TaxTMI 
TaxTMI 
2018 (7) TMI 2036
X X X X Extracts X X X X
X X X X Extracts X X X X
....le. 3. Facts on record further show that the appellant-company did not file its return of income u/s 139(1) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act']. Pursuant to the notice issued u/s 142(1) of the Act dated 18.02.2009, the assessee filed return of total income on 30.04.2009. The returned income was at Rs. 90,51,78,215/. The net profit as reflected in the profit and loss account was at Rs. 73,08,47,000/-. In its computation of income, the assessee company added back certain expenses as had been incurred and were duly debited in the profit and loss account, which were considered as not allowable in law. This means that while computing income at Rs. 90.51 crores, the assessee company had not claimed deduction for such of the expenses, which in the opinion of the auditors, were not eligible for deduction. 4. Return filed on 30.04.2009 was revised on 20.08.209 and the revised return of income was at Rs. 76,82,44,979/-. In its revised return of income, the assessee claimed deduction of expenses which had been directly debited in the balance sheet but were not claimed in the return of income filed on 30.04.2009. This means that certain deductions whi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as accepted the return filed on 30.04.2009, he cannot blow hot and cold at the same time for not treating the same as filed in pursuance to notice u/s 142(1) of the Act. Once the return has been accepted as being filed u/s 142(1) of the Act, there is no reason why the revised return filed on 20.08.2009 should not be accepted. We, accordingly, direct the AO to accept the revised return filed on 20.08.2009. 8. The AO is further directed to consider the claim made in the revised return of income afresh which can be understood from the following chart: Sl No. Amount (Rs.) Particulars of claim made in the revised return of income i) 3,17,17,125/- Disallowance made in the original return u/s 40(a)(i) of the Act. In other words, in the original return of income, the assessee company inadvertently considered a disallowance u/s 40a(ia) of the Act of Rs. 14,00,99,718/- (page 68 of the Paper Book); whereas in the revised return of income, the same was revised to Rs. 10,83,82,593/- (page 212 of Paper Book), since it was noticed that, sum of Rs. 3,17,17,125/- had not been claimed as an expenditure in the profit and, loss account and as such, there could be no disallowance made. i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he tune of Rs. 28.30 crores and, therefore, the surrendered income should be taken at Rs. 28.30 crores in place of Rs. 31 crores. In the alternative, it was pleaded that if the income is still considered at Rs. 31 crores, then the assessee should get the benefit of set off of Rs. 2.70 crores from the other additions based upon the impounded documents. 11. The AO rubbished the claim of the assessee by observing that the assessee was required to file details of transactions and reconcile the same with the books of account. No specific reply was given and it was simply submitted that the same is offered as undisclosed income. The Assessing Officer finally concluded by holding "it, therefore, appears that this amount is either unquestioned in impounded document or embedded somewhere in the transaction claimed as recorded. The total offer amount was taken at Rs. 31 crores and benefit of set off was denied. 12. We have carefully considered the aforementioned issue in the light of facts emanating from the records. There is no dispute that the amount of transaction of Rs. 20.50 crores was found in the case of M/s Browz Technologies Pvt Ltd and Rs. 8.80 crores in the case of Wonder Deve....
X X X X Extracts X X X X
X X X X Extracts X X X X
....each addition mentioned hereinabove. For the sake of clarity, the ld. CIT(A) has deleted the additions made on account of rejection of books of account amounting to Rs. 6.40 crores, in reconciling cash in hand Rs. 10 crores, inadmissible compensation Rs. 7.31 crores and has given partial relief in respect of compensation paid to customers amounting to Rs. 63.47 lakhs. The ld. CIT(A) has confirmed the addition of Rs. 2.79 crores being unexplained investment for purchase of property from Verma family. 16. The Revenue is in appeal against the deletion of the additions and the assessee is in appeal against the confirmation of additions. We will address each issue one by one. 17. Addition of Rs. 6,40,21,407/- deleted by the ld. CIT(A) on account of rejection of books of account. 18. During the course of scrutiny assessment proceedings and on examination of impounded documents, the Assessing Officer noticed that entries found recorded in the impounded documents need reconciliation from books of account. Entries are exhibited at pages 12 and 13 of the assessment order. In its reply dated 28.12.2010, the assessee explained the entries in the impounded documents vis a vis the books of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sions and documents submitted at the behest of the first appellate authority, the first appellate authority was convinced that the Assessing Officer had no ground for rejecting the books of account or to estimate the g.p. rate. The ld. CIT(A) observed that the addition made by the Assessing Officer is neither based on any direct evidence nor any indirect or circumstantial evidence. The amount of Rs. 6,40,21,407/- was deleted. 23. Before us, the ld. DR strongly supported the findings of the Assessing Officer. 24. Per contra, the ld. counsel for the assessee reiterated what has been stated before the lower authorities. 25. It is true that the Assessing Officer has computed the profit margin varying from 18.6 to 72% on the basis of documents which do not relate to the year under consideration and some of the documents do not even relate to the assessee company. It is equally true that most of the trial balances were incomplete. The Assessing Officer has rejected the books of account u/s 145(3) of the Act without verifying the records/books of account maintained by the assessee when the computer and hard disks were available with the Assessing Officer. There is no doubt that th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xure A-2 belongs to M/s Kolina Developers Pvt. Ltd which is separate company and, therefore, no addition on this amount could have been made in the hands of the assessee company. On the directions of the ld. CIT(A), the assessee produced copies of bank account alongwith copies of statement of return of income and balance sheet of M/s Kolina Developers Pvt. Ltd. The ld. CIT(A) forwarded these documents to the Assessing Officer for his comments who simply observed that the issue may be adjudicated at the appellate stage considering the facts and circumstances of the case. 29. The ld. CIT(A) found from the bank account of M/s Kolina Developers Pvt Ltd a sum of Rs. 10 crores was deposited on 25.01.2008 as funds transferred by cheque from M/s Vatika Ltd and had been withdrawn by the said company vide Cheque No. 805226 in cash on 25.01.2008. The ld. CIT(A) concluded by holding that the said amount has not been received in the account of the assessee company but has actually gone out of the assessee company to its associate concern M/s Kolina Developers Private Ltd. The ld. CIT(A), on these facts, deleted the addition of Rs. 10 crores. 30. Before us, the ld. DR could not point out any....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cannot be made only on the basis of assumptions, surmises and conjectures. We, therefore, confirm the findings of the ld. CIT(A). Addition of Rs. 7,31,50,595/- stands deleted. This ground is also dismissed. 37. Next addition is of Rs. 2,79,70,000/- which has been confirmed by the ld. CIT(A). 38. Page 2 of Annexure A-2 contains entry relating to Shri K.L. Verma and family wherein it has been mentioned that the assessee has agreed to buy back four units from Verma Family aggregating area of 2797 sq. ft. Total buy back transaction was to the tune of Rs. 2,09,77,500/-. The Assessing Officer further found that as per Annexure A-2, page 4, the rate per sq ft. is worked out at Rs. 17,500/- whereas the selling rate of the same property is mentioned at Rs. 7,500/- per sq. ft. The Assessing Officer further found that a sum of Rs. 27,86,994/- was also paid to Shri K.L. Verma. The assessee was asked to explain the transactions. In its reply, the assessee explained that four units were booked by Verma family and the said booking was subsequently cancelled. The Assessing Officer was not convinced with the reply of the assessee and was of the opinion that the commercial space sold to Verma ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... were allotted 5594 sq ft. Ironically, though the Assessing Officer made additions on the basis of notings in the impugned documents, but he did not care to examine K.L. Verma or his family members to verify the impugned transaction. We find that the Assessing Officer has not even examined the refund of buy back amount given by the assessee. The entire transaction can be understood from the following chart: Name Amount originally received in Unit No. Area originally allotted (per sq. ft) Amount (In Rs.) Outstanding since Buyback @ 7500 Cheque No. & Date Bank Area allotted in exchange of the original allotment (Sq Ft) Mrs. Usha Verma Vatika Green Field Private Limited IB-02 547 12,03,400 07.02.2002 4,102,500.0 0 727911 31.12.07 Indus ind Bank 1094 Mr. K. L. Verma Vatika Green Field Private Limited IB-01 750 16,50,000 06.02.2002 5,625,000.0 0 727912 31.12.07 Indus ind Bank 1500 Mr. Pankaj Verma Vatika Green Field Private Limited IB-03 740 16,28,000 06.02.2002 5,550,000.0 0 727913 31.12.07 Indus ind Bank 1480 Mr. Vikram Verma Vatika Green Field Private Limited IB-04....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s agitated before the ld. CIT(A), it was explained that the amounts received from allottees of the plots were only shown as advance and was never considered as sales. Since the assessee could not complete the sale transaction, advance received from clients was refunded alongwith compensation of Rs. 10.96 lakhs which was paid to Mamta Gupta, S.K. Gupta and Shri S.K. Gujral. Supporting evidences were furnished before the ld. CIT(A) who after verifying documentary evidences was convinced with the contention of the assessee and directed the Assessing Officer to delete the addition of Rs. 10,95,616/-. However, in so far as addition of Rs. 48,24,444/- is concerned, the ld. CIT(A) directed the Assessing Officer to verify the transaction after verifying that the amount when received was not considered as sale in the books by the assessee. 48. The ld. counsel for the assessee reiterated what has been stated before the lower authorities. 49. The ld. DR vehemently stated that there is no evidence that the assessee has not allotted the plots and has actually refunded the advance amount with compensation. 50. We have given thoughtful consideration to the orders of the authorities below qu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e compensation was paid on the revocation of the agreement entered with the customers. The assessments have been framed u/s 143 (3) of the Income Tax Act, 1961 from the assessment year 1995-1996 to 1998- 1999 when such a claim of expenses has not been disallowed by the Assessing Officer and thus the claim stood allowed. In so far assessment years 1999-2000 to 2000-2001 are concerned assessment were not taken up for scrutiny assessment, however, the expenses had been incurred in those years too. In the subsequent Assessment Year 2002-2003 and 2004-2005 the Assessing Officer did not disallow the expense incurred. It is only in the year 2003-2004, no such expense had been incurred. Further the method of valuation of closing stock was the cost method which did not include the amount paid as compensation which was not treated by the appellant company as the capital cost as it represented the expenses incurred on account of commercial expediency. Thus on facts I find the submissions made by appellant and recorded in para 9 & 10 above are true and correct. I further find that the appellant itself has shown the income from sale of aforesaid land and had shown the income without including t....