TaxTMI 
TaxTMI 
2020 (1) TMI 545
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....was selected for scrutiny assessment and notice under section 143(2) of the Act was issued on 5.9.2014 which was duly served upon the assessee. On scrutiny of the accounts, as well as AIR information received by the AO it was observed that the assessee company has not shown any purchase of immovable property either under the head 'fixed assets' or under the head 'current assets' in the balance sheet, whereas as per AIR information, it had entered into sale/conveyance deed dated 7.12.2011 for purchase of land admeasuring 8398 sq.meters at survey no.507/1 of village Khoraj District Gandhinagar and final plot no.78 of TP scheme 63(Khoraj) for a consideration of Rs. 3.22 crores. The ld.AO obtained details from the office of Sub-Registrar by using power under section 133(6) of the Act. On analysis of these accounts and accounting policies of the assessee, it was observed by the AO that the assessee should have shown the land on the 'asset' side and if any payment is required to be made to the vendors, then such payment should have been shown as 'liability' side in the balance sheet. Since the assessee failed to recognize the 'asset' in the balance sheet, he construed that this must have....
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....f development charges etc which were to be made by the appellant only. Copy of joint venture agreement dated 15/04/2011 entered into between the appellant and Shri Dilipbhai Purshotambhai Suthar is appearing at Pages 1 to 8 of Paper Book. 2. Under these circumstances, the appellant in the year under consideration in order to achieve its objects purchased land at P.P. 78 of T.P. Scheme No. 63 of Survey No. 507/1 mouje Village Khoraj, Taluka & District Gandhinagar from Shri Shivabhai Popatbhai Gohil who was the owner of the land for a agreed consideration of Rs. 40,00,000/- (Rupees Forty Lacs only). Before making sale of land to the appellant, Shri Shivabhai Popatbhai Gohil had entered into an understanding with M/s Shubham Granite Ltd (now known as Blazon Marbles Ltd) to get the encroachments on the land clear and to make the land clear in all respects. Shri Shivabhai Popatbhai Gohil had agreed to compensate M/s Shubham Granite Ltd for this purpose an amount of Rs. 2,82,00,0007- (Rupees Two Crore Eighty Two Lacs only) only on clearing the encroachments and to clear the land title in all respect. Since, appellant was interested in the said land for its business, it agreed to....
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....with a view to raise the funds which in turn will be paid to the occupiers of the land in order to get it vacant. The appellant accordingly, entered into agreement to sale with M/s Tvisha Tradelink and Consultancy LLP on 11/02/2013 for a consideration of Rs. 3,10,69,500/- (Rupees Three Crores Ten Lac Sixty Nine Thousand Five Hundred only). As per the terms, the appellant was to get 50% of the agreed consideration at the time of handing over clear and vacant possession of land and time period agreed to hand over the vacant possession of land was two months from the date of agreement failing which buyer had right to claim liquidated damages as per para 12 of the agreement. Balance of 50% of consideration was to be received by the appellant at the time of execution of sale deed in favour of the buyer. Copy of agreement to sale entered into by appellant with M/s Tvisha Tradelink and Consultancy LLP dated 11/02/2013 is appearing at Pages 28 to 34 of Paper Book. 5. During the period of two months appellant made all attempts to negotiate with the occupiers of the land in order to get the land vacant by making compensation to them but failed to do so and under these circumstances,....
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....link & Consultancy LLP to whom agreed amount of liquidated damages were to be paid. The appellant remained in active joint venture agreement with Shri Dilipbhai Purshotambhai Suthar as there were no disputes to share the income with him as per agreement entered into with him. 8. As per the settlement terms agreed into with M/s Tvisha Tradelink & Consultancy LLP on 18/05/2013, appellant was required to pay the liquidated damages with 18 months failing which it was also required to make payment of interest @ 36% on the agreement amount of liquidated damages. The 18 month period came to an end on 18/11/2014. By this date appellant had not made any payment to M/s Tvisha Tradelink & Consultancy LLP. Therefore, Tvisha approached the appellant in the month of December, 2014 to make payment of liquidated damages as well as interest as agreed in the settlement agreement. Due to sluggish and recessionary market conditions in real estate market, the appellant expressed its inability to make payment of liquidated damages and also the interest @ 36%. Instead it sought more time to make payment of original amount of liquidated damages. Both the parties discussed the matter by m....
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....f whatsoever nature which can implicate the appellant of any payment outside the books of account to acquire the said land or making any investment source of which remained to be explained by the appellant. It is in this back ground of the matter, appellant makes following submissions with regard to each of the grounds of appeal taken in the appeal memo on the basis of which actions of the Assessing Officer have been disputed." 5. Apart from the above factual submissions of the assessee, the assessee has made submissions as to how the addition under section 69 could not be made. The ld.CIT(A)has gone though the submissions of the assessee and thereafter deleted the addition. "2.3 Decision: I have carefully considered the facts of the case, the assessment order and the written submission of the appellant. The addition of an amount of Rs. 3,41,29,844/- has been made by the AO being unexplained investment in the land purchased in FP- 78 of TP Scheme No.63 of Survey No.507/1 Moje Village, Khoraj Taluka and Dist. Gandhinagar for an amount of Rs. 3,22,00,000/- being sales consideration and stamp duty expenses at Rs. 19,29,844/-. 2.4 It has been noti....
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....ip Suthar had withdrawn cash from his bank account and retained the same for no express purpose. No documentary evidence regarding alleged cash receipts by way of sale proceeds of agricultural produce except copy of extract of agricultural holding of Shri Dilip Suthar has been filed. 2.6 It is worth here to mention that possession of the aforesaid land was not given by the original land owner to the appellant although the sale deed of the same have already been executed on 7.12.2011. Except the cash payments the cheques given to Shri Shivabhai Gohil for Rs. 35 lakhs and to Shubham Granite Pvt. Ltd. at Rs. 2.82 crores have not been encashed due to the dispute and non-providing the possession by the land owner over the land to the appellant. In between various disputes arosed in respect of possession of the aforesaid land and various transactions have taken place. However, finally a settlement agreement dtd. 16.2.2015 was executed between the appellant and the original land owner Shri Shivabhai Gohil and according to such settlement the appellant was to pay a sum of Rs. 40 lakhs over and above to Rs. 5 lakhs paid by Shri Dilip Suthar to Shri Gohil at the time of the executio....
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....t is illegal and null and void. It is further necessary to declare that the defendant has no right, title, interest in the suit property in any I manner whatsoever. 11. The plaintiff states that the defendant has no right, title, interest, share in the said land in any manner whatsoever. However, the defendant is illegally claiming its right and likely to demise the suit property to third party. Therefore, it is necessary to restrain the defendant and its agents, servants, representatives, etc. from gifting, demising, transferring, alienating, leasing and or dealing with the suit property in any manner whatsoever in the interest of justice by permanent injunction. 12. The plaintiff states that the act of the defendant has caused mental harassment, torture, trauma to the plaintiff and has further caused monetary loss to the plaintiff apart from inconvenience. The plaintiff is required to spend money on litigations etc. In view of the above referred facts, the defendant is liable to compensate the plaintiff. As a matter of fact by virtue of illegal acts and deed by the defendant the plaintiff has suffered mental tension, trauma, loss of reputation & good wi....
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....s and acknowledges that despite the execution of the Sale Deed dated 07/12/2011 bearing registration no.13973 and in spite of the First party having received Rs. 5 Lakhs, no vacant and Peaceful possession of the said Land was given to the Second Party and thereby, the First Party had failed to fulfill the terms and conditions of the sale Deed resulting in a default. 2. That the Second Party hereby admits and agrees that though it did not receive the vacant and peaceful possession of the said Land, the Second Party has been successful in getting the said Land vacated and obtaining peaceful possession of the same, after great hardships, efforts and after incurring huge expenditures. The Second Party further acknowledges that it did not allow the Cheques issued to the First Party and the Confirming Party to be encashed which were to the tune of Rs. 35 lakhs and Rs. 2.82 crores respectively. 4. That in order to resolve all the disputes with the First Party with regards to the sale of the said Land, the Second Party undertakes and agrees to pay a lump sum amount of Rs. 40 Lakhs to the First Party over and above the Rs. 5 Lakhs which has already been paid to the First P....
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.... The plaintiff and the defendant have executed agreement of settlement dated 16/02/2015 and a copy of the settlement agreement is produced along with this pursis. That as per the said agreement, both the parties with mutual consent are desirous to withdraw the suit, which we hereby declare vide this pursis. Date : 21/02/2015 Gandhinagar Plaintiff Advocate for Plaintiff Defendant Advocate for defendant 2.7.1. In other words, this litigation came to an end vide agreement of settlement dtd. 16.2.2015 and the order of the Hon'ble Court dtd. 21.2.2015 passed thereupon. 2.7.2. Thereafter, the Hon' ble Court vide its order dated 21/2/2015 has disposed of the Civil Suit with the following order. Spl. Civil Suit No. 16/2015 Order Below Exh. No. I: In view of the withdrawn pursis at Exh. 9 This suit is disposed of accordingly. Refund certificate be issued in the name of Plaintiff as per rule. Date: 21/02/2015. Gandhinagar (V.A.Buddha), 5th Addl. Sr. Civil Judge ,Gandhinagar 2.7.3 According to this final settlement the appellant had to pay only Rs. 40 lakhs to ....
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....with Shri Dilip Suthar was undertaken on 15.4.2011. But Shri Dilip Suthar has confirmed having payment of Rs. 5 lakhs out of its sources which is verifiable from the summary of cash transactions provided. Further with regard to the registration charges of Rs. 19 ,29,844/-, these have also been paid by Shri Dilip P. Suthar as per the JV agreement between the appellant and Shri Suthar dtd. 15.4.2011. The AO has not controverted the existence, authenticity and the terms of payment and the payments of Rs. 5 lakhs and Rs.l9,29,844/- made by Shri Dilip Suthar by bringing anything on record. The summary of the cash transactions of Shri Dilip Suthar explaining the source of above payments have been submitted to the AO also and same is verifiable. As per the JV agreement between the appellant and Shri Suthar, it is on record that the aforesaid payments have been made as per the terms and conditions of the JV agreement by Shri Dilip Suthar and appellant has not paid any amount except the cheques of Rs. 35 lakhs to Shri Gohil and Rs. 2.82 crores to M/s. Subham Granite Pvt. Ltd. Even if there was any doubt in respect of the sources of the initial payments of Rs. 5 lakhs and the registration ch....
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....015 the balance payment of Rs. 40 lakhs have been made by the appellant to Shri Gohil which falls in the A.Y. 2015- 16. Merely the J. V. agreement was dated 15/04/2011 and the sale deed was dated 07I 12/201 1 prior to the JV agreement date would not alter the status of payment of Rs. 5 lakhs and further registration charges when the same were confirmed to have been paid by Shri Dilip Suthar out of its funds. 2.12 In view of the aforesaid discussion since no payments have been made by the appellant towards the sale consideration in the year under consideration although sale deed was executed but in absence of taking over of the possession of the land the litigation going on, which ultimately settled in A.Y. 2015-16 no adverse view is warranted in the hands of appellant. Nothing has been brought on record to show that besides Rs. 5 lakhs and Rs. 19,29,844/- paid by Shri Dilip Suthar any further payments has been made by the appellant out of its undisclosed income. Even the cheque so issued as per sale deed dated 07/12/2011 were to be cleared only upon handing over of the vacant and peaceful possession of the land which did not materialized in the year under consideration. No....
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.... nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year." 7. A perusal of the above provision would indicate that if the AO was able to lay his hand on any evidence exhibiting the fact that in the financial year immediately preceding the assessment year, the assessee has made investment, which are not recorded in the books of accounts, if any, maintained by him for any source of income, and the assessee failed to give any explanation or such explanation was not to the satisfaction of the AO, then the value of the investment may be deemed to be the income of the assessee of such financial year. Thus, the first condition for invoking section 69 is, there should be some investment, which are not recorded in the books of accounts, if any maintained by the assessee for any source of income. The second condition is that the assessee failed to give any explanation, and if some explanation was given, it was not to the satisfaction of the AO. In this situation, the value of such investment may be deemed as income....