the statement of five parties, the extract of which has been reproduced ....
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....presumptive basis, which cannot stand on its legs, therefore, the addition of Rs. 1,40,39,036 was rightly deleted, consequently, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals). 3. Now, we shall take ground no 2 & 3 with respect to deleting the addition of Rs. 66,03,316/- and Rs. 5,44,32,840/-made on account of sale consideration of shop number 1A in Riddhi, flat numbers 82, 904 in Riddhi and Siddhi and 22 flats respectively. The crux of arguments, advanced by ld. CIT-DR is identical to the ground raised and broadly as was canvassed for the aforesaid ground by contending that the addition was rightly made which was pursuant to search proceedings by creating bogus tenancies and none of the alleged tenants appeared in response to summons issued by the Assessing Officer. On the other hand, the ld. counsel for the assessee defended the conclusion arrived at in the impugned order. On ground no.3, identical argument was advanced by ld. CIT-DR, whereas, the ld. counsel for the assessee strongly defended the conclusion arrived at in the impugned order. 3.1. We have considered the rival submissions and perused the material available on record. ....
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.... (i) Shri Kamlesh Baheti, (ii) Shri Ramanlal Jain, (iii) Shri Mahendra Jain (iv) Shri Sanjay Agarwal & (v) Shri Rajiv Agarwal, is as mentioned in their respective agreements mentioned in their respective agreements submitted to your during these appellate proceedings by the assessee, the details of which are summarized below for ready reference:- Sr. No. Name of the tenant As per seized document As per Agreement Flat No. Area Sq. Ft. Flat No. Area Sq. Ft. 1. Kamlesh Baheti 2301 1450 1705 1802 1803 567.04 404.40 551.32 1522.76 2. Ramanlal Jain 2401 1450 1805 567.04 3. Mahendra Jain 2101 906 1003 436.69 4. Rasilaben Ajani 2001 906 Not flat Sold/Alloted 5. Sanjay Agrawal 2501 1450 2005 567.04 6. Rajiv Agarwal 2505 906 1505 566.83 23. Along with the remand report the Assessing Officer has also attached the response of the five parties to the notice u/s 131 of the Act. Relevant extract of the response of Mr. Kamlesh Baheti is as under:- Q. 5 Nature of transaction with Rohan Developers:- I had 3 office at Manek House, office premises No.1(405 sq. ft.) No.2(approx 550 sq. ft.) No-3(Approx 550 sq.ft.) In lieu of surrender of the ....
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....ctual tenants were 101, whereas, as per the assessee, they were only 97, thus, there is no question of bogus tenancy, more specifically when alternate accommodation was provided to, claimed, 97 persons in lieu of surrender of their tenancy rights. So far as, seizure of incriminating material from the residence of Ms. Chola Joshi is concerned, we have already deliberated upon the same in preceding para of this order. It is also worth mentioning that while deliberating upon the issue, the ld. Commissioner of Income Tax (Appeals) has already placed reliance upon various judicial pronouncements, therefore, the same are not being repeated, being, matter of record and may be considered to be looked upon/considered by us. Thus, on this ground, we find no merit, in the appeal of the Revenue, consequently, we affirm the conclusion drawn by the ld. Commissioner of Income Tax (Appeals). 4. Now, we shall take up ITA No.3222/Mum/2011, 3224/Mum/2011, 3225/Mum/2011, 3226/Mum/2011, 3228/Mum/2011 and 3230/Mum/2011, wherein, identical grounds have been raised. Before coming to any conclusion we are reproducing hereunder the appeal wise factual finding recorded by the ld. Commissioner of Income Tax ....
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....ck is established. These bills are issued by government companies and authorities i.e. Mahanagar Telephone Nigam Ltd. The same cannot be disapproved unless there is any contrary evidence. Therefore, as no other evidence were found indicating that the appellant had received any on money, the addition on account of receipt of on money cannot be made. 18. Considering the aforementioned facts and in absence of anything material on record to prove otherwise, the addition on sale of flats to bogus tenancies by the appellant cannot be sustained. In the result the appeal is allowed in favour of the appellant. Xxxxxxxxxxx 22. I have carefully considered the submissions of the appellant and the assessment order. It is observed that various tribunals have accepted the project completion method as an appropriate method of computing income. The tribunals have also accepted the treatment by the assessee to offer income to tax in the year when the project was completed in the following decisions: i. In Champion Construction Company 5 ITD 495 (1983) ii. M/s Unique Enterprises Vs ITO [201O-TIOL-737-ITATMum iii. In Prestige Estate Projects (P) Ltd Vs DCIT (2010) 33 DTR 514 iv. CIT v B....
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....he notings on the said loose papers are incorrect and does not represent the factual position and thus held to be rough notings. d. The addition in respect of sale of bogus tenancies has been made by the AO on the basis of incorrect facts. 18. It is also observed that the appellant has provided this party with permanent alternate accommodation as per the provisions of rule 33(7) of the BMC rules. On perusal of the various material evidences available on record like the agreement copies, electricity bills, telephone bills, etc, it is observed that the property against which Flat of Siddhi Apartment was allotted was possessed by Mrs. Jayaben Kanober. In my view, no presumptions can be made as there is no Material or evidence on record. More so, on perusal of the electricity bills, declaration by the school, etc, the tenancy of the said party since long back is established. These bills are issued by government companies and authorities i.e. Mahanagar Telephone Nigam Ltd. The same cannot be disapproved unless there is any contrary evidence. Therefore, as no other evidence were found indicating that the appellant had received any on money, the addition on account of receipt of on m....
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....enancies for the current year. 16. It is observed that all the contentions and the findings relied upon by the AO had arisen for consideration before me in the appellants own case for AY 2006-07 ~d vide order dated 31/01/2011 the same was decided in favour of the appellant for the following reasons given in para nos. 45 - 47 of the said order:- a. The AO erred in counting the no. of tenants. The total no of tenants in the 3 buildings were 101 out of which the total no. of tenants to whom permanent alternate accommodation was provided was 97. b. The four parties are the sub-tenants of M/s. Mehta Trading Company and the appellant provided permanent alternate accommodation to these parties in lieu of the sub-tenancies. c. The entire addition made by the AO on the ground under consideration is the seized material found in the residence of Chaula Joshi. The notings on the said loose papers are incorrect and does not represent the factual position and thus held to be rough notings. d. The addition in respect of sale of bogus tenancies has been made by the AO on the basis of incorrect facts. 17. It is also observed that the appellant has provided this party with permanent alt....
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....n that since the appellant has consistently followed project completion method the income of the appellant ought to have been considered on the same basis. Accordingly, the said ground of appeal stands allowed in favour of the appellant. ITA No.3229-2011 28. I have considered the submissions of the appellant, comments of the A.O. on the remand report and the various judicial pronouncements cited by the appellant. It is evident from the comments of the assessing officer in the remand report that the area mentioned in the seized documents and the actual area given to the persons concerned differs. 29. Further, in my view, no addition on account of receipt of on money can be made due to the fact that AO in. his remand report has clearly stated that the area mentioned in the seized document & the actual area given to the persons concerned, differs. He confirmed that the actual area given to the persons concerned is as mentioned in their respective agreements. Its is also observed that Mr. Kamlesh Baheti, one of the five parties, in response to notice issued u/ s. 131 stated to have received flat in lieu of surrender of property. He admitted, to have sub tenanted the property to fou....
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....is observed that the area mentioned in the noting on the seized paper does not tally with the actual area allotted to those parties as per the agreement and the response letters to notice u/ s. 131. In fact, the AO has concluded in the remand report that the noting on the seized paper and the agreement does not tally and factually the parties have received area as per the agreement only. Thus, the agreements, comments in the remand report, the statements recorded in the remand proceedings, corroborates with the submissions made by the appellant. Therefore, as there is nothing material on record to prove otherwise, the addition on account of receipt of on money by the AO cannot be sustained. In the result the ground of appeal is allowed in favour of the appellant. Accordingly, the addition ofRs. 1,40,39,036/- is deleted. Ground no.2 & 3 45. I have carefully considered the submissions of the appellant and the contentions of the AO. It is observed that the AO has erred in counting the no. of tenants. It is seen that the total no of tenants in the said 3 buildings are 101 out of which the total no. of tenants to whom permanent alternate accommodation was provided was 97. It is furthe....
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....ct and does not represent the factual position and was held to be rough notings. 2. Response of the five parties to whom notice was issued u/s, 131, wherein they stated that they were in the possession of the property and they have received flat in lieu of surrender of property. Further, the said parties also categorically stated that they have not paid any money to the appellant. 3. As per the notings in the seized paper, Flats no 2501 and Flat No. 2505 is allotted two parties. However, it was perused that the building Siddhesh Apartment was constructed only upto 24 floors. . 4. The comments of the AO in the remand report clearly mentioning the fact that the area mentioned in the seized documents and the actual area given to the persons concerned differs. 12. Considering the aforementioned facts and as there is nothing material on record in the year under consideration to prove otherwise, the addition on account of receipt of on money by the AO cannot be sustained. In the result the ground of appeal is allowed in favour of the appellant. Accordingly, the addition of Rs. 1,72,16,6821- is deleted." 4.1. During hearing, the ld. representatives from both sides contended that the ....
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....als, in exercise of the statutory right, a refusal to condoned the delay can result in a meritorious matter being thrown out at the threshold, which may lead to miscarriage of justice. The judiciary is respected not on account of its power to legalize in justice on technical grounds but because it is capable of removing injustice and is expected to do so. 5.2. The Hon'ble Apex Court in a celebrated decision in Collector, Land Acquisition vs Mst. Katiji & Ors. 167 ITR 471 opined that when technical consideration and substantial justice are pitted against each other, the courts are expected to further the cause of substantial justice. This is for the reason that an opposing party, in a dispute, cannot have a vested right in injustice being done because of a nondeliberate delay. Therefore, it follows that while considering matters relating to the condonation of delay, judicious and liberal approach is to be adopted. If sufficient cause is found to exist, which is bona-fide one, and not due to negligence of the assessee, the delay needs to condoned in such cases. The expression 'sufficient cause' is adequately elastic to enable the courts to apply law in a meaningful manner, which sub....
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....thority. During hearing, of these cross objections, this ground was not pressed by the ld. counsel for the assessee, therefore, this ground in the respective appeal is dismissed as not pressed. 5.5. So far as, the next ground with respect to addition of Rs. 43,84,800/- (AY.s 2001-02), Rs. 37,17,000/-(A.Y. 2002-03), Rs. 34,94,488/-(A.Y.2003-04), Rs. 2,47,75,912 (A.Y. 2004-05), Rs. 1,56,84,696/- (A.Y. 2005-06), and Rs. 66,03,316/-(A.Y. 2006-07) is concerned, this ground is broadly in support of the order of the ld. Commissioner of Income Tax (Appeals) with respect to granting relief to the assessee. Since, we have dismissed the appeal of the Revenue, therefore, the impugned grounds in the cross objections, is consequential in nature, therefore, dismissed as in-fructuous. 6. Now, we shall take up the appeals, filed by the Revenue in the case of Manav Builders Pvt. Ltd. (ITA No.4691 to 4693/Mum/2011) against the impugned orders dated 31/03/2011 of the ld. First Appellate Authority, Mumbai. During hearing of these appeals, the ld. counsel for the assessee as well as the ld. CIT-DR contended that the issue and the facts involved in these appeals are identical to the case of Meridian Co....
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....d to be, incorrect and erroneous. 21. It is also seen that the flats are sold by the appellant at market rates. It is further observed that there is no material or evidence on record to prove that the appellant has received on money on the sales of free flats or tenants. Further, it is observed that extrapolation cannot be applied in the present case. In my view, no presumptions can be made as there is no material or evidence on record. More so, the tenants are certified by MHADA, a government agency, the same cannot be disapproved unless there is any contrary evidence. Therefore, as no other evidence were found indicating that the appellant had received any on money in respect of free sale flats j tenants certified by MHADA., the addition on account of receipt of on money cannot be made. 22. Considering the aforementioned facts, and, on examination, in case of M/s. Meridian Constructions Pvt. Ltd., it is observed that no material has been found indicating that the appellant has actually received on money. On going through the agreements filed by the appellant, the response of the five parties to notice u/s. 131 issued by the AO, and the comments made by the AO in the remand repo....
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....ized material containing noting of cash from the said Smt. Pastidevi K. Mehta, no other material or evidence indicating receipt of cash/on money from any other flat purchaser whatsoever has been found or seized. Further, part of the noting in the said seized paper is also factually incorrect. Thus, respectfully following the ratio laid down by Hon'ble Courts and considering the facts and circumstances of the present case, I had confirmed the addition on account of Net Profit @20% on the amount of Rs. 8,70,250/- received in cash from Pastidevi K. Mehta of Rs. 1,74,050/ - . Therefore,since, the addition on account of Pastidevi K Mehta has been confirmed in AY 2006-07, no addition on that account can be made in this year. 24. The issue of extrapolation and making addition on that account in the AY 2005-06 is not tenable. There is no evidence of any rash received from any of the parties. The details of sales made in AY 2005-06 is of Rs.l,18,ll,655 but there is no evidence of either any noting or any document to show that any of these parties have made any payment in cash to the appellant. Just on the basis of one rough noting regarding receipt of cash, the same cannot be extrapolated ....