AI Drafter 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
1998 (1) TMI 526
X X X X Extracts X X X X
X X X X Extracts X X X X
....le of Vikas Builders. The assessee filed his regular returns of income and assessment was made upto assessment year 1995-96. On 8th Feb., 1996, a search and seizure action under section 132 of the Act was conducted at the residential and business premises of the assessee. During the course of search, cash, jewellery and documents with regard to the certain assets were found and seized. A notice under section 158BC was issued requiring the assessee to file return of income for the block period. However, the assessee did not file any fresh return. At the assessment stage, the assessee was directed to submit details of his assets and liabilities as the Assessing Officer was of the view that the assessee had not reflected the true facts in his balance sheet. The assessee furnished the details and explanation, but the same were not accepted by the Assessing Officer and the Assessing Officer assessed the assessee's income at Rs. 1,59,59,342 for the block period. With regard to cash, assessee's explanation was found satisfactory and, therefore, no addition on this account was made. Since aggrieved, the assessee filed the present appeal. 3. We have heard Shri Shivram, the learned cou....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The authorities relied by the learned counsel for the assessee are clearly distinguishable on the facts from the present case. Ekbal & Co.'s case does not help the assessee in any manner. In Ekbal & Co.'s case (supra), the issue involved was with regard to the serving of the notice requiring the assessee to furnish return of his income within such period not being less than 30 days. In these circumstances, the hon'ble High Court held that the notice was not issued within clear 30 days' period and, therefore, the notice was held to be invalid. The observation of the hon'ble High Court are worth mentioning wherein the Court had held that "the word "within 30 days" is within two points of time, one at which the period begins and the other at which it expires". As per section 158BE, the time-limit begins on 1-3-1996, and expires on 28-2-1997. It is well established under the common law that the complete one year has to be taken as a calendar year which would expire at the midnight of 365th day. Accordingly, we hold that the impugned order passsed by the AO was within time-limit. 6. The next legal issue raised by the learned counsel is that the AO did not pass speaking order on 28th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n issued and sent to the assessee and in case, he desired to have another copy of the order, he could apply after paying the copying charges. The learned Departmental Representative pointed out that even from the affidavit of the assessee which is at pp. 1 to 7 of the paper-book, it becomes abundantly clear that the assessee was very much present in the office of the Assessing Officer on 28-2-1997. The assessee has also admitted that he was served with one page order for the block assessment on the same date along with the assessment order of assessee's wife Mrs. Badamibai at his residence at 12.05 midnight. The learned Departmental Representative submitted that from the affidavit of the assessee itself it is clear that the order was served on the assessee at the midnight i.e. night between 28-2-1997, and 1-3-1997. The assessee's contention that the speaking order was served upon him on 30-5-1997 in the Tribunal at the time of the hearing of the stay application is falsified as there is no such mention of these facts in the order sheet of the Tribunal dated 30-5-1997. 8. As regards the difference in typography of the impugned order, the learned Departmental Representative submit....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... could not have been possible to type it in the computer printer. The next circumstance pointed out by the learned counsel is that there are discrepancies in the additions made in the body of the order and the computation sheet. The substantial difference pointed out by the learned counsel are given at p. 828 of the paper-book. The difference as seen from the paper-book is reproduced below : Asst. yr. Income as per order Income as per computation sheet Difference 1986-87 1,38,282 1,38,282 - 1987-88 2,66,519 2,66,519 - 1988-89 2,73,651 2,64,651 (-) 9,000 1989-90 3,18,108 3,19,005 897 1990-91 5,51,873 5,51,873 - 1991-92 8,36,302 8,36,307 5 1992-93 21,93,198 22,93,198 1,00,000 1993-94 5,39,800 1,89,625 (-) 3,50,000 1994-95 3,76,800 3,76,800 - 1995-96 41,22,030 48,59,880 7,37,850 1996-97 64,51,054 58,63,204 (-) 5,87,850 Difference 1,08,098 A perusal of the entire order and the computation sheets it seems that there are arithmetical and typographical mistake according to which the computation sheet shows lesser addit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsel made reference to the decision of the Delhi High Court in the case of L.R. Gupta v. Union of India [1992] 101 CTR (Del.) 179 : [1992] 194 ITR 32(Del), wherein the hon'ble High Court has held that expression "income" which has not been or would not be, disclosed for the purposes of the IT Act" means that income which is liable to tax but which the assessee has not returned in its IT return or made known to the IT Department. The learned counsel also invited our attention to the budget speech of the Finance Minister for the year 1995-96 reported in [1995] 212 ITR (St.) 87 and argued that as per the said speech, the new provision were incorporated for assessment of undisclosed income detected as a result of search initiated after 30th June, 1995. The learned counsel emphasised that the AO had proceeded on wrong presumption that he was at liberty to make rowing enquiries and examine the records of all the years during which the assessee has income and assessment were completed. The learned counsel further brought to our notice the CBDT Circular No. 707 dated 14th Aug., 1995 [1995] 126 CTR (St.) 85 : [1995] 215 ITR 33 (St.), at p. 37. The learned counsel further submitted that as p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tive placed reliance on the decision of the Supreme Court reported as Kerala Financial Corpn. v. CIT [1994] 119 CTR (SC) 164 : [1994] 210 ITR 129 (SC). 14. On careful consideration of the rival submissions, we feel that in order to adjudicate this legal issue it is pertinent to understand the object, implications, of provisions of Chapter XIVB of the Act. Chapter XIVB provides for a special procedure for assessment in search cases, where search action has been initiated after 30th June, 1995. The definition of 'undisclosed income' as provided in section 158B(b) of the IT Act reads as under : "158B. (b)-"undisclosed income" includes any money bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act." Section 158B provides the manner in which the assessment of undisclosed income as a result of search is to be made. Section....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... those sections shall be construed as references to the relevant previous year falling in the block period including the previous year ending with the date of search or of the requisition. (3) The burden of proving to the satisfaction of the AO that any undisclosed income had already been disclosed in any return of income filed by the assessee before the commencement of search or of the requisition, as the case may be, shall be on the assessee. (4) For the purpose of assessment under this Chapter, losses brought forward from the previous year under Chapter VI or unabsorbed depreciation under sub-section (2) of section 32 shall not be set off against the undisclosed income determined in the block assessment under this Chapter, but may be carried forward for being set off in the regular assessments." 15. On consideration of provisions of section 158B(b) and 158BB(1) we find that undisclosed income as defined in the Act has wide connotation. By bare reading of the provisions it is clear that undisclosed income means income which is liable to tax but the assessee has not disclosed the same in his IT return or made known to Revenue authorities. It would inter alia i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....would certainly include any income based on any entry in books of account or documents where such entry in books of account or documents represents wholly or partly which has not been or would not have been disclosed for the purpose of this section by the assessee. For example, if entry representing income has been shown as liability or loan and not as income in the seized material, it would certainly come within the ambit of definition of undisclosed income provided such material has been found or has come to the knowledge of the AO from the books of accounts or the seized material during the search. As per sub-clause (3) of section 158BB(3), the burden to prove that any undisclosed income has already been disclosed in any return of income filed by the assessee before the search is certainly on the assessee. Accordingly, we may agree with the finding of the Tribunal, Mumbai Benches in the case of Sunder Agency v. Dy. CIT (supra ) and Shankar Mahadev v. Dy. CIT (supra ) that Chapter XIVB does not give unfettered powers to AO to review the assessment already completed until and unless there is any direct evidence that assessee had withheld or had not disclosed any income for the pur....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... above. (1) Addition on account of jewellery (i)During the search, jewellery, weighing 1721.07 gms (gross) and 1,662,05 gms (net) was found out of which only 765.25 gms were seized. The assessee's contention before the AO was that the jewellery belonged to his various family members which includes his wife, sons, daughters and grand daughter including the HUF. The assessee further claimed that the jewellery had been acquired by his family members out of their own sources over a long period of time. The AO after taking into consideration the explanation submitted by the assessee made addition only with regard to 926 gms of gold jewellery, the value of which was adopted at Rs. 4,63,000 and added under section 69A of the Act. The learned counsel for the assessee submitted that the AO has not accepted the assessee's explanation that the jewellery belongs to his sons Kamlesh Jain, Nilesh Jain and Vikas Jain and daughters, Jayshree H Jain, Pushpa Sanklecha and grand daughter Anketa Jain and his wife Badamibai H Jain. The AO has given rebate of only 300 gms in respect of his wife and only 180 gms with regard to his daughters. The learned counsel brought to our notice the instruction....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ubmitted that the jewellery of the assessee and his wife was low and was received by various occasions, like marriage delivery, birth, etc. and the jewellery belonged to the children was also received in similar occasions. On the other hand, the learned Departmental Representative argued that the assessee has not provided any evidence to explain the source of the investment in the jewellery. (iii)On careful consideration of the rival submission we find that the assessee has not placed on record any evidence to prove that the jewellery has been received as gift by him by producing the GT return or any other evidence. However, we are conscious of the fact that in Indian society everyone receives gifts at the time of marriage and other occasions. Therefore, keeping in view the number of family members we are of the view that further rebate of 500 gms out of the entire jewellery may be treated as explained. The balance 426 gms of jewellery may be treated as addition under section 69A of the IT Act. 2. Personal withdrawals (i)During the entire block assessment period of 10 years, the AO has made an addition of Rs. 4,15,173 on account of low withdrawals for personal expenses. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessee had shown very meagre withdrawals which do not commensurate with his life style and the number of family members. (iii)On careful consideration of the rival submissions and on perusal of the record, we find that the assessee did not submit any explanation or reasoning in reply to show-cause notice dated 29-1-1997 to the effect that as to why the family expenditure should not be estimated at Rs. 75,000 for the asst. yr. 1996-97 and proportionate figure for the earlier years. The assessee opted for not replying the said notice nor submitted any explanation. The AO, however, seams to have made a reasonable estimate keeping in view the status, life style and the size of the family. In the asst. yr. 1988-89, the AO has mentioned that the assessee's daughter's marriage took place and the addition of Rs. 1 lakh in the said asst. yr. 1988-89 seems to be reasonable and, therefore, no interference is called for, with regard to the addition on account of low withdrawals for personal expenses. 3. Addition on account of unexplained cash credits The AO has made various additions on account of unexplained cash credit for the block period from 1-4-1985 to 8-2-1996. We shall d....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... are assessed to tax and they have submitted the confirmation before the AO. Moreover, nothing was found during the search nor the AO has brought anything on record with regard to any information for disallowing the cash credit from the above four creditors. Rather, we are of the opinion that the assessee had already explained the cash credit in the earlier assessment and, therefore, no additions could have been made in the block assessment and, accordingly, the addition made by the AO was not justified. The AO has also made addition of Rs. 11,440 on account of interest on the above said loans. In view of our finding that the assessee had proved the genuineness of the loan,we delete the addition made on account of interest also. (ii) Asst. yr. 1987-88 (a)The AO made the following additions during this assessment year : Rs. (1) Vikas H. Jain-son 60,000 (2) Nilesh H. Jain-son 60,000 (3) Kamlesh H. Jain-son 60,000 (4) Smt. Badami Jain-wife 10,000 (5) Smt. Sangita Jain-daughter 8,000 According to the AO, though the confirmation letter in respect of the above creditors have been filed, the assessee was not able....
X X X X Extracts X X X X
X X X X Extracts X X X X
....efore, the same are deleted. Consequently, the addition made on account of interest on these loans also stand deleted. (iii) Asst. yr. 1988-89 (a)During this assessment year, the assessee had taken unsecured loan from the following parties : Rs. (1) Sarosh V. Gautam 50,000 (2) Shri Pannalal 9,000 3) Mahavir Traders 60,000 The AO made the addition mainly on the ground that the assessee failed to produce all the three creditors in spite of opportunity given to him. He also made addition on account of disallowance of interest on those loans amounting to Rs. 54,651. (b)The learned counsel for the assessee argued that the assessment for the asst. yr. 1988-89 had been completed under section 143(3), copy of which is placed at pp. 907 to 908 of the paper-book. The assessee had disclosed all the cash credits in his assessment which was accepted by the AO in the regular assessment. He further argued that the AO has not brought any evidence or information or document to show that the cash credits are not genuine. He further argued that Pannalal and Mahavir Traders are assessed to tax. Their capital account, balance sheet and confi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessee had placed copy of the original agreement which was with the AO and the amount was paid as advance on pursuance of the agreement. He further argued that the confirmation had also been furnished which is placed at p. 70 of the paper-book. Similarly, Nand Kishore Singh had also given an advance of Rs. 1,10,000 for the purchase of flat and the agreement was executed in the name of his wife, Mrs. Shanti Singh on 27-12-1989, copy of which is placed at p. 78 to 106 of the paper-book. As regards Mahavir Traders, the learned counsel submitted that the confirmation in respect of this party was submitted before the AO which is also placed at pp. 75-77 of the paper-book. It was further submitted that the said creditor is assessed to tax and their books were lying with the Revenue authorities at Kalyan as there was survey/search in case of the said party. He further argued that all details with regard to the cash credits referred to above were reflected in the balance sheet, and along with the returns of income. The AO has accepted the same in the regular assessment. However, the AO has failed to bring any fresh evidence or documents or information to prove that the loans are not genu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ved by the assessee in the assessment year 1986-87 also. It is urged that the confirmation had been submitted and the source was also explained by the assessee as having been advanced out of her husband's savings. With regard to Mahavir Traders, the learned counsel submitted that the confirmation had been filed which is at p. 77 of the paper-book. He further submitted that there was a search in the case of the said creditor and the books were lying with the Department and, therefore, no other documents could be produced. However, the verification could be made from the records lying with the Department. The learned counsel submitted that Madhu Jain is the daughter of the assessee and is assessed to tax at Kalyan Income-tax Office and the computation of income, confirmation, capital account, balance sheet and the IT return's acknowledgment have been placed on record at pp. 108 to 113 of the paper-book. With regard Bhikabhai Patel, Jyotsana N. Patel and Tulsibai Patel, the assessee had submitted the confirmation letters which are placed at pp. 114, 115, 120 to 128. It is further submitted that since these parties were not co-operating, the assessee had requested the Assessing Officer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....before the Assessing Officer and submitted all the documents including the confirmation letters, and accordingly, we delete the additions for this assessment year made on account of the cash credits along with the interest of Rs. 1,22,773 added on account of disallowance of the above cash credits. (vi) Assessment year 1991-92 (a)During this assessment year, the Assessing Officer made the addition of Rs. 4,30,000 on account of the following cash credits and interest of Rs. 1,82,100. Rs. (1) Rajni G. Sanklecha 40,000 (2) Sunil S. Sanklecha 35,000 (3) Anil S. Sanklecha 35,000 (4) Suresh P. Sanklecha 60,000 (5) Mayur F. Sanklecha 35,000 (6) Monica F. Sanklecha 35,000 (7) Sapana F. Sanklecha 40,000 (8) Kamlabai R. Choka (and not Kamlabai H. Sanklecha) 50,000 (9) Sunderdevi Ranka and G.P. Ranka (and not Sunderdevi H. Sanklecha) 1,00,000 4,30,000 The Assessing Officer made the addition on the ground that the assessee failed to produce the creditors and that all the creditors had deposited money in cash immediately prior to advancing the loan to the assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....earned counsel for the assessee submitted that Shri Davis had given an advance of Rs. 80,000 for purchase of a flat. The said amount was duly reflected in assessee's accounts. The learned counsel submitted that agreement for the purchase of the flat was submitted before the authority but the copy of the same has not been furnished to the assessee in spite of several requests. The learned counsel submitted that the letters of the assessee in this regard are placed at pp. 833, 871 and 872 of the paper-book vide which the assessee had requested the Assessing Officer to supply him the copies of the flat agreement and cancellation agreement copy in respect of Shri Davis. On the other hand, the learned Departmental Representative argued that there is nothing on the record to prove that the assessee reflected loan of Rs. 80,000 advanced by Shri P.R. Davis. Even the letters at pp. 833 and 871 show that the assessee had requested the Assessing Officer to give him the copy of the agreement of one Shri T.R. Davis and not Shri P.R. Davis. However, the assessee has failed to prove that Shri P.R. Davis had advanced sum of Rs. 80,000 for purchasing the flat as no agreement has been placed on the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ils were given in the confirmation letter and in spite of the repeated reminders, the creditor was not produced. The learned counsel for the assessee submitted that this amount of Rs. 50,000 is well proved as the LIC had paid money to Chhaganbhai R. Oswal. Copies of the LIC covering the letter were filed with the Assessing Officer. Copies of assessee's account in the books of Ramesh T. Oswal, HUF were also submitted. He further submitted that the loans were duly reflected in the balance sheet for the assessment year 1994-95 which was accepted by the Assessing Officer. (b)On careful consideration of the rival submission and the documents of the record, we find that the fact of Rs. 50,000 received from Shri Ramesh T. Oswal finds mention at p. 966 of the paper-book. The Assessing Officer has accepted the same in the regular assessment. In these circumstances, the Assessing Officer cannot, at this stage make the addition. The computation and assessment order is placed at pp. 961 to 965. Accordingly, we hold that the Assessing Officer was not justified in making the additions. (x) Assessment year 1995-96 (a)During the assessment year 1995-96, the Assessing Officer made the addi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at p. 483 clearly shows the advancing loan amount of Rs. 24,45,000 to Vikas Builders. The other documents such as the partnership deeds and the other P&L a/c, etc., are at pp. 484 to 527 of the paper-book. From the confirmation and the other documents, it is evident that Vignahar Builders and Developers had advanced the loan to Vikas Builders. The learned counsel submitted that this amount was used by Vikas Builders for the project which had been signed by partners of the firm. The learned counsel further argued that there is no iota of evidence from the record to show that the firms Vikas Builders and Vignahar Builders & Developers are benami of the assessee. He further argued that the loan was advanced through account payee cheque. The statements of the partners of Vignahar Builders & Developers are at pp. 789 to 793. The learned Department Representative, on the other hand, argued that from the statements of the partners, it is evident that the firms are benami of the assessee and other partners have nothing to do with the firm as they have no knowledge about any transaction or activity of the firm. He further argued that mere confirmation does not prove the genuineness of the t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the said amount was not advanced by the firm, Vikas Developers. A perusal of the acknowledgment which is placed at p. 533 of the paper-book that the return for the assessment year 1995-96 received by the Revenue authority in the month of January 1996 and therefore, the observation of the AO that the creditor had not filed the return for the assessment year 1995-96 does not appear to be correct. In view of the fact that the creditor firm is assessed to tax independently and is genuine and that the loan appears in the balance sheet for the assessment year 1995-96 and there is no evidence to prove that the assessee has shown these entries merely to account his income from unaccounted source and, therefore, the AO was not justified in making the addition of Rs. 14,95,000. The assessee in his capital account and the balance sheet for the assessment year which is placed at p. 715 of the paper-book has clearly shown amount of Rs. 14,95,000 from Vikas Developers. We, therefore, delete the addition made by the AO on this account. (xi) Assessment year 1996-97 (a)During this assessment year, the AO has made the following additions : Rs. (a) Shantilal Rikabc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h proceedings was conducted on 8-2-1996, and, therefore, no addition could be made in the block assessment order for this year. On the other hand, the learned Departmental Representative submitted that the AO was justified in making the addition as none of the creditors were produced before the AO and from the documents on the record, it is apparent that Shri Shantilal R. Jain and Shri Rikabchand Jain had deposited the amount in cash just before advancing the loan. (d)On careful consideration of the rival submission we do not agree with the argument of the learned counsel that no assessment for the assessment year 1996-97 could be made under the block assessment under section 158BC of the Act. In fact, as per the provisions of Chapter XIVB, the income of each of 10 years prior to the year of search would also include the assessment year 1996-97 and that has to be determined under the block period. In fact, the pending assessment of the block period would merge in the collective assessment under section 158BC(c). The special procedure has been introduced by Chapters XIVB for framing of assessment of search cases. Once the assessment is framed for a particular year failing within ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....her hand, the learned Departmental Representative contended that the assessee himself offered the said amount for tax and he has not retracted the said declaration and, therefore, the addition made by the AO was justified. (b)On careful consideration of the rival submissions we find that the assessee himself had offered the amount of Rs. 1 lakh on account of purchase of land at Kasabe and till date that statement has not been retracted and, therefore, we do not find any ground to interfere with the order of the AO and accordingly, we confirm the said addition. (ii) Addition on account of investment in land at Prakash Towers. The assessee purchase land for developing residential-cum-shopping complex known as 'Prakash Towers'. The said project was developed during the assessment years 1994-95 and 1995-96 by Vikas Builders. The land for the said project was purchased from three persons, i.e., Parvati Rane, Yashwant Rane and Shilpa Rane, the details of which are given as under : S. No. Name Area sq. mtr. Value Rate per Sq. mtr. Date 1. Parvati Mahadeo Rane & Ors. 1,782.22 85 lacs 4,770 1-8-1991 2. Yashwant Rane 504,20 2.5 lacs ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on as per agreement 4,40,000 18,53,564 The AO, therefore, added a sum of Rs. 18,53,564 (b)The learned counsel for the assessee contended that the AO failed to take into consideration that the land belonging to Parvati Rane was the main plot of land whereas the land belonging to Yashwant Rane and Shilpa Rane was encumbered by the main plot. These plots were also encumbered by tenanted plot and, therefore, their rate could not be at par with the rate of Parvati Rane's land. He further argued that the land of Parvati Rane was a commercial plot as there was a theater known as Prakash Talkies whereas the land of Yashwant Rane and Shilpa Rane were tenanted properties and, therefore, the vendors did not have any other option but to sell the same to the assessee at a lower price. He further contended that statement of the parties were recorded and they categorically stated that the land was sold to the assessee as mentioned in the agreement. The agreement of the parties are at pp. 298 to 344 of the paperbook. The learned counsel argued that the AO has made the addition merely on conjectures and surmises and there is no documenta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ference of Rs. 12,04,000 on account of investment as undisclosed income. The learned counsel for the assessee submitted that valuation report was not furnished to the assessee. Therefore, without providing any opportunity, to rebut the same, furnishing the same, no addition should have been made on the basis of the vacation report. He further pointed out that the cost of construction as submitted by the assessee was Rs. 1,01,94,012 and not Rs. 94,76,000 as mentioned by the AO. The learned counsel drew our attention to pp. 596 and 597 of the paper-book wherein the details of the expenditure for the project New Prakash Talkies have been mentioned. Taking into consideration that the assessee had submitted the details of cost of construction at Rs. 1,01,94,012, if the addition could be made, would be the difference of Rs. 5,05,988. On the other hand, the learned Departmental Representative submitted that the AO has rightly made the addition of the difference between the valuation report and the cost of construction shown by the assessee himself. (b)On careful consideration of the rival submission and the documents on record, we find that the DVO vide his report determined the expend....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee had worked out as per the carpet area or built-up area. The AO worked out the sale price of the flats as under : "The receipts of the assessee @Rs. 700 per sq. ft. as per the area of flats at 28,970 sq.ft. worked out in prospect of sold out flats as per bundle No. C-2/39 would be Rs. 2,02,79,000 in respect of flats and Rs. 11,72,834 in respect of shops. As against this, the actual sale consideration receivable/received by the assessee as per agreements drawn out would be Rs. 1,49,43,600 in respect of flats and Rs. 9,00,000 in respect of shops. The difference of Rs. 56,06,054 (Rs. 2,02,79,000 + Rs. 11,72,834 - (Rs. 1,49,43,600 + Rs. 9,00,000) represents sale consideration for the area suppressed by presenting saleable area as carpet area instead of built-up area. Accordingly, this amount of Rs. 56,06,054 in respect of the shops and flats sold till the date of search are treated as the suppressed sale receipts of the assessee during the previous year ended 28-2-1990." (b)We have heard the rival submissions. The learned counsel for the assessee contended that in all its projects he has sold the flats and the shops on the basis of the carpet area. He further pointed o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nst the assessee with regard to the receipt of money and if he fails to rebut the said evidence, it can be used against him by holding that it was a receipt of an income nature. He further argued that after taking into consideration the surrounding circumstances and applying the test of preponderance of probabilities, the AO has rightly made the addition. The learned Departmental Representative heavily relied on the order of the AO. He pointed out that the AO has discussed the seized note book wherein the built-up area with terrace separately is provided for and the payments received has been mentioned. In support, the learned Departmental Representative placed reliance on the decision of the Hon'ble Supreme Court in the case of Sumati Dayal v. CIT [1995] 125 CTR (SC) 124 : [1995] 214 ITR 801 (SC), CIT v. Precision Finance (P.) Ltd. [1994] 121 CTR (Cal.) 20 : [1994] 208 ITR 465 (Cal.). (d)After considering the submissions of both the parties and the material on record, we find some force in the arguments of the learned counsel for the assessee. Apparently, of course, a doubt arises in the mind when the rates of comparable instances are given showing that the rates are on the bas....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... suppressed value of sale of flats. In fact, it is the duty of the Revenue to show that the assessee has received more than what has declared or disclosed by him as consideration. Therefore, the burden to prove the same was on the Revenue and not on the assessee. This burden should have been discharged by the Revenue by establishing the facts and circumstances from which a reasonable inference could be drawn that the assessee has not correctly declared or disclosed the consideration received by him and there was an understatement or concealment of the consideration. In the present case, the agreement between the parties are the basis evidence to show the sale consideration and the built-up area on which the shops and flats have been sold by the assessee and the Revenue could not bring out any evidence to show that the assessee has suppressed the sales merely on the basis of suspicion and presumptions. Accordingly, the addition on this account made by the AO deserves to be deleted and this ground of the assessee is allowed. V. Excess receipt in the project at C.S. Pandit Site Ambernath (a)The assessee in the name of Vikas Builders has undertaken a project at Ambernath on the l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....utation given by the assessee and computed it a fresh as under : "Total land cost = 1,75,000 + 1,050 x 300 = 4,90,000 Half of it is attributable to the project already completed, i.e., land cost of project 2,45,000 Receipt from customers = 3,654 x 300 = 10,96,200 Receipt from owner (notional) = 1,050 x 300 = 3,15,000 Total receipts 14,11,200 Construction cost shown by the assessee 9,07,365 Land attributable to this project 2,45,000 Profit shown by the assessee 61,331 Excess receipts not declared by the assessee 1,97,504" (b)The learned counsel for the assessee submitted that the property was a tenanted property having two tenants, viz., Y.V. Jape and V.J. Sathe. the tenants were given an equivalent area at a concessional rate of Rs. 120 per sq. fit. and for excess area at a concessional rate of Rs. 250 sq. ft. The agreement of both the tenants have been placed on record at pp. 183 to 200 of the paper-book. The learned counsel submitted that if the sale in case of the tenants is not considered the assessee has shown more profit than worked out by the AO. The learned counsel argued that the AO cannot estimate the sale on notional basis whe....