TaxTMI 
TaxTMI 
2017 (9) TMI 810
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....rom surrender of allotment of flats. A search and seizure action u/s.132 of the Act was carried out between 24/03/2011 and 26/03/2011 in the case of Ravi group of cases including M/s. Ravi Developments. The assessee is one of the partners of the said firm. During the search proceedings various newspapers, computer backups and other documents were seized. Later on, a notice u/s.153A of the Act in response to which the assessee filed her return of income for the year under appeal on 13/12/2011, declaring the same total income that was shown in the original return. During the assessment proceedings, the AO noticed that the assessee had shown a flat at Andheri appearing on the asset side of the balance sheet as on 31/03/2005, valued at Rs. 1.15 crores other than her residential house, that the same was carried forward from AY. 2004- 05. Verification of the balance sheet for the year under consideration revealed that the said property was not appearing on the asset side of balance sheet as on 31/03/2006 and that no income from the said transaction was offered to tax. He issued a show cause notice to the assessee, in response to which she filed her explanation, vide letter dated 20/03....
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....de by the assessee was a result of the enquiries carried out by the AO during the assessment proceedings and not a result of any incriminating evidence found in the course of search action. He relied upon certain case laws and stated that the addition made by the AO was not based on seized incriminating records, that he was not justified in making the addition. On merits of the addition, it was argued that assessee and her daughters had independently invested certain amounts with RCC for booking of flats in buildings under development, that each family member had invested the consideration out of their own sources of funds, that investments were duly reflected on the asset sides of the balance sheets of the respective persons for the relevant AY.s, that the money had flown to RCC from the bank accounts of each person independently, that the assessee in the year 2001 had invested in her own name and in the names of then minor daughters certain amounts for booking of flats with RCC, that in the year 2005 the said allotments were cancelled and the amounts were refunded to her with compensation, that her daughters did not get any compensation, that the daughters of the assessee were....
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.... various details gathered in the course of search operation in the group cases. Finally, he rejected the contention of the assessee about addition being made without any material. 3.2. With regard to the argument of the assessee that amount received on cancellation was liable to be assessed under the head capital gains with resultant benefit of indexed cost of acquisition, the FAA held that the contention of the assessee was not sustainable in law, that she had only booked flats in her name is and in the names of minor daughters in the year 2001 by paying token advances for several flats in different buildings, that she had not placed on record agreement of sale, if any, entered into with the respective builders, that by paying token advance money she did not get any right which could be termed as capital assets within the definition of section 2(14) and which could be transferred within the meaning of section 2(47), that RCC, in its letter dated 22/11/2005, had stated that position of the flats could not be given to her before 25/03/2005 and accordingly compensation was agreed to be paid to her in view of surrendering the flats, that she had claimed that at the time of original....
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.... 4. Before us, the AR stated that in absence of seizure of incriminating documents no addition could be made to the income of the assessee for the year under appeal. He relied upon the cases of Continental Warehousing Corporation (374 ITR 645), Gurinder Singh Baba (386 ITR 483), Kabul Chawala (380 ITR 573) and RRJ Securities Ltd. (62 taxmann.com 391). The Departmental Representative(DR)supported the order of the FAA and contended that as per panchnana ated 26/03/201 ertain documents were seized, that the documents consisted bank account statement of Shamrao Vitthal Co-Operative Bank, that the amount received by the assessee were transacted through the said bank account, that the amount in dispute related to seized documents, that the assessee had admitted that books of accounts were not available, that there was specific reference to bank passbooks in the question and also recorded during the course of search proceedings, that the assessee had admitted that bank passed of Shamrao Vitthal Co-Operative Bank would be produced later on, that the accounts of the assessee were not properly drawn prior to search and were redrawn subsequent to search as far as per flat at Andheri was co....
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....clear that after the assessee admitted the inadvertent mistake he AO accepted her claim in principle. In light of the peculiar facts and circumstances of the case e decide the jurisdictional issue against the assessee. 6. Second effective ground of appeal is about head of income under which the compensation received on cancellation of the flats should be assessed i.e.whether it should be taxed under the head income from capital gains or income from other sources. Related to it is the issue of indexation f the disputed amount is to be taxed as capital gains. We have already mentioned the facts regarding cancellation of flat-booking by the assessee n the earlier part of the order and the part relief given to her by the FAA. 6.1. Before us he AR argued that the assessee had invested certain amounts with RCC for acquisition of flats in a building under development, that in the year 2005 the allotment was cancelled, that the investment was made in the year 2001, that the FAA was not justified in denying the indexation for the asset sold, that he did not grant beneficial rate of taxes to the assessee, as provided under section 112 of the Act. He referred to the provisions of sectio....
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....of balance instalments dentification of a particular flat and delivery of possession were consequential acts, hat the Tribunal erred in holding that transaction did not envisage a long-term capital gain. In the case of Vijay Flexible Containers (supra) he Hon'ble Bombay High Court has held that the right to obtain a conveyance of immovable property fell within the expression property of any kind sed in section 2 (14) and was a capital asset. In that matter the assessee firm had entered into an agreement for purchase of an immovable property. It paid Rs. 17,500 as earnest money. Subsequently, it had to file a suit for specific performance of the agreement for sale or n the alternative or damages for its breach. Consent terms were arrived at in the suit and a decree was passed in favour of the assessee for the sum of Rs. 1,17,500/-and interest. The said sum was received by the assessee during the course of the previous year relevant to the AY.1972-73. The AO held that the right that the assessee had acquired under the agreement for sale was a capital asset. Upon the extinguish - ment of that right he assessee had received the sum of Rs. 1,17,500/-. Deducting the cost of acquisition o....