TaxTMI 
TaxTMI 
2013 (9) TMI 1220
X X X X Extracts X X X X
X X X X Extracts X X X X
....king an addition of ₹ 1,70,91,150/- in respect of 9 flats in Cabo Project which were surrendered to M/s Landscapre Developers vide agreement dated 26.03.2010 due to share of escalated cost of construction. 3. The learned CIT(A) failed to appreciate that 9 flats as above were subsequently sold by M/s Landscape Developers and entire consideration in respect of these 9 flats was received and accounted by them. 4. Without prejudice to the above the learned CIT(A) erred in making addition in the hands of the assessee of 9 flats sold and accounted by M/s Landscape Developers resulting in to double taxation. 5. The learned CIT(A) erred in confirming addition of ₹ 7,85,90,105/- as alleged undisclosed receipts from sale of Cabo project by relying on loose sheet which were mere projections. 6. The learned CIT(A) failed to appreciate that the fact of projections was also deposed by the assessee on 25.03.2010. 7. The learned CIT(A) erred in not appreciating that the sale of flats in Cabo Project surrendered to M/S Landscape Developers was accounted by them on the basis of actual sale by them and there was no consideration or part thereof received by the assessee. 8. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was entitled to receive 42 flats alongwith 42 parking slots. As per the agreement to sale dt. 19.7.2004, the Assessee agreed to assign all the 42 flats in favour of Mr. Atanasio Teofilo Martins Monserrate. This agreement was subsequently amended by way of addendum dt. 5.3.2008 and according to that, Mr. Atanasio Monserrate was to receive 11 flats and accordingly the builder, M/s. Landscape Developers confirmed the same and balance 31 flats were to be allotted to the Assessee. These 11 flats were as under : 11 flats allotted to Atanasio Monserrate 1 D-202 117.32 2 D-204 112.72 3 D-205 246.89 4 D-206 246.89 5 E-102 155.96 6 E-205 250.04 7 E-206 250.04 8 E401/501 (2 flats) 321.22 116.00 9 E-402 152.85 166.08 10 E-502 168.04 2021.97 232.08 50% of terrace 116.04 2138.01 Subsequently, agreement between the Assessee and Developer dt. 5.10.2002 got amended as per their verbal agreement on 4.4.2008 which was subsequently put into writing on 26.3.2010 and as per the amended agreement, it was agreed between the Assessee and M/s. Landscape Developers that the Assessee will allot 9 flats out of balance 31 flats to the Develope....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for the sale of the said property described in Schedule II therein. 3) That during the actual course of construction, the parties hereto realized that the actual soil conditions and the difficult terrain which forced, the DEVELOPER/PURCHASER to incur heavy extra costs of constructing R.C.C. toe wall, retaining wall for extra protection and also due to the exorbitant escalation in the cost of the construction material such as cement, steel, the cost of constructing the said property increased manifold and thus resulted in loss of income to the DEVELOPER/PURCHASER. 4. That in view of the above the parties hereto renegotiated the terms and by a verbal Agreement dated 4th April 2008, it was agreed between the parties hereto that the VENDOR shall allot nine flats as shown in schedule III hereinunder alongwith 9 (Nine) parking slots to the DEVELOPER/PURCHASER and that the DEVELOPER/PURCHASER shall be free to enter into agreement with any third party for the sale of the said flats at the price as shall be decided by the DEVELOPER/PURCHASER. 5. That the VENDORS do hereby confirm the said verbal agreement entered by and between the parties hereto and do hereby declare that the VENDOR....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nded that as per the agreement dt. 5.10.2002 the Assessee has sold 50% of the land admeasuring 16140 sq. mtr. being part and parcel of land admeasuring 1,28,826 sq. mtr. identified as 'Odxell' situated at Galeigao within the limits of Panaji Municipal Council, Tal. Tiswadi to M/s. Landscape Developers for a total consideration of ₹ 2,52,40,000/-. As per the agreement the consideration has to be received by the Assessee in the shape of super built-up area of 5884 sq. mtr. + 211 sq. mtr. (terrace) i.e. saleable area of 5989.50 sq. mtr. It was estimated that this area will come for 42 flats. The number as well as the super built-up area of each flat was duly mentioned in Schedule-IV of the agreement. Subsequently, M/s. Landscape Developers contacted the Assessee and pointed out that there is a change in the super built-up area of the flats and even the prices of cement, steel etc. have also increased. Therefore, the value of 42 flats will be much more than ₹ 2,52,40,000/- and therefore, the Assessee orally agreed with M/s. Landscape Developers to take only 33 flats, the super built-up area of which was more than 5989.5 sq. mtr. out of which 11 flats, the assessee has assig....
X X X X Extracts X X X X
X X X X Extracts X X X X
....added in the hands of the Assessee. Had these flats gone to the share of the Assessee, M/s. Landscape Developers would not have transferred these flats to Hyder Khan and family and the vendor would have been the Assessee. Thus, it was contended that the addition so made must be deleted. 4.2 The ld. DR, on the other hand, relied on the order of the authorities below. 4.3 We have carefully considered the rival submissions and perused the matter on record alongwith the order of the tax authorities below. We have also gone through the documents which have been referred to during the course of hearing before us. It is an undisputed fact that the Assessee has entered into agreement dt. 5.10.2002 with M/s. Landscape Developers in respect of land admeasuring 16,140 sq. mtr. which is part and portion of land admeasuring 1,28,826 sq. mtr. identified as 'Odxell' situated at Taleigao within the limits of Panaji Municipal Council, Tal. Tiswadi. As per the said agreement, the Assessee agreed to sell to M/s. Landscape Developers property admeasuring 16,140 sq. mtr. as described in Schedule - VI thereto alongwith all its development right for a consideration of ₹ 2,52,40,000/-. It was agre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uilders, i.e, M/s Land Scape Developers. The above flats sold is from the share of the built up area of M/s Land scape Developers have nothing to do with the above sale agreements. Q.No.17 Please let me know the details of the Flat Nos ear marked for you as consideration as per the development agreement. Ans: The flats which are ear marked against the built up area, I am to receive are as per Schedule 2 of the addendum dated: 19.07.2004 me and Sri.Antatio Monseratte. Totally there are 42 flats out of which 11 flats have been assigned to Sri.Monseratte. The 7 flat Nos. from 'D1 Block are 201 to 206. 17 flats from 'E1 Block Flat Nos. 002, 101, 102, 201 to 206, 301 to 304, 401, 402, 501 and 502. From „F‟ Block 18 flats Nos. 001, 002, 101, 102, 201 to 206, 301 to 304, 401, 402, 501 & 502. Q. No.l8 Please refer to the above two questions, the 9 flats referred in the question above are D-201, 203, E-001, 002, 101, 201, 202, 301 & 302. All these flats are out of those flats ear marked to you in your answer to Q. No. 16 and 17. Please reconcile your answers in the light of facts that have emerged. Ans: I stand by the answers given in my answers to Question....
X X X X Extracts X X X X
X X X X Extracts X X X X
....no. 16. The DDIT while recording the statement did not point out who is the seller or the vendor but has simply given the names of the buyers. From the agreements, we noted that each of the agreement for sale was registered by M/s. Landscape Developers in favour of the respective buyers as mentioned in question no. 16 for a consideration as has been mentioned in question no. 16. In none of the sale deeds, we noted, the Assessee is the vendor. Had the Assessee been the owner of these flats, the Assessee would have transferred these flats by executing these sale deeds before the Sub-Registrar office in favour of the respective buyers. From the registered agreements, it is apparent that it is M/s. Landscape Developers who has sold these flats to the various buyers against the consideration stated therein. We noted while going through the agreements that the description in respect of the agreements entered into between the Assessee and the vendor dt. 5.10.2002 has been referred to and the super built-up area was also referred to. This is apparent from Flat E-1, pg. 13. The Agreement for sale so registered nowhere states that each of the flat sold by M/s. Landscape Developers comes to t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y M/s. Landscape Developers, we are of the firm view that no income has arisen or accrued to the Assessee out of the sale consideration of ₹ 2,28,31,505/- in respect of the 9 flats. We, accordingly, delete the addition amounting to ₹ 1,70,91,150/- (50% in case of each of the Assessee). 5. Ground nos. 5, 6, 7, 8 & 9 relates to the common issue relating to addition of ₹ 7,85,90,105/- (50% being added in the hands of each of the Assessee). The brief facts relating to these grounds are that during the course of search at the office of M/s. ESAR Builders, folder A/E/3 was seized from pg. 46-48. The pg. 46-48 contains details regarding Cabo project constructed by M/s. Landscape Developers. It was noted by the revenue from pg. 48 that the sale consideration for flats sold at Cabo was received partly in cash and partly by cheque. The relevant part of the sheet is reproduced as under :- Sq. mts. Rate Cheque Cash Total 1 2 Bed Room (Non Seaview) 108.00 50000 20000 30000 5400000 Shabbar 107.00 50000 20000 30000 5350000 228.50 75000 15000 60000 17137500 A 3 Bed Room (Seaview) 153.96 85000 15000 70000 13086600 3 Bed Room (Seaview) 153.96 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....71,37,500 12.99.16.311" The AO on the basis of this paper noticed that the Assessee invested ₹ 8.25 crores in the flat given to Parvez, Forest Department, Adam and Azim Mohidiri and this is the same amount which has been declared under the head 'unexplained expenditure' for the project 'Cabo' by the Assessee vide letter dt. 10.4.2010 and in the statement recorded u/s 131 dt. 12.4.2010. The Assessee has given the money to Mr. Dinar Tarkar and his concerns amounting to ₹ 7.72 crores which was re-paid by Mr. Dinar Tarkar and his concerns subsequently and this amount has been shown as amount refunded and against the same, interest @ 15% worked out for the period April, 8 to March, 9 at ₹ 1,15,80,000/-. There is a mention of cancellation of two flats sold to Mujib Khan which is retained by Sadiq Sheikh amounting to ₹ 1,71,37,500/-. These flats, E-303 and E-304 was sold by Sadiq Sheikh to Abdul Rehan Khan vide sale deed dt. 26.3.2010. There is mention of above flats in pg. 33 of NEB/3 and pg. 47 of Annexure A/EB/4 wherein the second column appears to be the cash portion received on sale of the above flats which matched with the cash portion mentioned on pg. 48....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y the seized documents mentioned above which has accrued to the appellant. Merely because he has entered into an agreement to give the flats to the builder, subsequent to the findings of the search action, does not make the said transaction a genuine one. The sum of ₹ 10.14 crore is therefore taxable as the income of the appellant after giving credit to the cost of acquisition. No separate addition on account of surrender of flats to the builder being a notional income is necessary. This takes care of the issue at (1) as well. 6. The appeal is disposed of with the above findings." 5.1 The ld. AR before us vehemently contended that the Assessee has got to do nothing with these papers. It is merely a rough paper and had the paper belonged to the Assessee, at pg. 48 the Assessee would have not mentioned his name while mentioning 'cancellation of 2 flats sold to Mujib Khan retained by Sadiq Sheikh'. Nobody will mention his name while keeping the record. The flats to Hyder Khan family has been sold by M/s. Landscape Developers and not by the Assessee. The registered sale deed has been executed by the Developer and not by the Assessee. This fact has duly been accepted when Mr. D....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on in respect of 9 flats sold by M/S Landscape Developers on the basis of these loose sheets. 1. The addition was made merely on the basis of loose sheet and the assessee claimed that it was a mere projection, there has to be circumstantial evidence about the same. Mere entries in seized material are not sufficient to prove that the assessee has indulged in such a transaction. Reliance is placed on the decision in the case of CIT v Maulikkumar K Shah 307 ITR 137 (Guj). In the said decision the Hon'able High Court considered the decisions in the case of S.K.Gupta v DCIT 63 TTJ 532 (Del) wherein on similar facts it was held that the addition can not be made merely on the basis of diary found during search without any circumstantial evidence. It also considered the decision in the case of CIT v Durga Prasad More 82 ITR 540 ( SC ) wherein it was held that," The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look in to the surrounding circumstances to find out the reality of the recitals made in those documents." In the case of CIT v Badar Durrez Ahmed and Rajiv Shakdher 308 ITR 230 the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... been first unjustifiably taxed on the surrender of flats to M/S Landscape Developers at its value. Besides the same flats when sold by M/S Landscape Developers have been again taxed in the hands of the assessee. Taxing of income in the hands of assessee at every incidence clearly indicates non application of mind while making the addition. 8. On page 5 of the assessment order addition has been made as undisclosed receipts from sale of flats in Cabo where as on page 20 in Computation part it is held as unexplained investment in Cabo project indicating non application of mind in making the addition. 9. The CIT (A) has referred to transaction of payment of ₹ 7.72 cr by assessee to Mr. Dinar Tarkar for acquiring stake in Minescape Group of companies. The transaction was normal business transaction through banking channel. The said amount was subsequently refunded to the assessee as the said stake could not be allotted. The payment and refund through banking channel by the assessee is properly accounted and disclosed. 10. While making the addition the CIT (A) has referred to statement on oath of Mr. Dinar Tarkar wherein the sale of 9 flats by M/S Landscape developers is cle....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rea comes to 1133.88 sq. mtr. We also noted that in respect of 3 flats, the area mentioned is 153.96 sq. mtr. in this table while as per the schedule attached to the agreement, the area is 155.96 sq. mtr. each. Therefore, we agree with the ld. AR that these papers relate only in respect of the sale of 9 flats. This fact is also apparent from the statement of Mr. Dinar Tarkar, the key person of M/s. Landscape Developers, whose statement was recorded by the revenue on 25.11.2011 and in reply to question no. 29 & 30, he stated as under : "Q.29. Now, I am drawing your attention to Page No.48 of the seized inventory, numbered A/EB/4, a copy of which has already been served on Landscape Developers. The said inventory indicates both consideration by cheque and cash. After detailed verification, it was found that the cheque portion has been accounted in your firm, Landscape Developers. I am showing you the said inventory once again, please go through the same and confirm whether the cash element mentioned therein are accounted or not? You are requested to furnish documentary evidence in support of the transaction. Ans. On going through the papers numbered A/EB/4, portion A, it appears ....