TaxTMI 
TaxTMI 
2021 (3) TMI 1192
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....u/s 40(a)(ia) of the Act in the facts and circumstances of the instant case. 2.1. We have heard the rival submissions and perused the materials available on record. We find that the assessee is a builder cum developer and had filed his return of income for the Asst Year 2010-11 on 15.10.2010 declaring total income of Rs. 11,96,630/-. During the course of assessment proceedings, the assessee had revised his total income by filing revised computation of total income of Rs. 13,45,280/-. We find that the ld. AO called for details of Legal & Professional fees, Consultancy Charges, Testing & Surveying fees, Sub-contractor (Labour) Charges and Brokerage Charges during the course of assessment proceedings which were duly furnished by the assessee. From the perusal of the details submitted by the assessee, the ld AO observed that certain expenses were not subjected to deduction of tax at source as under:- Pravin V Satra Asst Year 2010-11 Nature of Expenses Total Expenses for Expenses for which tax Expenditure which tax was was not deducted and ....
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....,000/- u/s 40(a)(ia) of the Act. 2.6. With regard to Testing and Surveying Charges (labour contract charges), we find that the ld AO observed that the assessee had not deducted tax at source on payment made to Kuber Trading Co. to the tune of Rs. 10,00,000/- in respect of interior work. We find that the ld AO in the remand proceedings verified the fact that assessee had purchased material from Kuber Trading Co. for Rs. 14,36,045/- plus MVAT of Rs. 57,442/- thereon, which is not liable for deduction of tax at source u/s 194C of the Act. It was proved before the ld AO that only a sum of Rs. 1,17,476/-was debited to interior work labour charges for which due TDS compliance was made by the assessee. We find that this was duly appreciated by the ld CITA by rightly directing the ld AO to delete the disallowance of Rs. 10,00,000/- u/s 40(a)(ia) of the Act. 2.7. With regard to Consultancy Charges, we find that the ld AO had observed that tax was not deducted at source on payment of Rs. 9,69,573/- out of total expenditure of Rs. 29,64,463/-. We find that in the remand proceedings, the assessee proved that tax was duly deducted at source on the total expenditure of Rs. 23,97,633/-. In ....
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....copy of ledger accounts were duly furnished by the assessee in the remand proceedings. It was stated that the BMC raised the bill in the name of original landlord eventhough the original landlord sold the property or entered into development agreement. As per the agreement, the buyer is liable to pay all the BMC charges for the property purchased. This explanation was practically accepted by the ld AO in the remand proceedings by not making any adverse comments on the evidences submitted by the assessee. Hence when the ld CITA grants relief on the ground that in remand report, the ld AO had accepted to the contentions of the assessee, the revenue ought not to have preferred further appeal before us as there could not be any logical grievance for the revenue. Reliance in this regard has been rightly placed by the ld AR on the decision of Hon'ble Madras High Court in the case of B Jayalakshmi vs ACIT reported in 407 ITR 212 (Mad). Accordingly, the Ground No. 2 raised by the revenue is dismissed. 4. The last issue to be decided in this appeal is as to whether the ld CITA was justified in deleting the disallowance of Rs. 1,26,37,560/- made on account of SRA Project expenses in th....
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.... the appeal to the file of ld CITA. In the second round of proceedings, the ld CITA restricted the levy of penalty u/s 271(1)(c ) of the Act to the tune of Rs. 11,17,600/- and deleted the remaining penalty amount of Rs. 79,12,106/-. Aggrieved, by this action, both the assessee as well as the revenue are in appeal before us. 9. The only issue to be decided in these cross appeals is challenging the levy of penalty u/s 271(1)(c ) of the Act. These cross appeals are taken up together and disposed of by this common order for the sake of convenience. 9.1. We have heard the rival submissions and perused the materials available on record. We find that the ld AO had levied penalty of Rs. 82,41,963/- u/s 271(1)(c ) of the Act on total additions / disallowances made in the assessment to the tune of Rs. 2,66,73,019/-. We find that the ld CITA deleted the penalty u/s 271(1)(c ) of the Act to the tune of Rs. 79,12,106/- on the ground that corresponding quantum additions for which penalty was levied were deleted by him. We have already dismissed the revenue's appeal against the quantum proceedings for Asst Year 2010-11 hereinabove in ITA No. 5505/Mum/2018. Once the quantum additions are del....
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.... by the ld AR before us. No other contrary decision was quoted by the ld DR before us. Hence we hold that this is not a fit case for levy of penalty u/s 271(1)(c ) of the Act in view of the aforesaid observations and judicial precedent hereinabove. Accordingly, we direct the ld AO to delete the penalty in respect of disallowance of expenses of Rs. 6,36,800/- ( 5,61,800 + 75,000) u/s 40(a)(ia) of the Act. 9.4. We find that the ld AO had made an addition towards personal expenses of Rs. 50,000/- on an estimated basis. It is well settled that there cannot be any levy of penalty on an estimated addition. Moreover, from the perusal of the quantum assessment order, we find that the ld AO had chosen not to initiate any penalty proceedings u/s 271(1)(c ) of the Act in respect of this addition, whereas while passing the penalty order, he has directly levied the penalty. On this ground also, the penalty levied deserves to be deleted and is hereby deleted. 9.5. With regard to shifting of head of income from house property to income from business, we find that the assessee had derived rental income which was duly offered to tax by the assessee under the head income from house property af....
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.... CIT(A) in short) against the order of assessment passed u/s.144 r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 30/12/2016 by the ld. Asst. Commissioner of Income Tax, 25(3), Mumbai (hereinafter referred to as ld. AO). 12. The revenue has raised the following grounds of appeal:- 1. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the additions made by the A.O. for the year under consideration as the same were made were made after verification of the information available in the impounded material impounded under the provision of section 133{3)(2)(vii) of the I.T. Act,1961 and also the material on the record and in light of chronic non co-operation by the assessee." 2. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the fact that the additions of Rs. 14,58,14,389/- & Rs. 49,38,84,500/- on account of income from Jogeshwari project & Vile parle Project respectively, were made after verification of the impounded loose papers that shows the Net profit of the projects which is noted to have been Completed in the previous year re....
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....d that the assessee is an individual and proprietor of two proprietary concerns styled as 'Darshan Developers' and 'Akansha Constructions', engaged in the business of builders and developers. A survey u/s 133A of the Act was conducted at the assessee's premises on 7/8.3.2014 and during the course of survey, various material / loose papers were found which were duly inventorised and impounded under the provisions of section 133(3)(2)(viii) of the Act. As on the date of survey, the assessee had not filed his return of income for the Asst Year 2013-14 and accordingly a notice u/s 148 of the Act was issued to the assessee calling for return of income. The assessee filed his return of income on 10.5.2016 in response to notice u/s 148 of the Act declaring total income of Rs. 20,54,850/-. The assessment proceedings were completed u/s 144 rws 147 of the Act on 30.12.2016 determining total income at Rs. 65,67,74,110/- due to continuous non co-operation from the side of the assessee by furnishing the requisite details. However the requisite details were filed by the assessee during the course of first appellate proceedings. The ld CITA admitted those evidences in the form of additional....
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.... a. The project was carried out by OMKAR Ventures Pvt Ltd, Omkar House, Off. Eastern Express Highway, Opp. Sion Chunnabhatti Signal, Sion (E), Mumbai - 400 022. b. A copy of a brief summary of project submitted by OMKAR Ventures Pvt Ltd to the Expert Appraisal Committee (EAC), MoEFCC, Delhi is submitted. 6.3.Counter Comments of the Assessing Officer: Further, to verify the authenticity of the content of the said impounded paper (Annexure A2, Page No. 15), a statement u/s 131 of The Income Tax_ Act, 1961 of Mr. Ketan Vaidya, Architect was recorded on 20.03.2018 On oath before me. The relevant extracts of the statement recorded is reproduced below: "Q.1 Please Identify yourself ? Ans: Ketan Vaidya, aged years, residing at 203/8, Rajkamal Co-op. Housing society, Paranjape Scheme 8, Subhash Road, Vile Parle-East, Mumbai - 400 057, contact is 9867336930. Q.2. Can you read & write English ? Ans: Yes, I/we can read & write English. Q.3. Are you filling your return of Income regularly, if yes what is your PAN ? Yes, I am filling-my return of Income regularly and my PAN is AAFPV0408E. ....
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..... We also find that the ld CITA had given a categorical finding that impounded loose papers marked as 15 of A-2 are not in the form of executed documents or books of accounts or certificates which can prove conclusively that assessee had earned undisclosed or unaccounted income. These impounded papers have no acceptable narration and do not bear the certificate of the assessee or any authorized person and they are in the nature of dumb documents having no evidentiary value. Infact these dumb documents are further corroborated by statement of Mr Ketul Vaidya that the assessee did not evince interest in developing the said project. Moreover, when the ld CITA grants relief on the ground that in remand report, the ld AO had accepted to the contentions of the assessee, the revenue ought not to have preferred further appeal before us as there could not be any logical grievance for the revenue. Reliance in this regard has been rightly placed by the ld AR on the decision of Hon'ble Madras High Court in the case of B Jayalakshmi vs ACIT reported in 407 ITR 212 (Mad). 14.3. Similarly with regard to the addition made in the sum of Rs. 49,38,84,500/-, the addition made on account of profit ....
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....s sold in the year 2013 and therefore, the project reached its completion stage. The Assessing Officer made the addition of Rs. 49,38,84,500/- because, the assessee offered no explanation and submission on the said relevant impounded papers, the amount of Rs. 49,38,84,500/- is held as income from the Hari Darshan, Vile Parle Project based on the impounded materials and the same was added to the Total Income by the Assessing Officer. 7.2.Contention of the Assessee: During the Remand proceedings, the Assessee stated the following as detailed below: a. The impounded loose paper is just an estimated project report left by a broker. It is unsigned and does not contain any details about the address of site being CTS No. to establish that the said paper pertains to the project at Hari Darshan, Vile Parle. This impounded paper is a dumb document. b. The Assessee has shown in the Profit & Loss Account for the year ended 31.03.2013 of Darshan Developers (Proprietor Pravin Sarra), sale from sale of flat at Rs. 5,63,58,000/-. This includes sale of flat from Haridarshan Society of Rs. 554,06,000/-. A copy of ledger account of sale of flat (Haridarsha....
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....alghar, PIN 401209. My Cell Phone Number is 9967715556. Q.2 Can you read & write English ? ' Ans. Yes, I/we can read & write English. Q.3 Are you filing your return of Income regularly, if yes what is your PAN ? Ans: '-Yes, I am filling my return of Income regularly and my PAN is AGOPP9516G Q.4 What is your educational qualification? Ans. I am 12th Pass. Q.5 Please provide the nature of profession carried by you. Ans I am a estate agent since last 12 years Q.6 How do you know Shri Pravin Satra ? Ans. I know Shri Pravin Satra since last 10 years. He is reputed builder. Whenever, I get some redevelopment projects, I approach him. Q.7 Notice u/s 131 dated 22.02.2018 was issued to Shri Arun Jaitely to appear before the undersigned. However, you have appeared on his behalf. Please explain ? Ans. Arun Jaitely was my friend. He was also an estate agent. He used to share land, redevelopment opportunities, with me for looking new claients and vice versa. He passed away one month back. I received a call from Shri Pravin Satra that there was a survey action carried out ....
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....in Satra had called for other documents related to the property. I asked Shri Arun Jaiteiy to provide the documents. However, the same were not provided by him. Q.12 Do you want to say anything else? Ans Madam, I just want to say if you have to make any enquiry from Arun Jaitly In this case, You can call me for the details as I was the mediator between Arun and Shri Pravin Satra Deal in the Dadar(W) project details which unfortunately never took off. 7.4. In the present case, the submissions made in the course of remand proceedings, the details filed by the Assessee in course of Appellant proceedings by way of additional evidence and Statement of Mr. Sunil Gopal Pawar, Partner associate of Mr. Arun, recorded u/s.131 on oath in course of Remand proceedings are taken on record and therefore explanation of the assessee on the said impounded paper is taken on record. Considering the above facts, this ground of appeal of the assessee may be decided on merits. 14.3.1. We find that the ld. CIT(A) had taken due cognizance of the aforesaid remand report where no adverse inference was drawn by the ld. AO in any manner whatsoever. The ld. CIT(A) also too....
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.... which was impounded during survey proceedings. 15.1. We have heard rival submissions and perused the materials available on record. We find that the ld. AO during the course of assessment proceedings have observed from the impounded document Annexure A-2 vide pages 89-91 that as per retirement deed of partnership, each partner is to be paid Rs. 1 Crore and out of which Rs. 25 lakhs is to be paid in cash to the partners. A firm M/s. Kenstro Island comprise of 5 partners i.e. Shri Ajay H Gosalia, Shri Shantanoo V Rane, Shri Prabhakar Shetty, Shri Pravin Satra (i.e. assessee) and Shri Girish Goda. The ld. AO called upon the assessee to explain the assessee as to why this amount should not be added to the total income. No explanations were filed by the assessee during the course of assessment proceedings and accordingly, the ld. AO made an addition of Rs. 75 lakhs on the ground that assessee has paid Rs. 25 lakhs in cash to three partners i.e. Shri Ajay H Gosalia, Shri Shantanoo V Rane & Shri Prabhakar Shetty out of his unaccounted income. During the course of appellate proceedings, the assessee stated that these papers i.e. pages 89-91 of Annexure-A-2 which were impounded during s....
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....ment recorded is reproduced below: Statement of Ajav H Gosalia Q.I Please Identify yourself? Ans. I am Shri Ajay Himmatlal Gosalia, aged 65 years, residing at A/403 - 404, Ram Tower, Off Link Road, Borivali West, Mumbai-400092, My contact is 9920931115. Q.2 Can you read & write English? Ans. Yes, I/We can read & write English, Q.3 Are you filing your return of Income regularly, if yes what is your PAN ? Ans. Yes, I am filling my return of Income regularly and my PAN is AABPG2466K. Q.4 Describe about M/s. Kenstro Island ? Ans. It is a Registered Partnership firm, since 29.03.2006, wherein at the time of inception we were 3 partners & later added 2 more partners vide partnership deed dated 04.07.2009 Q.5 What was the object of the firm M/s. Kentro Island ? Ans. The main object of the firm was to carry on the Business of Development and Constructions of Residential / Commercial/ Industrial units for sale or lease. Q.6 How do you know Shri Pravin Satra ? Ans. Shri Pravin Satra, is an established Builder & Developers & I had planned a construction business with him, under....
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....siding at 9, Indraprasad, Near Teachers Colony, Bandra East, Mumbai - 400 051, My contact is 9820440606. Q.2 Can you read & write English ? Ans. Yes, I/We can r6ad-& write English. Q.3 Are you filing your return of Income regularly, if yes what is your PAN ? Ans. Yes, I am filling my return of Income regularly and my PAN is AEKPR2556J. Q.4 Describe about M/s. Kenstro Island ? Ans. It is a Registered Partnership firm, since 29.03.2006, wherein at the time of inception we Were 3 partners & later added 2 more partners vide partnership deed dated 04.07.2009. Q.5 What was the object of the fime M/s. Kentro Island ? Ans. The main object of the firm was to carry on the Business of Development and Constructions of Residential/ Commercial/ Industrial units for sale or lease. Q.6 How do you know Shri Pravin Satra ? Ans. Shri Pravin Satra, is an established Builder & Developers & I had planned a construction business with him, under partnership, wherein we added Shri Pravin Satra & another Shri Girish Gada, also as the Partner wef. Dated 04.07.2009. Q. 7 How many projects have been developed by M/s. Kens....
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....g Survey action conducted on Shri Pravin V Satra, what do you have to say about it ? Ans. I am not at all aware of this paper, nor have I retired from the partnership firm as mentioned in this loose unsigned paper and I have not received any amount from Shri Pravin V Satra. Q.9 Please give the complete details about the project of Kandivali mention in the given page? Ans. The Kandivali project was under SRA scheme we have tried to acquire and develop the same but it did not materialized. Q.10 Do you want to say anything else ? Ans. No. In the course of statement of Ajay Gosalia, a Partner of the said firm, A copy of Partnership Deed dated 29th March, 2006 and. A copy of Admission cum Partnership dated 04th July, 2009 were submitted by him. 8.4. In the present case, the submissions made in the course of remand proceedings, the details filed by the Assessee in course of Appellant proceedings by way of additional evidence and Statement of 1) Ajay Gosalia, 2) Shantanu V Rane, and 3) Prabhakar Shetty were, recorded u/s.131 on oath in course of Remand proceedings are taken on record and therefore explanation of the assessee o....
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....as also one of the basis for the ld. CIT(A) to grant relief to the assessee. Moreover, when the ld CITA grants relief on the ground that in remand report, the ld AO had accepted to the contentions of the assessee, the revenue ought not to have preferred further appeal before us as there could not be any logical grievance for the revenue. Reliance in this regard has been rightly placed by the ld AR on the decision of Hon'ble Madras High Court in the case of B Jayalakshmi vs ACIT reported in 407 ITR 212 (Mad). Accordingly, the ground No.3 raised by the Revenue is dismissed. 16. The next issue to be decided is as to whether the ld. CIT(A) was justified in deleting addition of Rs. 25 lakhs which was made based on the impounded loose paper Annexure-A-2 page 43 in the facts and circumstances of the case. 16.1. We have heard rival submissions and perused the materials available on record. We find that during the course of survey an impounded loose paper marked as Annexure A-1 in page 43 was impounded which contained the noting that 25 cheques of Rs. 1 lakh are to be issued on Wednesday and cash to be received on Friday after taking the commission at 2%. The assessee had not furnished a....
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....etailed below: a. The impounded loose paper was just a discussion point of instructions given to broker to pay 25 cheques of Rs. 1 lakh in advance and total payment is Rs. 25 lakhs and the commission will be 2% on sale amount. b. There is no such transaction that took place as per the bank statement of M/s. Darshan Developers, proprietary concern of the assessee produced during the course of remand proceedings. c. These papers are unsigned and no datewise details of payments are mentioned thereon and therefore dumb documents. d. The name of the brokers and the details of the property in respect of which the alleged brokerage is paid is not mentioned anywhere on the said impounded loose paper and qualifies for dumb document. e The addition of Rs. 25,00,000/- is made based on dumb document without having corroborative evidence. 10.3. Counter Comments of the Assessing Officer: In the present case, the details filed by way of Additional Evidence and the submissions made by the assessee during the assessment proceedings as well as remand proceedings are considered and taken on record and therefore, the explanation of the ass....
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.... out taken at the time of survey proceedings disclosed the profit of Rs. 28,90,721/- as on the date of survey. The ld. AO observed that the profit on the date of survey was Rs. 28.90 lakhs and whereas the final profit disclosed by the assessee in the return of income is Rs. 20.54 lakhs and accordingly proceeded to add the difference of Rs. 8,35,871/- as profit not disclosed by the assessee. The matter was ultimately remanded back by the ld. CIT(A) to the file of the ld. AO calling for remand report. In the remand proceedings, the assessee stated that the ld. AO made comparison between total income of assessee of Rs. 20,54,850/- with the provisional profit shown in the provisional profit and loss account on the date of survey of Rs. 28,90,721/-. It was pleaded that the net profit as per the audited accounts of M/s. Darshan Developers (proprietary concern of the assessee) for the year ended 31/03/2013 was Rs. 59,63,620/- and the same was duly disclosed as business income in the computation of total income by the assessee. Accordingly, it was pleaded that there was absolutely no shortfall in the profit disclosed by the assessee in the return of income warranting any addition thereon. ....