TaxTMI 
TaxTMI 
2016 (10) TMI 1024
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..../business premises of the Bharat Shah Group of cases on 13.03.2008 and subsequent dates. The assessee, interalia, was covered in the search operations but pursuant to search warrants drawn in respect of premises not belonging to the assessee. However, it was claimed by the assessee that search at the said premises did not lead to discovery of any unaccounted assets, investments or incriminating evidence whatsoever relating to the assessee. Copy of the panchanama drawn in joint names, interalia, incorporating the name of the assessee was filed. (enclosed at pages 15 - 119 and pages 124-130 of the Assessee's Paper Book-I). During the course of search operation u/s 132 of the Act on 15.03.2008 at the office premises of Prime Down Town Estates Pvt. Ltd (in short PDTEPL), a group company formerly known as Bharat Shah Estates P. Ltd., at 3rd Floor, 55 Gamdevi Road, Gamdevi, Mumbai, certain loose papers were found and seized by the search party and marked as Annexure A-1, pages 1 to 19.These loss papers contained recordings made in respect of on-money allegedly received by the assessee for Legend project. However, it was claimed by the assessee that the said papers were found in course of....
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....of the case and in law, the Ld CIT (A) has erred in relying on the ratio laid down by the Hon'ble Bombay High Court in the case of Jalaram Jagruti Developers Pvt Ltd. Wherein unaccounted cash receipts were entered in the regular books of accounts whereas in the instant case the assessee has neither admitted the existence of unaccounted cash receipts nor accounted them in its regular books of accounts. 4. The AO observed that during the course of search u/s 132 of the Act on the office premises of PDTEPL on 15-03-2008 an Annexure A1 containing loose papers pages 1 to 19 were seized and copy of which are attached to the assessment order as Annexure A. The assessee before the AO explained the contents of these seized papers as under:- "1. Page Number 1 to 16 appear to be rough estimates of working prepared by some-one, as can be seen from explanation appearing on page 12 of loose paper seized on 16.03.3006 (total pages 133). It appears that the working is estimated receipts on proposed sales of flats. 2. It appears that the working was done on the basis of possibility of sale of built up area of 2550 sq. ft. 4550 sq. ft. and 5675 sq. ft as the company was then trying to const....
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....tion (upon bargaining etc), details of receipt of cash & cheque over a period of time. It has been written over a period of time, after due thinking and consideration, as and when events like rate finalization, rate renegotiation, cash received, cheque /draft received have taken place. It contains all or most of details in respect of the sale transactions mentioned therein, viz- XI. Name of the main person negotiating for purchase of flat. XII. Contact details of said person. XIII. Super built up area XIV. The rate finally decided to be charged per sq. f. & super built up area. XV. Total money receivable XVI. Breakup of money receivable into accounted and unaccounted portion. XVII. Where renegotiation of rate has taken place, the renegotiated rate, revised total consideration and its breakup XVIII. Details of cheque received from time to time XIX. Details of cash received from time to time. XX. Details of balance receivable 17. It is clear, therefore that your contention that these papers are rough workings only is clearly wrong, as discussed above. It is not rough working, but a systematic working. 18. Assessee repeatedly claimed that SH represents....
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.... @ 10000rs. per sq ft chargeable on flats were sold @ 12000 rs per sq ft and more, for eg. Ashok Meta, Sujit Mehta, Ashok Siroya etc. g. Regarding out of book receipts in form of US dollars, assessee h. company has claimed that, it might be regarding provision of substantial imported items for special house, as it was possible for the company top import such items as per government policy, however it has failed to provide any evidence to substantiate this claim of yours. All these seems to be part of your afterthought process. 19. Further, as contended by assessee, SH means special house, in which 5000 rs. PSF are charged for furniture, tiles etc. But, as it is evident from the loose papers itself that claim of the assessee is wrong, as on page no. 10, there is mention of sale of sample flat on 10th floor to Mr. Naresh Shah (sample flat means fully furnished flat, which is shown to prospective buyers) On this page, it is clearly mention that "F&F"i.e. for furniture and fixture, there will be separate charge of Rs. 70lakh. If assessee's contention regarding SH i.e special house and charging of Rs. 5000 psf is accepted, then, on each page, it must be separately mentioned as ....
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....ed from Mr. Bharat Shah's premises, who is the promoter of Layer Exports Pvt Ltd, comes to Rs. 12,21,20,000/- What you want to say about this? Ans. We have nothing to do with this. We stand by the facts and figures which I am submitting to you. Q.8 On this page No.8 itself it is mentioned that on 27.11.2003 cheque of Rs. 100 Lakhs has been received and on 1.12.2003 cheque of Rs. 100 lakhs has been received, which is also evident from the details submitted by you regarding cheque payment. Do you confirm this? Ans. Yes I do confirm. Statement of Ashok siroya u/s on 12.10.2009:- Q.6 I am showing you page no.7 loose paper file containing pages 1 to 19 seized from Mr. Bharat Shah's premises. From this page it can be inferred that you have purchased flat on 14th floor in Legend project for which you have been charged at the rate or Rs. 14,111/- for saleable area i.e. super built up area of 2550 sq. ft, which comes to Rs. 3,59,83,060/-. Further, it has been written that no parking has been given to you. It is also been written that total cheque consideration of Rs. 19892949/- is to be received by Layer Exports. Pvt. Ltd from you regarding 14th floor flat out of which Rs.....
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....er, on this page "5x5=25" is written which can be clearly inferred as that total 5 car parking for a consideration of Rs. 25 lakhs has been purchased. This details also tallies with your previous answers that total 5 car parking were purchases? Ans. I have not given any cash and the garages were including with the purchase of each flats as explained above i.e. 3 and 2 with all flats. Regarding cheque payment total payment paid by my family is Rs. 3,35,00,000/- and Rs. 1,18,00,000/- by me and my mother respectively. Q.9 Do you confirm that first three cheques given by you to Layer Exports vide cheque No. 910755, 910760, 633881 being Rs. 3500000, 20000000, and 5000000 total up to Rs. 2,85,00,000/- as mentioned in question No.8, has been paid by you? Ans. Yes I confirm. From all these statements, it is ample clear that none of the buyer was aware of the noting on these loose papers, and particularly of words SH and Recd. From this it is clear that Assessee Company's contention that these notings on loose paper are recordings discussion with buyers is not correct. 3. Regarding sale of sample flat on 10th floor to Naresh Shah as mentioned on Page no. 10, assessee objected....
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....is 35-40% over and above carpet area and make agreement for built-up area which is carpet area + 20 % and thus evade taxes. On being confronted on this fact, assessee refuted it and claimed that initially, at the time of submitting plan to BMC, it was expected that 2550 sq ft saleable area will be allowed, but finally approved plan dt 13.9.2005, 2550 sq. ft area was not approved. This contention of the assessee can't be accepted at all, as it is evident from the loose paper no. 1 to 12 of Annexure A-1, containing pages 1 to 25 that assessee company has offered flats in Legend Project as security for credit facility in favour of B. Vijay Kumar & Co. and B. Vijay Kumar Jwellers. For security purposes, saleable area of flat is mentioned as 2550 sq. ft for 2nd to 8th floor and 6000 sq. ft on 31 and 32 floor. These saleable areas of flats are mentioned in letter dt 15.2.2006, 15.1.1.2007 of Layer Exports pvt. ltd. These letters are written in response to sanction letter of Oriental Bank of Commerce no. OBC.OHB/1014/2005 dt. 2.1.2006. Further there are also sanction letters by Oriental bank of Commerce, in which above mentioned are of flats are clearly mentioned. These loose papers no.1 ....
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....„ RECD". Relevant extract of Mr. Bharat' Shah's reply is being reproduced here: "Q.7 On the above mentioned pages at various places, it is written "Q" recd. and "SH" recd. Doesn't this indicate that part consideration has been received in cash and part in cheque? Ans. I do not know the meaning of "Q" and "SH" as mentioned in the pages 1 to 19 of Annexure A-l. I once again reiterate that these are certain rough workings and nowhere cash is mentioned on these pages." This statement was given by Mr. Bharat Shah. chief' promoter of Layer Exports Pvt. ltd. in spite of the fact that in Question no. 5 of same statement, he mentioned about furnished flats. i.e Special House. Under oath. 22. On the basis of above mentioned events, it clearly seems, that in order to suit his own needs, and to take benefit of accidental mention of special house in his statement, assessee created this theory for his own benefit and to evade taxes, that SH represent Special House and Recd. represents recording. But at the same time assessee failed to explain that what does "0/ ch/chq" and "SH to Receive" represents. 23. Assesses company has also failed to produce the person, who....
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....ow: Name of purchase Wing Falt no. and area sold Date of first payment Accounted payment Unaccounted payment Page no AY Shishir Mehta Sea 10/1878.16 8/1/2004 1,98,92,949 2,1,32,051 9 2004-05 Yogesh Mehta Sea 13/1878.16 5/11/2003 1,98,92,600 2,01,32,051 6 2004-05 Ashok Siroya Lalita Siroya Sea 14/1878.16 4/11/2003 2,37,52,200 1,60,90,101 7 2004-05 Ashok Mehta Sea 15,16/3466.44 29/08/2003 3,85,67,640 6,84,60,000 15 2004-05 Kiran Kothari Sea 23,24/3011.29 22/05/2004 4,87,00,000 4,42,82,3324 16 2004-05 Vipul Shah Necklace 6,7,8/5634 14/12/2003 5,85,06,710 4,17,71,153 4 2004-05 Kranti Impex Necklace 9/1878.16 22/1/2004 1,98,92,600 2,06,32,051 11 2004-05 Naresh Shah Necklace 10/1878.16 16/1/2006 2,63,04,320 2,76,32,051 10 2004-05 Mangalam Gems Necklace 11/1878.16 16/1/2006 2,63,04,320 2,76,32,051 10 2004-05 Maya Mehta Necklace 13/1878/.16 17/01/2004 2,03,50,200 1,93,57,051 3 2004-05 Ramesh Mehta Necklace 14/1878.16 1....
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....noted as SH Recd), how many parking spaces purchased is mentioned, amount payable on parking spaces is mentioned. It is also seen that on pages 1, 8 and 13 dates of 18.9.01, 8.7.03, 27.11.03, 1.12.03 and 1.10.03 are mentioned. 10.3 It is also seen from page 2 of Annexure 'A' of the seized material and other pages that the flats in Floor 1 to 14 were taken with space of 2550 sq. ft. and 15 to 24 at 4550 sq. ft. and above 25 flats at 5674 sq. ft. and rate per sq. feet is charged differently from different purchasers. But floor space mentioned was same in the respective floors. 10.4 It is also seen that the cheque payments were made on various times and the cheque payments tallies with the amount recorded in the books of accounts. 10.5 The cash payments were also received on various dates and in many cases how much balance money to be received is also mentioned. 10.6 The AO has elaborately discussed the contents in the seized papers from page 3 to 14 of the assessment order. The inference drawn by the AO is very correct and I am convinced that the appellant has collected "On Money" on sale of flats and it is not accounted. 10.7 The appellant's contention that „SH'....
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....d documents clearly proves that "SH" means cash and "Recd" means Received. The reasons mentioned above and the detailed analysis made by the AO from pages 3 to 14 of the assessment order and the detailed conclusions arrived by the AO in the assessment order makes it very clear that the appellant has received unaccounted cash ( on money) on the flats sold in the project "Legend" developed by the appellant. The seized documents are detailing all details just like a Ledger listing out enormous details about the purchasers, No. of flats purchased, in which wing the flats are located, saleable area, built up area, Total amount, How much in cheque, how much in cash, How much amount in cheque received so far, how much cash received so far, how much cash is yet to be received. As mentioned in page 1, 8 and 13 dates are mentioned. 10.12 In view of all the above, I hold that the appellant has received unaccounted cash towards the sale of flats in the project "Legend". 10.13 Since the seized documents contains full details about the purchaser of flats in the project „Legend' and the cheque payments and cash payments are recorded over a period and since the documents were seized fr....
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....will be available to the project is not correct. From the seized material at page 2 (out of these 19 documents) it is very clear that the appellant wanted to charge for 2550 sq. ft. (saleable area) for the flats in floor 1 to 14 even though the built up area mentioned in the sale agreements is for lesser sq. ft. of built up area. The appellant has fixed 2550 sq. ft. as super built up area and charged from the purchasers accordingly and the price charged per sq. ft. is also higher than the price mentioned in the sale agreement. The appellant has charged from the customers on more area than the built up area mentioned in the sale agreement and more price per sq. feet than the price mentioned in the sale agreement. 10.19 Pages 1 to 19 of Annexure A1 clearly proves the "on money" received and there is nothing in page no.12 of Annexure A2 to show "no on money was received". There is also no evidence to show that any "on money" was returned back to the customers. 10.20 In view of this, the contents in page no.12 of Annexure 2 will not come to the rescue of the appellant. I am fully convinced that the evidences in pages 1 to 19 of Annexure A1 is more than sufficient to prove that th....
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....was not bound by the presumption u/s 292C of the Act in respect of such papers. It was again claimed by the assessee, since the search in the assessee's own case did not lead to discovery of any incriminating material, whatsoever, against the assessee; the high pitched assessment framed u/s 153A of the Act was bad-in-law. Even otherwise, the seized papers were incorrectly and prejudicially interpreted against the assessee by the Authorities lower. We find that the assessment was made on account of on-money receipts recorded in the 19 loose papers marked as Annexure A-1 seized from the premises of PDTEPL. 7. Learned Counsel for the assessee narrated the facts that while making aforesaid additions, the AO completely brushed aside the consistent statements of the Directors of the assessee company denying any nexus with the impugned seized papers and also the statements and affidavits of the purchasers of the flats in 'Legend' project categorically denying any payment of on-money to the assessee. It was explained by Learned Counsel that the impugned loose papers were found lying in a room at the site office for construction project of PDTEPL at 55, Gamdevi Road, Gamdevi.....
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.... AO made an addition of Rs. 67,16,25,687/- on the basis of interpretation of scribbling on these 19 loose sheets of papers seized from the premises of PDTEPL. The year wise break-up of the addition is as under:- A.Y. 2004-05 Rs. 57,14,15,087/- A.Y. 2006-07 Rs. 10,02,10,600/- Further, based on the aforesaid addition of Rs. 67,16,25,687/- for total built- up area of 41,383.25 sq. ft. of flats sold, the AO extrapolated the resultant on- money @ Rs. 16,230/- per sq. ft. to the remaining flats in the project as under:- Assessment Year Area sold as per BMC Addition on account of alleged on-money @ Rs. 16,230/- per sq. ft. 2004-05 3466.44 5,62,60,321 2005-06 10766.24 17,47,36,075 2007-08 7013.59 11,38,30,565 In view of this, the AO made the following additions on account of onmoney receipts in cash by assessee:- (i) Addition on account of on-money in respect of flats sold described in aforesaid 19 loose papers - Rs. 57,14,15,087/-. (ii) Further an addition of Rs. 10,02,10,600/- was made in AY 2006-07 in the hands of the assessee on the ground of representative asses....
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.... area (i.e. carpet area + 20%) the working has been given for area then available 10,000/-per sq. ft. 4. The paper it appears, was suggesting providing of special house, by offering fully made up houses with interior work of high quality commensurate with the status of the buyer and location of the building, the rate of estimated realization is more than actual rate of sale of Rs. 10,000/-per sq. ft. 5. Page 18 appears to be some working in respect of Petty Cash." Copy of the reply dated 06-08-2009 is enclosed at pages 181-187 of the Assessee's Paper Book-11. But, the AO disregarded the explanations filed by the assessee on the basis that the names of the buyers written on the said pages of Annexure A1 were matching with the actual buyers of the flats and their payment schedules. The AO issued show-cause notice dated 25-05-2009, which is reproduced at pages 3-16 of the assessment order for AY 2007-08, to the assessee analyzing the noting on the said pages. Extract of the same, AO's interpretation of page 4 of the loose papers at pages 6 to 7 of assessment order u/s 153A of the Act for AY 2007-08, is reproduced hereunder for the sake of clarity (Copy of the said loose p....
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.... 5 x 46.75 ......... SH to receive 198.97 1,99,13,153 Q received 13.50 200.00 Of Rs. 4,32,88,153/-, Rs. 2,33,75,000/- has been received in cash and the balance of Rs. 1,99,13,152/- cash is yet to be received. Further cheque of Rs. 13.50 lacs and Rs. 2 crores has been received as on that date. All these facts correspond with the regular books except for cash portion, for obvious reasons. The said 6^th, 7^th and 8^th floor as per books and records have been purchased in t he necklace view portion of the building by Sri Vipul V. Shah. Further, part of the proceeds seems to have been received in dollars. 5 x 46.75 = 233.75 means 500000 dollars at the rate of Rs. 46.75 per dollar equal to Rs. 23375000 has been received. This is clear because 233.75 has been deducted from 432.72 which is the cash consideration. The balance amount is Rs. ....
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....; 14/1879 4/11/2003 2,37,52,200 1,60,90,101 7 Vimla Mehta 13, 16/3212 29/08/2008 3,85,67,640 6,84,60,000 15 Kiran Kothari 23,24/3212 22/05/2004 4,87,00,000 4,42,82,324 16 Vipul Shah 6,7,8/5088 15/12/2003 5,85,06,710 4,17,71,153 4 Kranti Impex 9/1990 22/1/2004 1,98,92,600 2,06,32,051 11 Sankhla Builders Pvt. Ltd. 10/1696 16/1/2006 2,63,04,320 2,76,32,051 10 Mangalam Gems 11/1990 2/1/2004 1,98,92,600 2,06,32,051 11 Maya Mehta 13/1685 17/01/2004 2,03,50,200 1,93,57,051 3 Ramesh Mehta 14/1695 1/9/1695 2,03,50,200 1,93,57,051 3 Chandravadan Desai 19,20/3498 2/12/2003 4,19,80,608 8,01,39,192 8 Shrikant Mehta 21,22/3498 22/12/2005 4,82,09,400 10,02,10,600 14 33146 40,62,92,027 49,80,52,727 The learned Counsel for the assessee explained that further, from page no. 13 it was inferred by the AO that Rs. 3,50,00,000 has been received from Baka Mehta i.e. Suresh Chand Mehta, who is father and father-in-l....
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....conjecture and surmises and are not supported by any actual evidences. We further submit that all the inferences are merely guesswork based on some imagination or speculative reading of the paper. None of the inferences are founded on Independent evidences. In the circumstances, we most respectfully submit that all the said inferences are totally baseless. However, without prejudice to our replies with the hope and expectation that the same would help you in arriving at a just, fair, equitable and unprejudiced view of the entire matter." The Counsel explained that assessee gave page wise analysis of the noting in the seized papers and the same has been reproduced in toto in the assessment order for AY 2007-08. Since the noting on all the pages of the seized papers are made on similar lines, for the sake of discussion, the assessee's explanation in respect of noting in one of the pages i.e. page 4 of the loose papers was drawn our attention. Assessee's explanations (also reproduced at page 22 of assessment order for A.Y. 2007-08) as under:- Actual notings Assessee‟s explanations Page 4 (*2) 6, 7^th , 8^th Floor Vipu....
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.... these loose papers could not have been recording of initial offer and in fact final transaction has happened on much different terms which are correctly and completely recorded in books of account. 6. These noting are not in respect of cash received as alleged. These are recording of preliminary discussion pertaining to probable expenses for providing Special House (SH). Thereafter recordings have been made for part approval for items (imported or otherwise) to be provided for making proposed Special House). Terrace 350 x 13000 x 1/3 =15,17,000 4 x 5 parking =20,00,000 ............. 1029.67 ............. 1014.50 (*1) (*3) CHQ 19898200 x 3 = 59694600 ....
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.... "To, The Director, As per verbal instructions, I clarify the method of working in respect of estimated details of selling flat, which Is subject to increase in area of flat to 2550 sq. ft. upon approval of extra FSL. Buyers have been explained following pattern for sale of flats. Present carpet area is 1658.19 sq. ft. 20 % is to be added for calculating built up area. Hence built up area is worked out at 1989.29 sq. ft. Cost of bare flat = 1989.29 @10,000/-. Cost of Special House (SH) Rs. 5000 per sq. ft. will be charged for high quality Italian marble, kitchen, fixture and furniture as per their specification. This is receivable on start of work. The price of special house is negotiable depending on the fittings required by buyer. This is the submission to the buyer. Accordingly we can negotiate with the buyers." The aforesaid page 12 of loose paper file marked Annexure A-2 was also seized in course of search on PDTEPL as in the case of impugned loose papers marked Annexure A-1 (19 pages), albeit in course of search on the said company at a different premise. The assessee before us claimed that the said page 12 of Annexure A-2 clearly supports the interpretation of ....
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....evidences are inconsequential/ inadmissible evidence as far as the assessment of the assessee is concerned. Presumption u/s 132(4A) cannot be invoked against the assessee in respect of either of the said papers referred to above. However, the assessee has merely tried to interpret the notings made in one set of dumb loose papers (i.e. Annexure A-i) with the help of somewhat more elaborate and clearer notings in another set of seized papers. Since both the above referred annexure were seized in course of search operation of another person, the AO was required to give similar treatment to both of them i.e., either accept both or reject both. The AO cannot be allowed to blow hot and cold in the same breath. 3. As would be evident from the copy of the relevant page 12 enclosed in the Paper Book, the rate mentioned is Rs. 10,000/- only and not Rs. 1,000/- as incorrectly read by the AO. 4. Both Annexure A-1 relied upon by the AO and Annexure A-2, page 12 relied upon by the assessee are undated and have been written by unidentified persons. As far as onus u/s 132(4A) is concerned, it has been sufficiently elaborated in the preceding paragraphs that since none of the papers were foun....
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....t the said papers contain only rough workings of negotiations made over a period of time for on-going deals with prospective customers and not of any concluded transactions with the customers. As per the observation of the AO himself at page 7 of assessment order u/s 153A of the Act for AY 2007-08, the pages have not been written in one go but over a period of time explain the stand of the assessee that the impugned papers only contain rough jottings of on-going negotiations with prospective clients and also proved from the fact that the so-called agreement values or the total amount receivable by cheque, as alleged by the AO as per noting in the said papers, do not, in most cases, match with the actual agreement values. It was explained that even the AO while summarizing the details of the noting on impugned papers in the table at page 15 of assessment order for AY 2007-08, table in Para 9.7, has taken the actual agreement value under the column showing „accepted payment' and not the purported agreement value allegedly impounded in the seized papers. 15. We have gone through the table showing the actual agreement value vis-à-vis the purported agreement value as per....
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.... Lalita Ashok Siroya (joint buyer of flat no. 14 in Project Legend along with husband Ashok Siroya), the concerned AO made an addition of Rs. 1,04,67,410/- on account of alleged cash payments (of on-money) paid in respect of flat no. 14 on the basis of alleged recording made on page no. 7 of aforesaid Annexure A-1 found in course of search from the premises of PDTEPL but the CIT (A) note the following differences between the noting made in the seized paper and the actual state of affairs which proved the inference drawn by the AO is not proper and that the noting in the seized paper could not be held as genuine:- (i) The cheque payments of Rs. 1,98,92,949/- mentioned in the seized paper did not match with the actual cheque payment of Rs. 2,37,52,200/- made by the assessee and her husband as per agreement. (ii) The area of the flat as per the sheet was 2550 sq. ft. whereas the correct built up area as per the agreement was 1878.85 sq. ft. We find that the AO tried to explain the difference in area as per seized sheet and as per agreement by stating that builders normally charge for super built up area which is 40% more than the carpet area and execute agreement showing area on....
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....seen, is Rs. 1 crore only. Therefore, even the details of cheque payment till the date of search do not match with the noting in the sheet." In view of the above observations, the CIT (A) in the case of Smt. Lalita Ashok Siroya finally held as under:- "On a careful examination of the copy of seized document as provided together with the facts as admitted, and in light of the glaring mismatches as above, and absence of any independent, reliable, corroborative evidence, It cannot be said that the said document, in any manner, can be held as genuine and reliable to hold that the assessee had paid unaccounted cash for the purchase of property as held by the AO." Similar decision was also made by the CIT (A) in the case of Sri Ashok Siroya and Smt.Vimla Mehta. 16. We find that in the case of Smt. Lalita Ashok Siroya decisions of the CIT (A) fortify the assessee's consistent stand that the noting in seized papers Annexure A-1 cannot be held to be conclusive enough to make such additions in the hands of the present assessee. Here we are placing reliance on the judgment of the Hon'ble Supreme Court in the case of CIT vs. P.V. Kalyanasundaram 294 ITR 49 (Copy enclosed....
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....e not details of any concluded transaction. It appears that some of these notings may be in respect of proposals & negotiations carried out in the year 2001." We have also gone through the statement of Sri Sujit S. Mehta son of Baka Mehta recorded u/s 131 on 23.09.2009, which buttresses the aforesaid denial of the assessee in respect of alleged payment of Rs. 3.5 crores by Baka Mehta (Copy enclosed at pages 153-155 of Paper Book-1). Relevant portions of the statement are reproduced as under: "Q. 10. Is it true that your father Mr. Sureshchandra Mehta was known as Baka Mehta in business circle" Ans. Yes. He was known as Baka Mehta. Q. 11. On page 13 of loose paper file containing pages 1 to 19 it is written "Baka Mehta" on upper right hand side and down side it is written "Sh reed 350" can it not be interpreted that your father must have paid Rs. 3.50 crores in cash to Layer Exports? Ans. My father died on 6.7.2003 and I entered into agreement for this flat on 12.6.2006, however, I made the first payment for this flat on 30.8.2003 of Rs. 21 lakhs i.e. even if it can be considered that the flat was purchased in August 2003 for which payment was made, my father already ....
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....available with the Income-tax department. We have submitted various sale agreements pertaining to relevant location and period. We therefore request you that instead of going by conjecture and hypothesis, the best way to judge correctness or otherwise of price of the flat will be to compare them with other buildings coming up at that time or completed during that time and other ready flats in the area....... You will appreciate that at about 10000/- per sq. ft. ready possession flats were being sold in the nearby vicinity, evidence in this regard have been filed. We are unable to understand how buyer could have purchased bare flats at rates as mentioned in loose papers in a building which was under construction and when completion date was also not certain............" But, here also, the AO failed to controvert the aforesaid submission of the assessee. 18. The assessee has placed reliance on co-ordinate bench decision of Mumbai Tribunal in the case of Harish Daulatram Innani Vs. DCIT (Inv) (2008) 24 SOT 541 (Mum) wherein it is held as under: (Copy enclosed at pages 493-504 of assessee's Paper Book):- "Addition in block assessment towards undisclosed investment....
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....ment order for AY 2007-08 is in respect of letters filed by the assessee company to Oriental Bank of Commerce (OBC) and seized in course of search in group concerns vide Annexure A-1, pages 1 to 12 offering flats in Legend Project as security for credit facility in respect of B. Vijay Kumar & Company and B. Vijay Kumar Jewellers. The AO further observed that in these letters, for security purposes, saleable area of flat is mentioned as 2550 sq. ft. for 2nd to 8th Floor and 6000 sq. ft. on 31st and 32nd floor. These saleable areas are mentioned in letter dated 15.02.2006 and 15.0 1.2007 of Layer Exports. The AO thus alleged that if, in the finally approved plan dated 13-09-2005, BMC disapproved 2550 sq. ft. area, then how the assessee kept showing the saleable area of flats as 2550 sq. ft. This according to the AO proved that the assessee was engaged in the practice of charging super built up area from customers but making the agreement in respect of built up area. The assessee explained that as is evident from the letter dated 11-01-2007 of the assessee company to OBC, the three flat sizes viz. 2550 sq. ft, 4550 sq. ft. and 5675 sq. ft, were based on 2.5 FSI applied to BMC. However....
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....43-553 of assessee's Paper Book). In this case, the Tribunal was faced with a somewhat similar situation wherein additions were made on account of on money received by the assessee in respect of sale of property. The CIT(A) confirmed the addition partly after being influenced by a report published by Ministry of Finance wherein prevalence of notorious practice of payment of black money in real estate transaction in metropolitan city of Bombay was discussed. The ITAT deleted the additions. In this case, there was an adverse statement by one of the disgruntled employees of the assessee. Further, the comparable cases in the vicinity suggested payment of on money. Despite all these facts, the Mumbai Tribunal held that additions could not be made on the basis of report prepared by the experts in the Ministry of Finance. A survey report which highlighted prevailing practice could not be adequate substitute for tangible evidence. 22. We have also noted that the assessee filed complete details of names and addresses and copies of agreements entered into with the purchasers of flats in Legend before the AO. The AO issued summons u/s 131 of the Act to various purchasers of flats in the im....
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....session. I further state that agreement for the said flat was executed on 10.10.2008 for total consideration at Rs. 2,37,52,2001-. Details of payments have been already been submitted. I state that we have made payments by cheque only and nothing has been paid by way of cash. I have seen the paper first time and what is written on the papers is not in our knowledge. I totally deny that any payment is made by cash except cheques." Statement of Ashok Mehta u/s 131 recorded on 1.10.2009: "Q. 8. lam showing you page no. 16 from loose paper file 1 to 19 seized from Mr. Bharat Shah's premises in which your name Mr. Ashok R. Mehta are written along with this 15th and 16h is written and "Sh reced 659.60" and "Q recd 285100" written. From this notings, it can be inferred that Mr. Ashok R Mehta have brought 15th and 16h floor in Legend project and cheque of Rs. 28500000 has been received. This also tallies with the details submitted by the assessee that the total of first three cheques received by the assessee vide cheque no. 910755, 910760, 633881 being Rs. 3500000, 20000000 and 5000000 total upto Rs. 28500000/-. Accordingly, as it is the practice followed by Layer Exports Pvt. Ltd. ....
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....t cash consideration have been mentioned. You are requested to explain which project these workings belong to and why it should not be construed that part consideration in respect of these flats has been received in cash outside the books of account? A. Since 1985 our many projects have been on-going/ completed. Before the project and during the construction phase, we make plans for different size flats and also furnished flats i.e. special house and unfurnished flats without amenities. The plans get altered as per the customers' requirement and BMC FSI. Further cash is nowhere mentioned in the above mentioned papers." As clearly evident from the above, the assessee's interpretation of the noting on loose papers is also supported by the statement of Shri Bharat Shah recorded in course of search and statements of buyers recorded u/s 131of the Act. Thus, these evidences and statements cannot be ignored if there is specific denial by the buyers and director and in such situation no addition can be made in the hands of the assessee on account of on-money merely on the basis of interpretation of noting in seized loose papers on the basis of conjunctures & surmises. We have....
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....he buyers of flats in Legend before the AO:- (b) Mr. Shishir Mehta (c) Mr. Yogesh Mehta (d) Mr. Sujit Mehta (e) Mr. Amar K. Kothari (f) Mr. Ashok Mehta (g) Mr. Vipul Shah (h) M/s. Kranti Impex Pvt. Ltd. (i) M/s. Shankhala Builders Pvt. Ltd. j) M/s. Mangalam Gems Pvt. Ltd. 2) Evidence in respect of price at which flats have been sold in other buildings in Walkeshwar Area at comparable rates. The agreements submitted were in respect of building with ready flats and amenities whereas the assessee had sold under-constructed and bare flats in Legend. Still the rates were comparable. 3) Copy of the said letter dated 16.12.2009 (Copy enclosed at page 235 of assessee's Paper Book-11). Further copies of affidavits and agreements for sale of flats in vicinity at comparable rates (Copy enclosed at pages 161- 180 of Paper Book-I and pages 261-337 of Paper Book-11) respectively. An extract of one of the affidavits i.e. affidavit of Sujit Mehta is reproduced hereunder for the sake of ready reference:- 1. I confirm that the builder had offered Special House Scheme with furniture in the Building "Legend" being constructed at Walkeshwar & they had taken Interest ....
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....essee despite being required to do so. In this connection, reliance is placed on the judgment of the Hon'ble Allahabad High Court in the case of L. Sohan Lal Gupta Vs. CIT, 33 ITR 786 wherein it was held that "the Tribunal was not entitled to reject the affidavit filed by the assessee on the mere ground that he had produced no documentary evidence; if it was not accepted as sufficient proof the assessee should have been called upon to produce documentary evidence or he should have been cross-examined to find out how far his assertions in the affidavit were correct." (Copy enclosed at pages 537- 542 of assessee's Paper Book). Further, Hon'ble Supreme Court in the case of Mehta Parikh & Co. Vs. CIT, 30 ITR 181 (SC), the Hon'ble Apex Court held that rejection of an affidavit filed by an assessee was not justified unless the deponent had either been discredited in cross examination or had failed to produce other supporting evidence when called upon to do so. In the instant case, however, the noting in seized documents corresponded to the facts asserted in the affidavits by various buyers. (Copy enclosed at pages 554- 560 of assessee's Paper Book). 27. Before us, the learned ....
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....ed at the back of the assessee also not supplied - important witnesses not examined - no addition could be made in the hands of the assessee. Harakchand N. Jain Vs. ACIT (1998) 61 TTJ (Mum) 223 (supra) (Copy enclosed at pages 505- 536 of Paper Book)." 28. In view of the above facts and proposition of law propounded by higher courts, we find that the AO, however, rejected/ disregarded all the evidences filed by the assessee in support of its interpretation of the seized papers and its claim that no transactions outside regular books of account were conducted and finally the AO summed up the year wise alleged receipts of on-money as under: Name of Purchaser Wing Flat No. and area sold Date of first payment Accounted payment Alleged Unaccounted payment Pg. No. AY Shishir Mehta Sea 10/1878.16 8/1/2004 1,98,92,949 2,01,32,051 9 2004-05 Yogesh Mehta Sea 13/1878.16 5/11/2003 1,98,92,600 2,01,32,051 6 2004-05 Ashok Siroya Lalita Siroya Sea 14/1878.16 4/11/2003 2,37,52,200 1,60,90,101 7 2002-05 Ashok Mehta Sea 15,16/3466.4 29/08/2003 3,85,67,640 6,84,60....
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.... In many cases how much balance money was to be received was also allegedly mentioned. (iv) The assessee's contention that SH meant Special House was allegedly not correct and the seized papers allegedly proved that the cash receipts were mentioned as 'sh' i.e. the last two words of cash. (v) The words "Recd" was allegedly for "received". (vi) On page 4 of the seized paper, it was mentioned "SH to Receive" and "Q Recd". (vii) Further, it was mentioned as under:- Q 10,14,50,000 SH 5,96,78,847 Recd 2,33,75 Balance 1,83,96,153 According to CIT (A) the aforesaid entries purportedly established that 'Q' was cheque, 'SH' was cash and "Recd" was received. Thus, the assessee's contention that "SH" was Special House and 'Recd' was recorded was allegedly disproved by the seized material. (viii) Page 9 used the word "SH Reed", "SH to Receive" and in the end, it was mentioned All Q/SH Full Reed. The said entries purportedly established that 'SH' was cash, 'Reed&#....
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....stage of initial discussions with clients to receipt of payments in cheques in some cases. However, there were no recordings whatsoever for any payments received in cash as wrongly alleged by the CIT (A). (iii) These were not recordings of balance money to be received as alleged by the CIT (A). These were actually recordings of orders for balance items of Special House to be explained to the client and the initial discussions with clients. (iv) As repeatedly explained earlier 'SH' did not represent cash but meant Special House which is proved from several corroborating evidences on record (eg. seized papers marked page 12 of Annexure A-2 seized from the premises at 6th Floor, Mehta Bhawan, affidavits of buyers etc.). (v) The word 'recd' appears to stand for recorded and not received as alleged by the CIT (A). (vi) The recording on page 4 (Copy enclosed at page 97 of Paper Book-I) read by the CIT (A) as 'Q recd' is not very clear. It appears to be 'Q Rcced' which may be abbreviation for installments received in cheques for part of the deal which materialized. Further, 'SH to receive' appears to be orders to be received for Special ....
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....ter, the purchaser's booking was cancelled & he was refunded the booking amount of Rs. 50.00 lacs. The final rejection of higher FSI was only in period AY 2011-12. (Copy of rejection letter of BMC is enclosed at pages 519 of Paper Book-Ill). Thus, according to the learned Counsel, CIT (A) erred in misinterpreting and misreading the noting on uncorroborated loose sheets of papers and rejecting the assessee's explanations. 31. Another aspect canvassed by assessee that in case the assessee received a total consideration (as alleged by the AO accounted plus unaccounted) of Rs. 1,15,88,56,634/- in respect of 41,383.25 sq. ft. which comes to more than Rs. 28,000/- per square feet which is quite infeasible and unbelievable considering the market rate for sale of comparable flats in Walkeshwar Area during the concerned period @ Rs. 10000/- PSF approx. Even if for argument's sake, the per square foot rate is computed in accordance with alleged super built up area of 48,280.46 sq. ft. (i.e. say carpet area plus 40% = 140% of 41,383.25/120%), the resultant figure will be more than Rs. 24,000/- PSF (i.e. 1158856634/48,280.46) which is once again quite unbelievable. 32. Thu....
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....nd corroborative materials to prove irrefutably that the said noting reveal either unaccounted income or unaccounted investment or unaccounted expenditure of the assessee. As discussed above, in the instant case, assessments for the impugned years have been completed u/s 153A of the Act which relates to assessment in case of search or requisition. The prerequisite condition for application of Sec. 153A of the Act is a search conducted under section 132 of the Act or any requisition made under section 132A of the Act to unearth hidden income or property. Thus, the very purpose/ essence of search conduced u/s 132 of the Act is to unearth hidden income or property or get hold of books of account or documents which has not been or will not be otherwise produced by the assessee in regular course on issue of summons or notice. In the assessee's case, as stated above, the purported search action did not lead to discovery of any unaccounted money, bullion, jewellery or other valuable article or thing. Further, no books of account revealing any undisclosed transactions of the assessee were found during the course of search. The entire assessment order revolves around scribbling in loose....
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.... evidence i.e., by the evidence of those persons who can vouchsafe for the truth of the facts in Issue. 6.5 Further, the Hon'ble Supreme Court in the case of Mohd. Yusuf& Anr. Vs. D. & Anr. AIR 1968 Bom. 112 has observed that the evidence of the contents contained in document is hearsay evidence unless the writer thereof is examined before the Court. The Hon'ble Court, therefore, held that the attempt to prove the contents of the document by proving the signatures of the handwriting of the author thereof is set at naught, the well-recognised rule that hearsay evidence cannot be admitted. 6.6 If we consider the said piece of paper seized during search in light of the definition of the word "document" as given in the Indian Evidence Act and General Clauses Act and the truthfulness of the contents thereof in light of the aforesaid decisions of the Hon'ble Supreme Court we find that the said paper contains jottings of certain figures but the same does not describe or express the substance of any transaction and even if the said paper has been seized from the possession of the assessee the contents thereof are not capable of describing the transactions the way the AO h....
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....f search then it has to be presumed that the signature and every other part of such account books and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by or to be in the handwriting of any particular person are in that person's handwriting. Needless to say that in law no document or paper can have any validity or enforceability until the same bears signature of concerned parties. Signature is the soul and any paper, notice or document is a body. Body without a soul is of no use, value or consequence. What is the significance and importance of a signature on any document can be found in the judgment of Hon'ble Calcutta High Court in the case of B.K Gooyee v. CIT [1966] 62 ITR 109. In that case the Assessing Officer issued a notice under section 34 of the Income-tax Act, 1922 but did not sign it. When the matter came up before the Hon'ble High Court at Calcutta it was held by their Lordships that the unsigned notice issued by the ITO was invalid and consequently equal to no notice. If we are to agree with the contention of the revenue that though the MOU is unsigned the same should form ....
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....#39;s income. The presumption at the most is attracted to the figures and a further presumption that they represent the income of the assessee Is not permissible under Section 132(4A). When a dumb document, like the present slip, is recovered and the revenue wants to make use of it, it is the duty of the revenue to collect necessary evidence which may provide an acceptable narration to the various entries. The evidence collected should be such that any reasonable man would accept, the hypothesis advanced by the revenue that the figures written on the right side of the slip represent incomes earned by the assessee. It was conceded by the learned Departmental Representative that no such evidence has been brought on record.......Therefore the additions cannot be sustained and they are hereby deleted." (Emphasis supplied). 38. In view of the aforesaid judgments, it is submitted that since the impugned seized papers are undated, have no acceptable narration and do not bear the signature of the assessee or any other party, they are in the nature of dumb documents having no evidentiary value and cannot be taken as a sole basis for determination of undisclosed income of the assessee. Wh....
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....he ground raised in assessment year 2006-07 as under:- "a) On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in concluding that the unaccounted cash receipts, which were received during the AY 2006-07 should be taxed in the year in which project was completed." 40. We have heard rival contentions on this issue and gone through facts and circumstances of the case. We find that the AO extrapolated the on-money rate Rs. 16,230/- per sq. ft. to the remaining flats in the project consequent to the aforesaid addition of Rs. 67,16,25,687/- for total built-up area of 41,383.25 sq. ft. of flats sold as under:- A. Y. Area sold as per BMC Addition on account of alleged on-money @Rs.16,230/- per sq. ft. 2004-05 3466.44 5,62,60,321 2006-07 10766.24 17,47,36,075 2007-08 7013.59 11,38,30,565 We find that the AO has, vide Para 31 of the assessment order for A.Y. 2007-08, alleged that the assessee company has contradicted claims regarding saleable area. For making addition the AO observed as under:- "31. Further, the assessee company, itself by way of its own submissions contradicts its own claims regarding saleabl....
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....the assessee i.e. on account of profit from Legend project in accordance with project completion method of accounting and the correct year of taxability of unaccounted cash receipt. For this, the assessee has identically worded grounds and for the sake of brevity we are reproducing the following grounds as raised in assessment year 2008-09:- "3. The Learned CIT(A) also failed to appreciate that since the assessee was following project completion method of accounting and the impugned project was not complete during the year under consideration, the appellant had not claimed any deduction on account of construction cost in its P/L A/c and accordingly, no addition on the said count could be made for the year under consideration." The Revenue has also raised identically worded grounds in both the years and hence the grounds as raised in assessment year 2008-09 read as under:- "1. a. On the facts and in the circumstances of the case and in law, the Learned CIT (A) failed to appreciate that the amount of Rs. 18.69 crores paid by the assessee to MHADA was in the nature of penalty paid by the assessee for infraction of law, which would not be allowable under the provisions of Sect....
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....director of the assessee in his statement u/s 131 had admitted that 95% of the building had already been completed. Hence, the AO concluded that as on 31.3.2008, project was almost complete and possession was not given because of issue of Bogus Tenancy. Accordingly, the AO was of the view that the project had already been substantially completed and accordingly, profits should have been recognized in AY 2008-09. The AO came to the said conclusion on account of the following alleged reasons:- (i) The project was going on since 1998 and the assessee had not offered any income up to AY 2008-09. (ii) Total saleable area in the project as per BMC plan was 109562 sq ft. out of which till 3 1.3.2008, 66451 sq ft were sold till 31.3.2008. (iii) Mr. Bharat Shah, director of the assessee had stated in course of search that 95% of the project had already been completed. (iv) Total agreement value of flats sold till 31.3.2008 was Rs. 95,01,16,716/- and against it till 3 1.3.2008 advance of Rs. 65,35,01,589 had been received. (v) The AO relied on the Guidance Note on recognition of Revenue for Real Estate Developers issued by ICAT. In response, the assessee vide letter dated 2....
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....the hands of the assessee for the A.Y. 2008-09. Aggrieved, assessee preferred appeal before CIT (A). 45. The CIT (A) held that the assessee had been consistently following project completion method of accounting which was an accepted method of accounting. The said method of accounting had been accepted by the Department up to AY 200708. He directed the AO to find out the accounting year in which the occupation certificate or possession of the flat was given (whichever date was earlier) and take advance collected by cheque and alleged estimated cash receipts as sale receipt and assess the income in the relevant assessment year. He thus deleted the addition made by the AO for AY 2008-09. The revenue is in second appeal before the Tribunal against the decision of the CIT (A) and assessee has appealed against the reliance placed by him on the seized papers and misinterpretation of notings therein. 46. We have rival contentions and gone through the facts and circumstances of the case. We have gone through AS-7 issued by the ICAI and find that the same is applicable only to accounting for construction contracts in the financial statements of contractors. The text of AS-7 (Construct....
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....that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. On these reasonings, in the absence of any material change justifying the Revenue to take a different view of the matter and, if there was no change, it was in support of the assessee-we do not think the question should have been reopened and contrary to what had been decided by the Commissioner of Income-tax in the earlier proceedings, a different and contradictory stand should have been taken." -- Further, Hon'ble Delhi High Court in the case of CIT vs. Neo Poly Pack (P) Ltd., 245 ITR 492 (Del) held as under:- "the doctrine of res judicata does not apply to income-tax proceedings since each assessment year is independent of the other but where an issue had been decided consistently in a particular manner for earlier assessment years, for the sake of consistency the same view -should continue to prevail for subsequent years unless there is material change in the facts. Since in the instant case there was no single distinguishing feature prompting a different view the income was liable to be assessed as business income.....
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....la, Mumbai - 400008 for grant of completion certificate vide letter dt. 7.12.2009 (Copy enclosed at pages 522 of Paper Book- III). The Appellant was, however, granted permission for part occupation of ground floor and basement and the completion certificate was not issued. Further, the Appellant was required to comply with certain other conditions by the Deputy Chief Engineer Buildings Proposals city vide letter dt. 1. 6.2010 (Copy enclosed at page 523 of Paper Book-Ill). It is worthwhile to note that the search in this case took place in March 2008 and the request for completion certificate was made almost 2 years thereafter in December 2009. It is ironical that the Department recorded a finding that the construction of the building was substantially completed in 1st quarter of 2008 whereas the BMC, the competent authority in this respect was not ready to give completion certificate even in December 2009. 5. The letter of M/s. Archvision Architects was supposed to be accompanied by completion certificate. It WOS however in reality a Certificate by Consulting Structural Engineers to the effect that the construction was carried out as per structural design and it was safe and sta....
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....he breach, at its own option and discretion either to terminate this Agreement by giving one month notice. Provided however that upon termination of this agreement as aforesaid, the Promoter shall refund to the Purchaser the amount which may till then have been paid by the Purchaser to the Promoter along with a further lump sum of Rs....../- with interest thereon at the rate of .............% p. a. or obtain specific performance of this Agreement. 9. As per chart enclosed sale agreements were entered into in respect of 17 flats only up to 31.03.2008 as against the total 32 flats available in the building (Copy enclosed at pages 341- 349 of Paper Book-11). The sale agreements for remaining 13 flats were executed after 31.03.2008. The chart enclosed reflects the amounts received by way of advances at the time of the execution of the sale agreement. The balance amounts were to be received at the time of handing over of possession/ occupation. In respect of the fiats for which sale agreements were entered into after 31.03.08, para 30 of the agreement mentioned that state of property as under 'construction'. This also clearly shows that the project had not been completed till....
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....ssee had filed a certificate of Architect showing that, the project was completed up to 75% in AY 2002-03. The Municipal Corporation had granted completion on 25-2-2003 and the possession was given to the flat owners by the assessee only in AY 2003-04. As on 31-3-2002 a sizeable portion of the construction involving large expenditure remained to be completed. The lift was however installed in AY 2002-03. The revenue had accepted that the assessee was following project completion method. On these facts the ITAT has held as under:- "The project was not complete in A. Y. 2002-03. The project was completed up to 75% and this is supported by the certificate of the architect. The assessee firm has given possession to the flats owners in A. Y. 2003-04. Bombay Municipal Corporation has issued final completion certificate on 25th Feb. 2003. After 31t March, 2002 substantial expenditure amounting to Rs. 10,71,57,107/- has been spent on the project. The various other facilities were not available in the project till 31st March, 2002. The project is not completed upto 90 per cent as argued by the Departmental Representative as no evidence in support of this aspect was produced. The AO in hi....
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....nce the very inception of its business. The said method of accounting has been consistently accepted as such by the AO in assessments framed u/s 143(3) of the Act over the past years. However, in assessments framed u/s 153A of the Act pursuant to search action, the AO discarded the project completion method of accounting consistently followed by the assessee and taxed the alleged on-money receipts in the years of purported receipts i.e. AYs 2004-05 to 2007-08. Further, for AY 2008-09, AO recognized the entire profit in respect of the total area sold till 31.03.2008 in AY 2008-09 purportedly in accordance with AS-7. Thus, the AO abruptly discarded the method of accounting consistently followed by the assessee and accepted by the Revenue over the past years without citing any plausible reason for the same. We find that the Hon'ble Courts in a plethora of cases held that project completion method of accounting is an accepted method of accounting in case of builders. Where the assessee- builder has been consistently following the said method over the past years and the same has been accepted by the revenue, the revenue cannot reject the said method of accounting for the subsequent ....
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....d share of land in a project which it is developing as a developer. Hence, the assessee is not a construction contractor and revised AS-7 was considered as not applicable. Accounting Standard - 7 has not been specified the Central Government under section 145(2). Hence, the AO could not have rejected the accounts under s. 145(3) on the ground the assessee has not followed the prescribed method of accounting. As per s. 145(1), income Is to be computed in accordance with system of accounting regularly employed and project completion method is an accepted method of accounting ....... In view of this, revised AS-7 cannot be applied in the case of the assessee." Thus, in view of the above, the assessee not being a construction contractor, AS-7 has no applicability in the assessee's case. Hence, as regards the year of completion of the project, we uphold the finds of CIT (A) that the monies received from the purchasers will partake the character of advance only and not as income until the possession is given to the purchaser. In case possession is not given, the purchaser can always claim the refund and the assessee is duty bound to return the money. In view of this receipts can b....
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....e to any other remedies to which he may be liable) to refund the amounts already received by him in respect of the flat (with simple interest at nine percent per annum from the date he received the sums till the date the amount and interest thereon is refunded), and the amounts and interest shall be a charge on the land and the construction if any thereon in which the flat is or was to be constructed, to the extent of the amount due, but subject to any prior encumbrances." (iv) Again, Section 16 of the aforesaid Act reads as under:- Act to be in addition to Transfer of Property Act and to over-ride contract to the contrary - The provisions of this Act, except where otherwise provided, shall be in addition to the provisions of the Transfer of Property Act, 1882 (IV of 1882), and shall take effect notwithstanding anything to the contrary in any contract." The abovementioned extracts from the MOFA Act clearly show that the advances collected has to be refunded, if asked for by the buyer, if the possession is not given. The promoter cannot give possession unless the promoter gets occupancy certificate. The CIT (A) has also reproduced extracts of agreement dated 10.06.200....
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....al before the Tribunal for AYs 2004-05, 2006-07 & 2007-08, the revenue has challenged the reliance placed by the CIT(A) on the decision of the Mumbai Tribunal (and later on affirmed by the Hon'ble Bombay High Court) in the case of Jalaram Jagruti Developers Pvt. Ltd. Vs. DCIT Central Circle (ITA No. 5121 to 5123/M/2008 vide order dated 2-04-2009) (Copy enclosed at pages 795-801of assessee's Paper Book). The AO has tried to distinguish the said case law from the facts of the present assessee's case on the pretext that in the case of Jalaram Jagruti, unaccounted cash receipts were entered in the regular books of account whereas in the instant case, the assessee has neither admitted the existence of unaccounted cash receipts nor accounted them in its regular books of account. Thus, according to the AO, the said decision is not applicable to the facts of the present assessee's case. We find that the assessee and the CIT(A) have relied on the ratio of judgment rendered in the aforesaid case law to the effect that if the assessee follows project completion method of accounting, then even the unaccounted cash receipts towards sale of flats have to be assessed in the year in wh....
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....t of Legend project, since such cash receipts will have direct nexus with the said project, they can be taxed only in the year in which the project is completed in accordance with project completion method of accounting regularly followed by the assessee and accepted by the revenue over the past years. Thus, the ground of appeal taken up by the revenue before the Tribunal challenging the reliance placed by the CIT(A) on the judgment rendered in the case of Jalaram Jagruti is baseless. Thus, the aforesaid case law clearly supports the assessee's contention that: (i) Project completion method of accounting is an accepted norm of accounting in case of real estate developers. (ii) That AS-7 (revised 2002) is not applicable to the assessee's case. (iii) The contention of the AO that the assessee was necessarily required to follow percentage completion method of accounting in accordance with revised AS-7 was misplaced. (iv) That the AO was wrong in assessing the income of the assessee for A.Y. 2008-09 in accordance with percentage completion method of accounting. (v) That the AO was bound to accept project completion method of accounting regularly followed by the a....
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....rwise, the assessee explained the entries, no addition on account of receipt of moneys on extrapolation can be added in the hands of the assessee. Accordingly this issue of the assessee's appeals is allowed and the issue of Revenue's appeals is dismissed. 54. The next common issue in this appeal of assessee in ITA No.1907/Mum/2011 and Revenue's appeal in ITA No.3020/Mum/2011 for the assessment year 2005-06 is against the order of CIT (A) confirming the disallowance of compensation of Rs.6,50,00,000/- and interest of Rs. 1,36,65,205/- paid to Videocon Group. For this assessee had raised the following grounds:- "1. That on the facts and in the circumstances of the case, the Learned CIT (A) erred in holding that the assessment order passed u/s 143(3) r. w. s. 153A of the Income-tax Act for the year under consideration was valid although no valid search was conducted in the appellant's case and no incriminating evidence was found as a result of search. 2. That the Learned CIT (A) erred in holding that the AO was entitled to use whatever material was available with him, whether or not a discovery of search in assessee's case, including material found in course of search o....
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....he payment of compensation of Rs. 6.5 crores and interest of Rs. 1.37 crores to Videocon Group were made wholly and exclusively for the purpose of business. Further, he alleged that these payments were made to compensate the Videocon Group for fault of the promoters and had nothing to do with commercial expediency. Accordingly, the compensation and interest paid to Videocon Group were disallowed by the AO u/s 37(1) of the Act. The assessee claimed that the impugned payments related to AY 2006-07, the AO erroneously made the disallowance in the assessment order u/s 153A of the Act for AY 2005-06. Thus, according to him, the entire addition of Rs. 7,86,65,205/- made on the aforesaid count for AY 2005-06 collapsed at the very threshold. On appeal, the CIT (A) appreciated the submissions of the assessee and deleted the impugned addition for AY 2005-06 partly. The assessee is in appeal before the Tribunal against the confirmation of the addition by the CIT (A) for AY 2005-06. 57. Before us Learned Counsel for the assessee argued, without prejudice to the fact that the impugned expenses did not pertain to AY 2005-06 and as such, the addition for the said year was not sustainable. It w....
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....o incriminating material or documents were found in course of the search at any of the premises of group concerns or premises of the assessee company with respect to the allowability or otherwise of the impugned compensation or interest expenses. In the original assessment framed u/s 143(3) of the Act for AY 2006-07, the AO after application of mind and detailed scrutiny of accounts had consciously allowed the said expenses. However, later on while framing assessments u/s 153A of the Act, under identical circumstances vis-a-vis the past, the AO opined that such expenses were not allowable u/s 37(1) of the Act. Accordingly, the same was illegally added back by the AO u/s 143(3) r. w. s. 153A of the Act merely on the basis of change of opinion in the guise of search assessment. Such an action is vitiated in law. It is an accepted principle of law that the AO does not have jurisdiction to review his own order. As such, since between the date of the order of original assessments u/s 143(3) of the Act and the date of framing assessment u/s 153A of the Act, no new material had come on record, no fresh information had been received in respect of the impugned compensation and interest expe....
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.... would arise in the A.Y.2010-11 which is still pending before the AO. c. On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in concluding that profit of the project should be recognized on completion of the project and that issue of occupancy issued by Municipal Authorities should only be the criteria for completion of project. d. On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in not appreciating the fact that 95% of the project was completed as per assessee's own statement and due to pendency of issue of bogus tenancy, possession was not given. e. On the facts and in the circumstances of the case and in law the Learned CIT(A) erred in not appreciating the fact that the project cannot be allowed to be stretched at the whims of the assessee, even if the assessee is following project completion method when the other circumstances clearly indicate that the project had been completed. The ratio laid down b the Hon'ble Mumbai Tribunal in the case of Unique Enterprises Vs. ITO (2010- TIOL-737-ITAT-MUM dated 20.08.2010) and Champion Construction Company Vs. ITO (1983) 5 ITD 495 has not been appreciated by....
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....r Road (the present site of Legend project) remained unproved and accordingly, possession of 48 flats shown for the purpose of rehabilitation of so called occupants/ tenants needed to be taken over by MHADA after confiscating them. The NOC holder vide letter dated 17-02-2004 gave its consent for handing over the possession of 48 tenements shown for tenants to MHADA. Copy of the said order dated 17-12-2007 was filed by assessee before us (Copy enclosed at pages 387-391 of assessee's Paper Book-Ill). Thereafter, vide letter dated 30-07-2009 MHADA gave legal sanction to 9 tenants out of the 48 tenants. Copy of the said letter was filed. (Copy enclosed at pages 392-395 of assessee's Paper Book-Ill). Again, vide letter dated 06.08.2009 MHADA intimated its approval to hand over the balance 771.44 sq. ft. of the disputed area of the impugned project to the assessee on payment of consideration @ Rs. 2,42,300/- per sq mt. amounting to Rs, 18,69,19,912/- to Mumbai Building Repairs & Reconstruction Board. Copy of the said letter was filed (Copy enclosed at pages 396-397 of assessee's Paper Book-Ill). Accordingly, the assessee vide cheque no. 042917 dated 13-08-2009 drawn in the name of M.B.R ....
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....; 5,00,32,914 Add: Additions made as discussed above 1). Proportionate expenses incurred for constructing area for tenants as per Para 4 2). Addition on account of actual construction cost on saleable area 6,67,67,532 25,42,10,217 32,09,77,749 GROSS TOTAL INCOME 37,10,10,663 Less: Deduction under Chapter VI-A NIL TOTAL INCOME 37,10,10,663 64.Now, having computed the business income for AY 2008-09 at Rs. 25,42,10,217 (balance profit) plus 5,00,32,914/- (profit as per computation on the basis of offer made by Shri Bharat Shah including other income of 32,914) = Rs. 30,42,43,131/- (i.e. the profit estimated by the AO on percentage completion method of accounting for 66451 sq. ft. without allowing deduction on account of the construction cost of Rs. 6,67,67,532/- in respect of alleged bogus tenants), the AO erred in adding back the impugned amount of Rs. 6,67,67,532/- to the said business income of Rs. 30,42,43,131/- although no deduction of the said sum of Rs. 6,67,67,532/- was made while computing the profit on the above basis by the AO. Thus, the AO ....
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....see was accepted in respect of 9 out of 48 occupiers. On this basis, the authorities in MHADA determined the surplus space at 771.44 sq. mt. intended for the tenants the claim for which was not admitted by MHADA. Accordingly, the assessee made the payment of Rs. 18,69,19,912/- in terms of letter dated 06.08.2009 (Copy enclosed at pages 396-397of assessee's Paper Book-Ill). It is a fact that MHADA authorities demanded the amount in terms of provisions of section 103-1(3) of Maharastra Housing and Area Development Act, 1976. Section 103-I of this Act (Copy enclosed at pages 398-399 of Paper Book-Ill) provides for methodology for determining the surplus area and the manner in which it is to be dealt with by MHADA authorities. One of the situations, in which there can be surplus and when the space constructed for the erstwhile occupiers is in excess of space allotted to them, under the provision of the aforesaid Act, the MHADA authorities have to decide as to whom the space is to be handed over and for what consideration. The constructed area/ tenements could be handed over to occupiers of another seized building for a consideration. In the present case, the authorities thought it fit ....
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....ion of expenditure u/s 37(1) of the Act corresponding to section 10(2)(xv) of the Indian Income Tax Act, 1922 as under:- "The Expression "for the purpose for the business" is wider in scope than the expression "for the purpose of earning profits". Its range is wide; it may take in not only the day to day running of a business but also the rationalization of its administration and modernization of its machinery; it may include measures for the preservation of the business and for the protection of its assets and conjectures without any tangible evidence ignoring the agreements on records, the statements of buyer recorded u/s 131 and the affidavits of buyers affirming the assertions made by the appellant company property from expropriation, coercive process or ascertain of hostile title; it may also comprehend payment of statutory dues and taxes imposed as a precondition to commerce or for the carrying on of a business; it may comprehend many other acts incidental to the carrying on of a business. However wide the meaning of the expression may be, its limits are implicit in it. The purpose shall be for the business, that is to say, the expenditure incurred shall be for the carryin....