TaxTMI 
TaxTMI 
2013 (9) TMI 1220
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..... 2. The learned CIT(A) erred in making an addition of Rs. 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 Rs. 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 ....
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....uilt-up area. On the basis of the super built-up area, the Assessee 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 writi....
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....l construct in the said property for the VENDORS a total super built up area of 5884 M2+ 211 M2 (Terrace) i.e saleable area 5989.50 M2 in terms of units, details of which are given in schedule IV of the said agreement dated 5th October, 2002 collectively valued at Rs. 2,52,40,000/- (Rupees Two Crores Fifty Two Lakhs Forty Thousand only) which amount will be set off towards the total consideration payable by the DEVELOPER/ PURCHASER to the VENDORS 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 t....
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....at the Assessee has sold these flats and took the view that the Deed of Addendum dt. 26.3.2010 executed was only a colourable device adopted by the Assessee to benefit M/s. Landscape Developers and on that basis, the AO computed the gain on the consideration of Rs. 2,28,31,505/- at Rs. 1,70,91,150/- and added the same in the income of both the Assessees (50% each). The Assessee went in appeal. The CIT(A) confirmed the addition. 4.1 Before us, the ld. AR vehemently contended 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 Rs. 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, ....
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.... 26.3.2010 to be a colourable device and being entered into to avoid tax in the hands of the Assessee. It was submitted that the sale consideration received in respect of these flats has duly been shown by M/s. Landscape Developers in its income chargeable to tax and M/s. Landscape Developers has duly paid the tax. Since the flats did not belong to the Assessee and were not received by the Assessee, the income arising from the sale of these flats should not be 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....
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.... 28.04.2008 Mr. Mujiboddin H. Khan 2339400 E-002 6 28.04.2008 Mr. Mujiboddin H. Khan 1642650 E-201 7 28.04.2008 Mr. Mujiboddin H. Khan 1778100 E-202 8 29.09.2008 Mr. Abdul Rehman Khan 1697405 E-303 9 29.09.2008 Mr. Abdul Rehman Khan 4037750 E-302 Total 22831505 Please explain why the above consideration of Rs. 2,28,31,505 should not be brought to tax in your hands for AY 2009-10 in the year of assignment of your rights. Ans. As per the agreement between M/s Land Scape Developers and me, portion does not come into my part of built up area and it to that of the builders, 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 ....
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....ossessions which have been handed over to me. The flat Nos. are E-203, 204, 301 and 302. Q.No.22 Please let me know when these flats were handed over to you. Ans: These flats are handed over to me in the month of December 2009/January 2010." From question no. 16 it is apparent that there were 9 agreements for assignment of the rights in respect of 9 flats. The total consideration as per these agreements were Rs. 2,28,31,505/-. When the Assessee was asked in respect of these agreements, the Assessee clearly stated that these agreements do not relate to his part of the built-up area and it belongs to M/s. Landscape Developers. The Assessee has nothing to do with these sale agreements. Copy of these agreements was filed before us. We noted that these agreements had duly been registered in the office of the Sub-Registrar on the date as has been mentioned in question 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 ....
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....rimisetti Seetharamamma vs. CIT, 57 ITR 532 in which it was held that when a receipt is sought to be taxed as income, the burden lies upon the Department to prove that it is within the taxing provision. Where, however, receipt is of the nature of income, the burden of proving that it is not taxable because it falls within an exemption provided by the Act lies upon the Assessee. We are of the firm opinion that in this case what the revenue has done is that they have simply assessed income on the sale of the 9 flats which does not belong to the Assessee on the basis of suspicion. It is a settled law that suspicion, whatsoever strong it may be, it cannot take place of actuality. Since the flats do not belong to the Assessee as per the terms and conditions agreed between the Assessee and the Developer and the material found during the course of the search by way of agreement registered by 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 Rs. 2,28,31,505/- in respect of the 9 flats. We, accordingly, delete the addition amounting to Rs. 1,70,91,150/- (50% in case of each of the Assessee). 5. Ground ....
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.... is being proposed to be declared by the Assessee for A.Y 2011-12. The built-up area of 1362.38 mentioned as 'area sold to Hyder Khan family' is also a true transaction. It was observed that the total area mentioned as sold to Hyder Khan family at pg. 46 is 1362.38 which is the same area as has been mentioned in pg. 48 as sold to Hyder Khan family and therefore, Hyder Khan family has paid consideration of Rs. 10,14,21,700/- for a super built-up area of 1362.38. When this paper was confronted to Sadiq Sheikh, Sadiq Sheikh stated in the statement recorded on 25.3.2010 that this was only projections and these figures will not appear in any documents. The AO took the view that the Assessee has not disclosed the sale consideration of Rs. 10,14,21,700/- for which Assessee has sold flats to Hyder Khan family. It was also noticed by him that the next part of the seized paper, pg. 48 reads as under : B Flat given to Parvez 10,14,21,700 C Flat - forest dept 20,00,000 15,00,000 D 2 Flats given to Adam 40,00,000 E Flat allotted to Azim Mohidiri 50,00,000 11,39,21,700 Add: 15 interest -April 2008 to August 2009( on item A) 2,15,52,11....
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....ed to builder. No evidence with regard to the cost of construction of the flats in respect of Cabo project has been brought on record despite repeated queries even during the course of appeal with regard to A.Y. 2008-09 (Refer Appellate Order in ITA No.181/DCIT,CC, Panaji/CIT(A)-VI/B'lore/2011-2012 of Mr Sadiq Sheikh and ITA No.176/DCIT,CC, Panaji/CIT(A)-VI/B'lore/2011-2012 of Mrs Sadia Sheikh of even date). In such circumstances, there is no justification that these 9 flats had to be surrendered on account of increase in cost of construction. Under such circumstances, the appellants' claim that these 9 flats were surrendered to M/s Landscape Developers for the purpose of increased cost of construction cannot be accepted. In such circumstances, the appellant is eligible to receive the consideration (in terms of number of completed flats) he has received as per the agreements to sell and is therefore liable for tax on the same. It is clear that the transfer of these 9 flats to M/s Landscape Developers is a business deal in which the appellant has earned income in respect of cash component and the cheque component is stated to be accounted in favour of t....
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....08 subsequently put into writing on 26.3.2010. The Sale Deed in respect of these flats has been executed by M/s. Landscape Developers. M/s. Landscape Developers even tried to sell two flats belonging to the Assessee for which the Assessee did not agree. Therefore, the area is mentioned as 1362.38 sq. mtr. If the area of 228.5 sq. mtr. in respect of 2 flats belonging to the Assessee is reduced, the area will come to 1133.88 sq. mtr. Our attention was drawn to the details of the 9 flats. It was pointed out that the difference of 6 mtr. is in respect of 3 flats bearing nos. E-001, E-002 and E-101. The area as agreed, as stated in the schedule and in the agreement dt. 26.3.2010 was 155.96 sq. mtr. each while on the paper bearing page no. 48 of the seized document A/EB/3 mentions 153.96 sq. mtr. each. Thus, the area as mentioned is tallying in respect of the total area of the flat sold by M/s. Landscape Developers as detailed in question no. 16 and these 9 flats are the same flats to which ground nos. 2, 3 and 4 relate. The CIT(A), therefore, preferred to dispose off both the grounds together. The ld. AR even submitted written submission as under : "There was a search in the of....
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....proof to arrive at undisclosed income. In the case of Nirmal Fashions (P) ltd v DCIT 25 SOT 387 (Kol) while considering applicability of section 292C r.w.s 132 of I.T.Act 1961 it was held that when addition was made on the basis of loose papers by making certain presumptions which are found to be unteanable as no significant asset outside the books or no evidence of ostensible expenditure outside the books was found, the addition deserves to be deleted. 3. The assessee in oath statement in reply to Q.No.69 and 71 also specifically stated that these are mere projections. Reliance is placed on the decision in the case of Krupeshbhai N Patel v DCIT 25 taxmann.com 443 ( Ahd ) wherein it was held that in absence of any direct evidence about receiving on money, it was to be concluded that loose papers were merely in the nature of offer which was made to the assessee. 4. As referred in loose sheet the very fact that interest calculations were made indicates that this transaction did not materialize. 5. The very fact that M/S Landscape Developers have accounted the sale of these 9 flats indicates that no payment in respect thereof was received by the ass....
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....stment outside books was found iii ) cash of Rs. 2.50 lakhs found was explained and accepted, iv ) addition is made on the basis of loose sheet without any circumstantial evidence, the addition of Rs. 7.85 deserves to be deleted." 5.2 The ld. DR, on the other hand, relied on the order of the tax authorities below. 5.3 We have heard the rival submissions and carefully considered the same alongwith the order of the tax authorities below. We have also gone through the case laws as relied by the ld. AR. We noted that we have deleted the addition in respect of sale of 9 flats by giving the finding that the flats do not belong to the Assessee but belong to M/s. Landscape Developers and these flats have duly been transferred by M/s. Landscape Developers. We have gone through the seized papers 46, 47 and 48, copy of which is available on record in the paper book at pg. 118 to 120, Annexure E/EB/4 and Folder A/E/3. As reproduced in the brief facts, from these papers it appears that it contains the details of 11 flats and 2 flats and it is mentioned that the sale of 2 flats cancelled sold to Mujib Khan retained by Sadiq Sheikh. Thus, there remain only 9 flats sold. This paper gives mea....