TaxTMI 
TaxTMI 
2019 (1) TMI 143
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....the I.T. Act was passed on 28.03.142 thereby assessed income at Rs. 3 crore and made certain additions. Aggrieved by the order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the case of both the parties partly allowed the appeal of the assessee. Now before us, the revenue as well as assessee have preferred their respective appeals. Firstly we are dealing with the appeal filed by the revenue. 5. The solitary ground raised by the revenue is against challenging the order of Ld. CIT(A) in deleting the disallowance made by the AO on account of the cost of the project being overruled at Rs. 14.25 crores which according to the revenue, is nothing but to claim excessive WIP and the assessee had made it a colourable device to increase the WIP of the project by routing of advance without any substance. 6. We have heard counsels for both the parties at length and we have also perused the material placed on record, judgment cited by both the parties as well as the orders passed by revenue authorities. Before we decide the merits of the case, it is necessary to evaluate the orders passed by AO & Ld. CIT(A). The AO in para no. 11 to 15 and Ld. CIT(A) in ....
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.... 100/- stamp Paper, which was not registered before the stamp duty authority. The paid up share capital of the company was Rs. 1,04,000/- of 10,400/-equiry shares having a face value of Rs. 10 each, unsecured loan was Rs. 62,45,739/-, share money application money was Rs. 1,83,000/-, W.I.P was Rs. 60,27,308/-, Cash/Bank Balance was Rs. 3,76,431/-, Loan and advance was Rs. 3,50,000/- and current liabilities was Rs. 2,46,000/as on 31/03/2010. 14. During the course of assessment proceeding the assessee had furnished investment agreement between the loan creditor(Vinod Sigtia and Lalita Sigtia) and the assessee's company and Sahana Construction Pvt. Ltd. (one of the assessee's group concern) .This investment agreement is not being registered thereby there is no legal sanctity of the said document. Further, in the said agreement which is not registered one, the assessee company has allowed to allot the above two creditors the premises admeasuring approaxmately 80,000 Sq. feet of salable area ready in every aspect for occupation on the ownership basis of the free sale building to be constructed fort the consideration of Rs.SCr. in the locality of Vile Parle(W),Mumbai . 15. Th....
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.... What remains is the view of the assessing officer that the transactions are colourable and that the sale consideration of shares by the Sigtias are undervalued and that construction space offered by appellant to the Sigtias is at much lower than the market value. Now even if it is assumed that the suspicion of the appellant is correct, then the correct action would be to tax the Sigtias for a higher value than that considered by them in their return of income while computing the capital gains. If a company passes on valuable assets to its past shareholder at less than market value, the assessment will be in the hands of the recipient. If and when such property is constructed and sold, the cost to be considered will also remain lower. However, the additions in the hands of the appellant u/s 68 cannot be made. 7.4. I do not find any evidence brought on record by the assessing officer to substantiate that the value of shares at Rs. 14.25 crores is undervalued. It is not inconceivable that the appellant may want to buy in the cooperation of the Sigtias for assistance in the project since they have conceptualized the project and are fully aware of all the past litigations, for which ....
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....de agreement dated 08.01.11. According to the records, the paid up share capital of the company was 1,04,000 of 10,400 equity shares having a face value of Rs. 10 each, unsecured loan was Rs. 62,45,739/-, share application money was Rs. 1,83,000/-, WIP was Rs. 60,27,308, cash /bank balance was Rs. 3,76,431/-, loan and advance was Rs. 3,50,000/- and current liabilities was Rs. 2,46,000/- as on 31.03.10. It was also noticed that assessee had furnished one 'investment agreeement' between the loan creditors and the assessee company and Sahana Construction. This 'investment agreement' was not registered and according to the said agreement the assessee company had allowed to allot the premises admeasuring 80,000 Sqft. of saleable area, ready in every aspect to the above two creditors on the 'ownership basis' for the consideration of Rs. 3 crores in the locality of Vile Parle (W), Mumbai. Considering the above facts, the AO reached to the conclusion that on the one hand, the transaction of transferring all the shares by the earlier directors to the new persons and the assessee for a consideration of Rs. 14.25 crores was considered as 'over valued transaction' after considering the....
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....dings on facts. Noticeably, it is only the appeal to the High Court, under Section 260-A, which is restricted to consideration of "substantial question of law", if any arising. As would be seen from the discussion that follows, the obligation to make proper inquiry and reach finding on facts does not end with the AO. This obligation moves upwards to CIT (Appeals), and also ITAT, should it come to their notice that there has been default in such respect on the part of the AO. In such event, it is they who are duty bound to either themselves properly inquire or cause such inquiry to be completed. If this were not to be done, the power under Section 148 would be rendered prone to abuse. 38. The provision of appeal, before the CIT (Appeals) and then before the ITAT, is made more as a check on the abuse of power and authority by the AO. Whilst it is true that it is the obligation of the AO to conduct proper scrutiny of the material, given the fact that the two appellate authorities above are also forums for fact-finding, in the event of AO failing to discharge his functions properly, the obligation to conduct proper inquiry on facts would naturally shift to the door of the said appell....
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....ing based on documents / reasoning. It is needless here to mention that before passing the order of assessment, the AO shall provide sufficient opportunity of hearing to the assessee. The assessee is also at liberty to file any other additional documents, if so desires with the AO. Before parting, we may make it clear that our decision to restore the matter back to the file of AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the AO independently in accordance with law. With these directions, this ground of appeal filed by the revenue is partly allowed for statistical purposes. Now we take up ITA No. 5215/Mum/2015 filed by assessee. 9. This cross appeal filed by the assessee in ITA No. 5215/Mum/2015 for AY 2011-12 is against the order of Ld. CIT(A)- 21, Mumbai dated 11.09.15 on the ground mentioned herein below:- 1. THAT the learned Commissioner of Income Tax(Appeals) 21 as well as the Assessing Officer has erred in law as well as under the circumstances of the case in confirming the disallowance of Legal & Professional Charges amounting to Rs. 60,22,000/- made by the Assessing o....
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.... Lalita Vinod Sigtia and Nikhil Sigtia and Sudhakar Shetty / Sahana Constructions Pvt. Ltd. It also mentions that the bill is in respect of general advising from time to time. The other comments mentioned by AR is not found on these bills. Similarly the bill dated 31.12.2010 of Parekh & Co., Delhi for Rs. 19,40,000/- is in respect of conferences of the Advocates with Advocates of Mulla and Mulla for finalizing the Share Purchase Agreement and the Investment Agreement. Similar is the purpose in the bills of Rs. 24,50,000/- of Pravin Parekh dated 7.01.2011. The other bills are in respect of various Writ Petitions. The sale of shares and management by the promoters of the appellant company cannot be the business of the appellant company. These expenses should have been met by the Sigtia in their personal capacity and not be charged to and claimed by the appellant. I therefore hold that a total of Rs. 60,22,000/- of the legal expenses during the year are in respect of sale of shares by the promoters and change of management, and thus not incurred for the business of the appellant. The disallowance is upheld to the extent of Rs. 60,22,0007- . The appellant gets a relief of Rs. 33,00,440....