TaxTMI 
TaxTMI 
2016 (11) TMI 64
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....f loans and advances but advance against the sale of the land to the company in the normal course of the business." Grounds in revenue's appeal:- "1. Whether on the facts and in the circumstances of the case the CIT (A) was right in deleting the addition of Rs. 6,32,650/- made by the A.O. on account of sale of plot considering as business income. 2. Whether on the facts and in the circumstances of the case the CIT (A) was right in deleting the addition of Rs. 20,00,000/- made by the AO on account of investment in Construction of house when the addition is supported by the findings of the DVO. 3. Whether on the facts and in the circumstances of the case the CIT (A) was right in deleting the addition of Rs. 1,50,00,000/- made by A.O. on account of advance given to Gulam Farooq Ansari which was accepted by the assessee during the search that this amount was paid out of books. 4. Whether on the facts and in the circumstances of the case the CIT(A) was right in deleting the addition of Rs. 20,46,604/- out of Rs. 50,26,604/- made by the A.O. on account of deemed dividend income u/s 2(22)(e) of the I.T. Act and accepting additional evidence without giving opportunity to A.O....
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.... of the assessee no benefit of indexation was given and the income from sale of plots assessed by the AO was as underITA Sr. No. Description of plots Sale Value Purchase Cost Profit 1 Plot No. 293, Shree Ram Vihar 13,01,000 6,68,350 6,32,650 Total 6,32,650 3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had deleted the addition made by the Assessing Officer by giving the following findings:- "I have considered the assessee's submission and also taken a note of judicial pronouncements relied upon by the AO and appellant. I have also carefully perused the records available before me and factual matrix of the case. I found that the assessee is not showing this plot as "Stock-in-Trade" in the balance sheet. In last balance sheet as on 31-03-2010, this plot is appearing under schedule 6 of the head "Non Depreciable Fixed assets". There is no dispute over the claim of the assessee that this plot was purchased by him in Financial Year 2000-01 and no any improvement or development activity was carried out over this plot with an intention to s....
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.... The assessee had also shown certain stocks in land under the head 'Inventories' during the year. It proves that assessee's intention was clear at the time of acquiring these plots for the purpose of investment. Therefore, we do not find any reason to interfere in the order of Id. CIT(A) which is sustained. Thus the solitary ground of the Revenue is dismissed." After going through rival submissions and findings of Hon'ble ITAT, in assessee's own case and in the case of wife of the assessee Smt. Renu Agarwal, it is seen that though the appellant is engaged in real estate business but no activity was conducted on the plot of land which were later sold off, therefore, the profit on the sale of the plot of land Plot No. 293, Shree Ram Vihar has been correctly shown as long term capital gains. The AO is directed to compute long term capital gains accordingly. 4. Now the revenue's is in appeal before us. The ld. CIT DR has vehemently supported the order of the Assessing Officer. 5. At the outset, the ld AR of the assessee has relied on the order of the ld. CIT(A) and further submitted that the assessee is maintaining the regular and separate books of accounts....
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....e would only be a realization of capital and would not stamp the transaction with a business character : • CIT Vs. PKN 60 ITR 65 (SC) • CIT Vs. Gordhan Das Trikambhai Patel 118 ITR 81 • CIT Vs. Trivedi 172 ITR 95 The issue is covered by decision of Hon'ble ITAT in the case of assessee Ashok Kumar Agarwal in ITA No. 920/JP/2007 dated 21/11/2008 and in case of Renu Agarwal wife of assessee in ITA No 125/JP/2013. The facts of this case are similar to the facts of the assessee's case. In view of above, the assessee prays your honor that addition made by Ld. A.O. is bad in law, unjustifiable and unreasonable deserves to be deleted and kindly upheld the findings of ld CIT(A) in this regard and dismiss the appeal filed by the revenue. 6. We have heard the rival contentions of both the parties and perused the material available on the record. The Ld CIT(A) has recorded a finding of fact that the assessee has not shown this plot as "Stock-in-Trade" in his balance sheet and no document was found during the course of search to the effect that the assessee has converted this plot into Stock-in-trade. Further, he has stated that on the plot of land w....
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.... was asked to segregate and give complete break up. In compliance, assessee provided a ledger showing head wise details of construction. From the detail filed, it is observed that, the assessee and his wife has shown Rs. 2,31,09,884/- under civil construction, sanitary & electricity, Rs. 1,13,44,374/- under furniture, Rs. 4,63,534/- under others and Rs. 18,34,744/- under plant and machinery. To order to ascertain the actual value of investment in construction of house, the AO referred the matter to District Valuation Officer (herein referred as DVO) for the valuation of the cost of construction of house. The DVO vide No. DVO/ITD/JPR/IT-10/2012-13/227 dated 06-03-2013, submitted his report wherein the construction cost of above said house was valued at Rs. 3,09,67,958/- as against Rs. 2,31,09,884/- declared by the assessee to the valuation officer. The copy of valuation report was given to the assessee to submit his comments/explanation on the difference arrived at by the DVO. The AR of the assessee vide his letter dated 15.03.2013 beside several technical objection, raised various objection. It was observed that the main dispute was on account of difference in amount shown in furni....
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....wer side. In this regard, the assessee contended that in first year and second year the amount under the head furniture was Rs. 76,74,944/-. The investment in sofa, dining table other loose furniture could be made only in the third year or fourth year after completion of the civil work and not in the first and second year i.e. during the continuation of civil structure of the house. The assessee contended that even if the benefit of Rs. 76,24,944/- being amount invested in first two year on wooden work is allowed as part of construction then the investment as per books comes to Rs. 3,07,34,828/- which is very close to the valuation made by the DVO at Rs. 3,09,67,958/- and therefore, no addition on this Account should be made. However, after considering the valuation report of DVO, reply filed by the assessee, comments of DVO and rejoinder filed by the assessee, the AO observed that cost of loose furniture shown by the assessee is at lower side, therefore to cover up all possible leakage on this account an addition of Rs. 20,00,000/- was made on account of undisclosed expenditure in construction of house furniture in the hands of Sh. Ashok Agarwal. 8. Being aggrieved by the order....
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.... (PB pg 186-203) and compared this figure with Rs. 2,31,09,884/- shown by the assessee for civil construction, sanitary and electric expenses. The assessee explained the ld AO that he and his wife have shown Rs. 1,13,44,374/- under the head bifurcated by him "Furniture". The year wise detail of expenses under Furniture was submitted as under:- S. No. Name of Assessee FY 08-09 FY 09-10 FY 10-11 FY 11-12 Total 1 Ashok Agarwal 7,24,443 23,57,527 10,65,712 3,16,680 44,64,362 2 Renu Agarwal 6,42,488 39,00,486 23,37,038 0 68,80,012 Total 13,66,931 62,58,013 34,02,750 316680 1,13,44,374 The assessee submitted that the entire amount in first year, second year and part of the amount in third year was against the door frames, window frames, doors, windows false ceiling etc which is part of the construction and part of DVO's valuation at figure Rs. 3,09,67,958/-. The assessee submitted that out of total amount of Rs. 1,13,44,374/-; amount of Rs. 84,91,873/- was against construction and Rs. 28,52,501/- was against loose furniture such as dining table, sofa, beds etc. Therefore the figure aga....
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....e by him the cost of Doors, window, wooden frames were included as apparent from Annexure "B" enclosed with the report. Further the cost of False ceiling, wooden ceiling tiles, wooden flooring, modular kitchen, special ornamental door, wardrobes, Malamine Polish, wooden paneling for TV, SS work in window grill railing, SS railing with glass panes at balcony were taken as extra items. The assessee has shown the cost of wooden items such as ply, wood, teak wood, fittings, labour charges, etc. in the head Furniture. The assessee has also given the details of the account along with the photocopy of the purchase bills to DVO but the same remained unconsidered by the DVO. The breakup of construction expenses disclosed by the assessee in books vis a vis reconciliation chart is enclosed herewith. The main objection in this regard is that the assessee has shown Rs. 44,64,352/- (Ashok Agarwal) and Rs. 68,80,012/- (Renu Agarwal) totaling to Rs. 1,13,44,364/- under the head Furniture. In this head, the assessee has debited cost against teak wood, ply, fittings, railing, glass, labour charges of carpenter and polishing, ornamental doors etc. Thus, the total amount of Rs. 84,91,873/- were shown ....
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....e. vii) We are enclosing the valuation report of the following two different registered valuers. S.No Name of Valuer Basic of valuation Value of construction estimated by the registered valuer. 1 Shri Naveen Kimar Jain Plinth area rate on the basis of Rajasthan BSR (including lifts, plant and machinery AC etc) 2,62,77,124.76 2 Shri Vivek Kulshrestha Item wise cost method based on Raj PWD BSR2012 1,67,01,232.00 viii) The DVO valued the servant room at Rs. 9,33,885/- by taking very high pitched plinth area rate. ix) Further, the assessee is maintaining complete account of construction of house and expenses in construction are supported by vouchers and in most of the cases the payment is also by account payee cheques. The assessee has filed complete details of the construction expenses and vouchers before the DVO. No any defect in the vouchers has been pointed out by you as well as by the DVO. Therefore, the investment in respect to construction of house disclosed by the books of account should be accepted. We are also filing herewith the details of construction expenses and copy of vouchers for your ready refere....
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.... of cost of construction, the item wise valuation is most appropriate method. What has to be done, is that to calculate different parts & components separately, like earthwork, RCC in foundation, PCC, flooring, painting & etc.. Hence to scale the investment of the assessee in construction must be by the itemized based valuation system, by considering the general practice of the construction adopted in the private buildings not by any plinth area rate system. Hon'ble Rajasthan High Court in the case of Commissioner of Income Tax Vs. Hotel Joshi (1999) 157 CTR (Raj) 369 : (2000) 242 ITR 478 (Raj) : (2000) 108 Taxman 199 (Raj) held that the question, whether the valuation made by the District Valuation Officer as per the CPWD rates prescribed in the Board's Instruction No. 1671 or the valuation made by the registered valuer as per the rates provided by the PWD of the State Government should be accepted, does not arise. The Tribunal has arrived at the conclusion that the cost based on item wise basis is the proper method to work out the cost. Thus, the question of law sought to be referred, does not arise from the order of the Tribunal. Thus, the cost of construction that has ....
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....ion of building. The relevant para of the instruction is reproduced as under:- "A building is not merely a structure with walls and a roof but also to fulfill certain intended functions for which it is built. To fulfill intended functions various services are integrated in the building which are also part of the building. Fittings & fixtures, appliances, instruments, machineries which are permanently rooted to the building and are essential for providing services required to fulfill functions for which the building is built are part of the building. While estimating value of investment in the building these fittings & fixtures, machineries etc. are to be included. For example a residential or a non residential building apart from the building itself has very many fittings & fixture, machineries etc. rooted to the building essential for performance of intended functions such as i) electric distribution boards, ii) circuit breakers, iii) internal electric wirings including switch boards, iv) transformers, v) fans & lights, vi) lightening arrestors, vii) lifts viii) pumps & motors, ix) generators as captive power plant , x) central air conditioning, xi) water supply ....
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....em and credit of Rs. 3,67,52,526/- should be given against the investment declared by Shri Ashok Agarwal and Smt Renu Agarwal. Along with the above submission the assessee submitted the ample detail and supporting vouchers and evidences to support his contention but the same were rejected by the DVO on summary manner without considering and examining the supporting detail/material provided to him. The ld. DVO simply relied on his high pitch valuation report which was prepared on estimation basis. Further while comparing the figure of construction expenses recorded by the assessee in books of accounts from value of construction estimated by the DVO the due credit of fixed furniture expenses and wooden work were not allowed to the assessee. g) On the counter comments of DVO on objections raised by the assessee we submit that the assessee was maintaining only one account under the head "Construction at 10-B Plot" in financial ledger. The head wise details were prepared as per instruction of the DVO and in the specific performa as suggest by him. The assessee segregated the head wise detail from the financial ledger and cost of all wooden work was shown under the head Furniture. ....
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....es in first two years, in wooden items cannot be towards the loose furniture except small amount. Under, third year also part of the expenses were toward wardrobes, modular kitchen, railing etc i.e. fixed furniture. Therefore, the credit of Rs. 84,91,873/- claimed by the assessee against fixed furniture included in cost of construction in valuation report should be given against the investment shown by the assessee in fixed wooden items, glass work etc. Thus the finding of the DVO that the assessee is manipulating the investment is without examining the details submitted to it supported with bills and vouchers. The DVO failed to examining the fact that in the chart of head wise construction expenses submitted to him (Copy at PB Page 179) the entire expenses incurred in wooden work was mentioned in the head furniture and due credit of wooden work estimated by his as cost of construction was not given by him. The ld. DVO for comparing the book investment in construction is just relying only on a chart which was not prepared perfectly on the basis of technical parameters/requirements and rejected the all other full proof submission and evidence on surmises and conjectures just to supp....
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....me are highly under invoiced. The payments of those bills were made through account payee cheques, therefore, it cannot be presumed that those bills were under invoiced. Further in support of his finding the DVO could not produce any evidence to prove that the invoices submitted by the assessee were under invoiced. n) The DVO valued the special sanitary items at Rs. 18,30,000/- and Special Electric Items at Rs. 18,30,000/- by increasing the basic plinth area rate by 12.5%. The assessee's cost is supported by bills which were completely ignored by him. Thus from the above submission it is clear that the valuation report of the assessee was prepared on estimation basis and the supporting bills and vouchers/documents/explanation submitted to the DVO were also rejected without examining the same. o) Further, the Assessee's declared cost is supported by the Valuation Report of two different registered valuers copies of which were submitted to AO and the same were also available with DVO (Copy at PB Page 218 to 231 & 232 to 260), but the same was not accepted by the AO as well as DVO without pointed out any defect. The valuation report of Register Valuer Shri V....
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..... Thus in view of the above submission this is to submit that the ld. AO was wrong in referring the matter to DVO to estimate the cost of construction of house of the assessee. Further the report prepared by the DVO and finding of the DVO cannot be rely upon as the same is based only on presumption/assumption and given without considering/ examining the supporting documents/details submitted by assessee in support of construction expenses. Therefore the entire addition is based on estimation basis ignoring the fact that the investment shown by the assessee is supported by books of accounts, bills & vouchers. q) Valuation by DVO on CPWD rates and difference is less than 20%:- It is an admitted fact that the valuation of the construction was made on the basis of CPWD rates. C.P.W.D. rates are mostly for metro cities like Delhi, Kolkata, Mumbai & Chennai where construction cost is very high. In Rajasthan construction cost is much cheaper therefore Rajasthan PWD rules are more authentic. In Rajasthan stones, grits, bajari, marble etc are locally available at cheaper rate whereas in metropolitan cities the cost of Stone, grit bajari, marble is higher. Labour i....
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....the conclusion that there is no basis for the adhoc estimation of Rs. 20,00,000. Hence, we confirm the following findings of the ld CIT(A): "3.2.3 I have duly considered the assessee's submission and also taken a note of judicial pronouncements relied upon by the appellant. I have also carefully perused the records available before me and factual matrix of the case. In this case, a search and seizure operation u/s 132 of the Act was carried out against the assessee. My observations in this regard are as under: * On perusal of assessment order, it is seen that the AO has not brought to notice any incriminating document showing undisclosed investment in construction of house. The assessee claims to have maintaining proper bills and vouchers pertaining to the construction expenses of house and this fact has not been controverted by AO in the assessment order. * It is also seen that the AO has not rejected the books of account of the assessee. However, the reference to the DVO was made by the AO u/s 142A of the Act and as per section 142A of the Act; AO may make reference to the valuation officer whether or not he is satisfied about the correctness or completeness of the accou....
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....assurance. These estimations are without basis. I inclined to accept that the cost against sewerage connection, electric connection and water connection should be estimated by taking into account the actual payments made by the assessee to local authorities and concerned department. * Further, the DVO as well as AO held that cost of loose furniture shown by the assessee is at lower side but no item to item list of loose furniture was made and comparison was made to find out how it is lower side. The ld AO made the ad hoc addition of Rs. 20,00,000/- on suspicion basis which cannot be sustained. * Furthermore, the DVO has valued the construction by applying the CPWD rates and difference is less than 20% and in such a case difference should be ignored as per the several decisions of Hon'ble ITAT Jaipur Bench in this regard. In the case of Income Tax Officer Vs. Nitesh Maheshwari ITA No. 363/JP/2010; ASST. YR. 2006-07 order dated 28th September, 2010 (2011) 138 TTJ 0116 : (2011) 53 DTR 0413 : (2011) 7 ITR 0645 held as under:- "We have heard rival submissions and considered them carefully. After considering the submissions and perusing the material on record, we find that learn....
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....ed the assessee to give reason/explanation for the same. The assessee in his reply submitted that at the time of search the books of account of assessee/family members/group concerns were not complete as on the date of search, therefore the cash payment of Rs. 1.50 Crores made to Ansari brothers was not found recorded in regular books of accounts of the assessee. He further stated that the assessee was under mental pressure during the course of search surrendered this amount as undisclosed income and that after examination of books of accounts it was found that the advance given to Ansari brothers has not yet been recorded in the books of accounts. At the time of completing of books of accounts the transaction was recorded in the books of respective person/concern of the assessee group. The AO mentioned that at the time of search the assessee has admitted that he has made payment of Rs. 1.5 crores but during the course of assessment proceedings, has shown payment of Rs. 50,00,000/- from Ashok Agarwal, Rs. 70,00,000/- from Renu Agarwal Rs. 6,00,000/- from Ashok Agarwal (HUF), Rs. 7,00,000/- from Ashish Agarwal and Rs. 17,00,000/- from Ashish Buildcon P Ltd. The assessee was asked to....
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....er of the Assessing Officer, the assessee carried the matter before the ld. CIT(A), who had deleted the addition sustained by observing as under:- I have duly considered assessee's submission and also taken a note of judicial pronouncements referred by AO and appellant. I have also carefully perused the assessment order passed u/s 153B r.w.s 143(3) of the Act and also taken a note of factual matrix of the case. During the course of the appellant proceedings, the assessee has contended that no any incriminating document was found during the search operation showing payment of Rs. 1.50 crore to Ghulam Farooq Ansari (herein referred in brief as Ansari). Further, no document was found from assessee's premises, showing generation of undisclosed income which could be said as utilized in the payment to Ansari. On the basis of sworn statement recoded u/s 132(4) of the Act of Ansari, Authorized Officer recorded assessee's statement on oath u/s 132(4) of the Act where he admitted the payment of Rs. 1.50 Crores to Ansari and surrendered the same as his undisclosed income. Entire crux of the case is based on sworn statement of assessee but the said entry of payment was not found....
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....became to Rs. 2,11,51,196.64 as the result of incorporating all the entries of cash inflow and outflow. The claim of the assessee is that cash books has to be completed after recording all the unrecorded entries based on bank statements and seized material which was subsequently done by the assessee on the basis of bank statements and other documents found during the course of search operation. Vide letter dated 25/3/2015, AR has also submitted the reasons for not-disclosing Rs. 1.50 Crore (payment made to Ansari) and in support of this, copies of letter dated 23/01/2013 & 27/03/2013 (Refer PB Pg 121-122 & 261-162) were also submitted as supporting evidences. In this regard, it is clarified that cash balance position as on date of search (after duly incorporating all entries in the re-casted books of account which were left in the seized books of accounts Refer PB Pa 112) Vide Letter dated 01/03/2013, recasted cash books of assessee and other persons of the group were also submitted before the AO for verification of entries in re-casted books of accounts with reference to seized cash book and bank statements/vouchers and source of payment of Rs. 1.50 Cr. to Ansari. The AO has not c....
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....see relies on the findings of ld CIT(A). b) At the outset we submit that the department has carried out intensive search operations over the assessee and Ansari Group. No any document was found either from the possession of assessee or possession of Ansari group showing the payment of Rs. 1,50,00,000/- from Assessee to Ansari. The entire addition is based on the search statement, which was retracted by the assessee and no further inquiry was made by ld AO and no examination of the assessee or Mr. Ansari was made. c) During the year under consideration the assessee made payment of Rs. 1,50,00,000/- to Ansari out of cash balance available with entire assessee group and the same was recorded in the books of accounts of the assessee. The copy of account submitted to AO is at PB Page 263-267. The books of account of assessee/family members/group concerns were not complete as on the date of search, therefore the cash payment of Rs. 1,50,00,000/- made to Ansari was not found recorded in regular books of accounts of the assessee found at the time of search. The assessee was under mental pressure therefore during the course of search he surrendered this amount as undisclosed income. H....
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....d the sales, expenses, and entries in the audited books of account though many of the entries were not in the seized books but in recasted books. The ld AO is blowing hot and cold in same stream. On one side she is accepting all the other entries made in the recasted books of account and on other side she is not accepting the entry of payment to Ansari in recasted books of account. Therefore, the entry as regard the payment of Rs. 1,50,00,000/- recorded in the audited books of account should also be accepted and no addition in this regard deserves to be made. d) As regarding to entry of payment made to Ansari brothers made in cash books of various group persons/concerns of assessee this is to submit that assessee is main key person of the group and he is maintaining the cash balance of entire group, therefore the cash payment to Ansari Brothers was made by him out of cash balance of entire group available with him and thereafter the entry of payment was made in the books of accounts of respective person/concern according to utilization of cash balance of respective persons/concerns. e) For making the addition of this amount the department is relying on two thinks first on the....
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....ns do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of search it seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders". The Hon'ble Supreme Court in case of Tanna And Modi vs. CIT, 292 ITR 209 (SC) has held that a fortiori, clarificatory circulars issued by the Central Board of Direct Taxes may also be taken into consideration for the purpose of construction of the statute. The Hon'ble Supreme Court in case of Kerala State Industrial Dev. Corporation Ltd., 259 ITR 51 (SC) has also held that Finance Minister's speech before Parliament while introducing bill can ....
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....under section 132 of the Act. When these statements were not provided, the appellant vide letter dated 3.10.2008 to the authorized officer, copy placed in assessee's paper book page 203 and letter dated 18.12.2008 addressed to the assessing authority requested to provide copy of statement in case the same were to be used against him. Till such time the copy of statement was not provided, assessee entertained a bonafide belief that in the absence of any documentary evidence or corroborative evidence having been found as a result of search, such statement would not be used against him. If such statements were to be used, the department was under legal obligation to have provided copy thereof to the appellant. It is only on persistent effort of the appellant, the copies of statements were provided only on 13.3.2009. The appellant after understanding the legal implication of such statements made a valid retraction as the surrender was not supported 8 by any corroborative evidence. The affidavit filed in this regard is laid on assessee's paper book pages 129 to 131. This affidavit has carefully been perused. After the affidavit was filed before the assessing authority, he remained silen....
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....Tribunal, the assessee should have been called upon to 9 produce documentary evidence, or, at least he should have been cross examined to find out how far his assertions in the affidavit were correct." (emphasis supplied) The reliance placed by assessee to the judgment by Hon'ble Apex Court in the case of Pullangode Rubber Produce Co. Ltd. (supra) and Hon'ble Rajasthan High Court in case of CIT vs. Ashok Kumar Soni (supra) are well placed as the assessee has successfully demonstrated that the admission made during the course of search is not correct. The ingredient for retraction of statement made during the search, therefore, stand duly satisfied as the assessee is found to have made retraction within a reasonable time immediately after the copies of statement were provided to him. Since the documents found as a result of search were pertaining to the income of the other two persons namely S/Shri Praful Mittal and Murari Lal Mittal and there being no material or evidence on record to show that the appellant has carried any business outside the books for sale and purchase of medicines that could give rise to the income to the extent of Rs. 25 lacs, the addition merely on th....
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....y him but it does not mean that the entire payment was made by him out of his own cash balance. The assessee is main key person of the group and day to day affairs and business of the group is being managed and controlled by him. He is maintaining the cash balance of entire group, therefore the cash payment to Ansari was made by him out of cash balance of entire group available with him. It is relevant to mention here that at the time of search the surrender of income on behalf of entire group was made by him, therefore it cannot be presumed on the basis of statement of the assessee that the payment of Rs. 1.50 crore was stated to be made by him, therefore the same should be found recorded only in his cash book and not in the cash book of other family members/concerns. iv) In para 8.7 (f) the ld. AO discussed the mode of entry of payment made in the books of accounts regarding payment made to Ansari. In this regard this is to submit that the payment to Shri Ansari was made to purchase the lands for farmers at Delhi Road. At the time of payment the land was not finalized, therefore no agreement was made. Further the land was to be purchased directly from farmers through Shri Ansa....
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....003 in the case of Shri Tarachand Jain. In this order, the Hon'ble ITAT has observed as under on page 2 para 5: "The first grievance of the department is pertaining to the deletion of addition of Rs. 1,20,240/- which was found from the bedroom of Shri Tarachand and his wife Smt. Anita Jain during the course of search. At the time of search, the books of accounts were not complete and day to day balancing of cash was not made. In the books of account, the cash balance of Rs. 80,291/- in the books of Shri Tarachand; and Rs. 51,335/- in the books of Smt. Anita Jain were shown by the assessee as per the explanation letter dated 12.1.2001. Thus in both the books of account the total comes to Rs. 1,31,626/-. According to assessee, the said amount was sufficient to meet the recovered amount, but the AO observed in his order that self-prepared books produced after the date of search cannot be relied upon. But the ld. CIT (A) observed in his order that the books which were completed later on were duly submitted by relevant material to support the income and out-going cash. So he deleted the said addition. With this background, we heard both the parties and perused the mate....
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....regular practice of the assessee to make such huge payment in cash for purchases of land. In this regard this is to submit in past whatever payment made by the assessee for purchases of land either cash or cheque duly recorded in books of accounts and during the course of search as well as during assessment proceedings the department could not prove any single payment which has been made out of books of accounts, therefore there was not a practice of the assessee to make payment outside the books of accounts for purchases of land. Further in some cases due to business requirements looking to the location of land, availability of banking facility on such village and payment in cash on demand of seller etc. the assessee has to made the cash payment. The ld AO herself has found that the assessee has made cash payment of Rs. 4658640/- in AY 2005-06 and made the addition by applying the provisions of section 40A(3). Therefore the findings of ld AO is perverse. vi) In para 8.7 (h) the ld. AO held that the assessee is well established businessman who knows very well that any expenditure over Rs. 20,000/- in cash is not known allowable u/s 40A(3) of the Income Tax Act, 1961, therefore h....
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.... group could not examine and complete the books of accounts up to 12.10.2010. ix) As regard of finding of the AO in para 8.9 to 8.11 this is to submit that the cases relied by AO in para 8.10 are not applicable in the case of the assessee because except to the statement of the assessee there is no other material with the department to prove that the payment was made from undisclosed income. Further as on the date of search the assessee group was having sufficient cash balance in books of accounts which was not found to the search party and otherwise use of such cash balance was also not find by the AO/search party, therefore the preponderance of probability that the payment of Rs. 1.5 crore was made to Shri Ansari out of cash balance available with assessee group in regular books of accounts is in favour of assessee. In view of the above, the assessee prays your honor that the payment of Rs. 1.50 crore to Shri Ansari was made out of cash balance in regular books of accounts. The addition was made solely on the basis that at the time of search this amount was surrendered as income and not found recorded in regular books of accounts and the department has no positive evidence t....
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.... Rs. 1,88,10,450 and which were incomplete at the time of search. Subsequent to the search, the assessee completed the cash books incorporating all the inflow and outflow of cash and recasted cash books were produced before the Auditors as well as before the AO and no discrepancies were pointed out by either of them especially in terms of inflating the inflow of cash or by deflating the outflow of cash to cover up the situation of unavailability of disclosed cash. The assessee has also reconciled the cash balance as per the seized cash books and the audited cash books and the same was submitted to the AO who has not controverted the same by pointing out any discrepancies therein. Based on his detailed examination, the ld CIT(A) has held in his order that "the assessee has successfully shown that the statement made before the search party was not correct as some entries were not incorporated in the seized cash book, therefore, it can be said that the cash book was not upto date as on the date of search. Assessee had produced the re-casted audited cash book after incorporating all entries before the AO. There were sufficient cash balance available with assessee and his family members....
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.... 18. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld. CIT(A), who had partly allowed the appeal by observing as under:- "3.4.3 I have duly considered assessee's submission, remand report of the AO and also taken a note of judicial pronouncements referred by AO and appellant. I have also carefully perused the assessment order passed u/s 153B r.w.s 143(3) of the Act and also taken a note of factual matrix of the case. From, the above two issues are emerges for adjudications:- (i) whether the re-payments by the company against the amount received by it from the shareholder comes in preview of deemed dividend u/s 2(22){e) of Income Tax Act. (ii) Whether the Advance Rs. 29,80,000/- as normal business advance against the purchase of land or comes in preview of deemed dividend. Now the first issue whether the re-payments by the company against the amount received by it from the shareholder comes in preview of deemed dividend u/s 2(22) (e) of Income Tax Act is taken for adjudication. The assessee has submitted the ledger account of assessee in the books of the company M/s Ashish Buildcon (P) Ltd (PB pg 282). The entry to....
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....e city, he was well aware of the situation that the conversion and approval of the land could not be obtained. These clauses were put because some of the money taken by the appellant from the company was refunded subsequently. The Ikrarnama is nothing but an afterthought to justify the loans taken by him from the company as advance for land, to escape the deeming provisions of sec. 2(22) (e) of the Act. On the other hand, ARs of the appellant have relied on the finding of Hon. Delhi High Court in the case of CIT vs. Creative Dyeing and Printing Pvt. Ltd. ITA No. 250/2009 dated 22.9.2010 and the order of the Income Tax Settlement Commission in the case of the M/s Career Point Infosystems Ltd., Sh. Pramod Kumar Maheshwari, Sh. Om Prakash Maheshwari and Sh. Naval Kishore Maheshwari (S.A. No. RJ/JP51/2011- 12/28 to 31-IT) I have carefully perused the ordered relied upon and find that the facts adjudicated upon by aforementioned the Hon. Judicial Authorities ate completely distinct from the facts of the case of the appellant. On the basis of the evidence available on record it is seen that no business transaction was undertaken by the company for purchase of the land as claimed by....
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.... to first received advance from the customer and thereafter sale the plot/land to them. This is evident from the Balance sheet & Profit and Loss account of M/s Ashish Buildcon Pvt. Ltd. (Copy at PB page 291-308). Since the land under the sale agreement could not be got approved for the purpose of 90B formalities, the agreement was cancelled and amount was refunded to the company. But later on another land was sold to the company by the assessee by executing the registered sale deed on 30.03.2013. (copy placed at PB page 309-316). This supportive evidence was filed before ld CIT(A) to establish that the amount received by the assessee was against the sale of the land was bonafide and this was a genuine and normal business transaction between the assessee and company. c) The copy of assessee's ledger account in the books of the company is placed at PB page 283-290. The assessee explained that the initial amount of Rs. 29,80,000/- was paid by the company to assessee as advance against land transactions and the balance payments on various dates are repayment by the company to the assessee of the amount paid by the assessee to the company on earlier dates. In other words, the assesse....
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.... in the nature of money transacted to give effect to a commercial transaction would not fall within the ambit of the provisions of S. 2(22)(e) of the Act. CIT V/s Raj Kumar 318 ITR 462 (Del). f) Unregistered Agreement:- The agreement to sale cannot be treated as unreliable evidence on the ground that the agreement to sale is not registered. In this regard, we submit that it is normal practice of the assessee. The assessee is purchasing the land on the basis of unregistered agreement to sale. This is common practice of the trade in Jaipur that advance against purchase of land is given on the basis of unregistered agreement to sales and registered sale deeds are executed when the possession of the land is taken/complete payment to the seller is made. The department is accepting this practice of the assessee in all scrutiny assessments made prior to search as well as assessments framed u/s 153A and therefore no separate treatment could be given for the unregistered agreement to sale in between the assessee and company. g) Agreement not found in search:- The ld CIT appeal held the agreement as unreliable evidence on the ground that it was dated 22.07.2009 but not found duri....
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....1.2009. The copy of notification of publication of master plan is enclosed herewith. As per draft master plan of JDA the land at Village Ajayrajpura was falling in U2 zone (Unbanisable land). As per rules proposed in the draft master plan the minimum area required for unbanisable land (U2) of integrated residential township was 10 hectare while the land of the assessee was only 1.01667 hectare. After the publishing of Draft Master Plan, the JDA was not accepting the application for 90B proceeding for the land less than 10 Hectares. We are enclosing herewith the relevant page of master plan wherein the minimum area required for integrated residential township is mentioned. The assessee was under apprehension that his application would also be rejected by JDA therefore instead of taking a adverse decision from JDA, it was thought proper to keep the application in abeyance till the pronouncement of Private Township Policy which was much awaited at that time just like pronouncement of regularization of Plots in Prathviraj Nagar Scheme now a days. It is also relevant to mention here that at that point of time several representations were made by the various Association of the b....
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.... submitted before us to displace the said finding of the ld CIT(A) and we see no reason to interfere with the said finding of facts. Now, coming to the provisions of section 2(22)(e) of the Act, it is the loan or advance given by the company to its shareholder which can be brought to tax as deemed dividend in the hands of the shareholders. Where the company has taken any loan or advances from a shareholder and repays the same subsequently and a clear nexus is established, such repayment relates back to the original loan/advance transaction and cannot be seen as an independent transaction of fresh advancement of loan/advance by the company to the shareholder. In the instant case, the ld CIT(A) has given a clear finding that the amount of Rs. 20,46,604 paid by the company is towards repayment of old advances taken by the company from the assessee, in such a situation, the provisions of section 2(22)(e) are clearly not attracted in respect of Rs. 20,46,604. Now coming to amount of Rs. 29,80,000 which is towards the advance given by the company to the assessee for purchase of land is concerned, the assessee submitted a copy of agreement to sale/Ikarnama dated 6.4.2010 as per whic....
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.... it is noted that in respect of a similar transaction entered between the assessee and M/s Ashish Buildcon in AY 2010-11, the Coordinate Bench has decided in favour of the assessee and the relevant findings are as under: "6. We have heard rival contentions and perused the material on record. On verification of copy of accounts placed at pages 38 to 39 of the Paper Book, it is seen that assessee had given money to the company. The opening balance as on 1.4.2009 was Rs. 1,12,17,000/-. Thereafter, he withdrew money from the company upto 15.7.2009. On 18.07.2009 the assessee again paid to company Rs. 7 lakhs. Thereafter assessee withdrew various amounts from the company. On 21.8.2009 again he paid Rs. 2 lakhs to company, Rs. 9.5 lakhs on 28.07.2009, Rs. 3 lakhs on 13.10.2009, Rs. 1.25 lakhs on 15.10.2009, Rs. 5 lakhs on 26.10.2009, Rs. 5 lakhs on 29.10.2009, Rs. 20 lakhs on 10.02.2010 and Rs. 60 lakhs on 10.3.2010 (Rs. 20 lakhs each) and Rs. 13 lakhs on 10.03.2010 and Rs. 1.25 lakhs on 10.3.2010 which show that there are numbers of transactions between the assessee and company. Finally, the assessee's accounts has been squared up. The assessee and company are in real estate business....