TaxTMI 
TaxTMI 
2021 (4) TMI 627
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....re being disposed off by this common order. 3. In the case of M/s N.R. Finance Pvt. Ltd revenue has raised following grounds in the appeal relating to Assessment Years 2012- 13 and 2013-14:- M/s N.R. Finance Pvt. Ltd IT(SS)No.201/Ind/2016 Assessment Year 2012-13 "On the facts and in the circumstances of the case the Ld. CIT(A) erred in deleting the addition of Rs. 2,72,71,700/- made by the AO on account of estimation of sale consideration on the basis of seized documents LPS-A3 found from the premises of the broker, Shri Kamal Goyal without appreciating the facts and evidences brought into light by the AO during assessment proceedings. The appellant reserves the right to add, amend or alter the grounds of appeal on or before the date, the appeal is finally heard for disposal. ITA No.1043/Ind/2016 Assessment Year 2013-14 "On the facts and in the circumstances of the case the Ld. CIT(A) erred in deleting the addition of Rs. 13,31,01,675/- made by the AO on account of estimation of sale consideration on the basis of seized documents LPS-A3 found from the premises of the broker, Shri Kamal Goyal without appreciating the facts and evidences brought into light by the AO duri....
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....g in doubting the authenticity of the registered sale deed documents executed before the sub-registrar office which are documents in public domain and cannot be considered as additional evidences. Accordingly the cross objector prays that the additional grounds of department be directed to be dismissed. 6. In the case of another assessee namely M/s N.R. Company Revenue has raised following grounds of appeal for Assessment Years 2009-10, 2011-12, 2012-13 and 2013-14:- ITANo.204/Ind/2018 Assessment Year 2009-10 1. Whether on the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting the addition of Rs. 1,89,47,147/- without considering the seized documents page no.64,66 and 68 of LPS-A3 from the premise of the broker who sold the plots in the area developed by assessee and the fact that there is huge difference in guideline value and sale consideration shown by the assessee which supports that the sale price was suppressed in books. 2. Whether on the facts and in the circumstances of the case, Ld. CIT(A) has erred in holding that no opportunity was provided to assessee for cross examination even when in statement of the partner, recorded u/s 131 of the Ac....
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....bove ground of appeal ITA No.423/Ind/2017 Assessment Year 2013-14 1. Whether on the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting the addition of Rs. 33,72,67,720/- made by the AO on account of undisclosed receipts from sale of plots without considering the seized documents page no.64,66 and 68 of LPS-A3 from the premise of the broker who sold the plots in the area developed by assessee and the fact that there is huge difference in guideline value and sale consideration shown by the assessee which supports that the sale price was under mentioned in books. 2. Whether on the facts and in the circumstances of the case, Ld. CIT(A) has erred in holding that no opportunity was provided to assessee for cross examination even when in statement of the partner, recorded u/s 131 of the Act, the details of seized documents were provided to him as such sufficient opportunity was provided to assessee firm and the assessee firm never asked for cross examinations during the course of assessment proceedings. 3. Whether on the facts and in the circumstances of the case, Ld. CIT(A) has erred in law by deleting the addition of Rs. 15,67,401/- made under the head ....
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.....R. Company (In short 'NRC'). In the order of 'NRC', Ld. CIT(A) referred to the finding of Ld. CIT(A) given in the case of M/s N.R. Finance Pvt. Ltd. Therefore, as agreed by both the parties, we are taking the case of M/s N.R. Finance Pvt. Ltd as the lead case and the common issue arising in case of both the assessee(s) shall be decided on the basis of facts of M/s N.R. Finance Pvt. Ltd. 10. Brief facts of the case as culled out from the records are that the assessee is a private limited company engaged in the business of construction of residential and commercial complexes and development of residential colony and plots. The appellant is one of the companies of M/s Appolo Group of Indore which was searched u/s 132 of the Act on 29.01.2012. The assessee company entered into an agreement for development of land owned by M/s N.R. Company and others at Gram Bicholi Hapsi in the name and style of N.R. Estate vide agreement dated 04.04.2007. Subsequently vide another agreement dated 05.02.2008 terms and conditions of the development agreement were changed and in consideration of relinquishing the part of development charges assessee agreed to acquire plots of land spread over financial....
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....eads as follows:- At the outset, it is submitted that despite an extensive search proceeding being undertaken by the department, no incriminating material was found at appellant's place. The Ld. AO solely relied on the noting in the diary seized from the premises of broker namely Shri Kamal Goyal. Further, the additions made by the Ld. AO are based on estimate, guess work, presumptions which is bad on facts and in law. During the course of assessment proceedings, it was submitted to the ld. AO that the appellant does not have an business relation with the broker Shri Kamal Go al and no lots were sold through him. The Ld. AO did not dispute such fact but alleged that the brokerage might have been paid in cash to the said broker. Such allegation is totally based on presumption and highlights the fact that any material seized from Shri Kamal Goyal premises cannot be taken into consideration for appellant's case. Moreover, the Ld. AO himself disbelieved his presumption where no addition was made in the form of imaginary brokerage he assumed to have been paid in cash. The main premise of the allegation of the Ld. AO was that the rates of the plot numbers mentio.ned in ....
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....the diary are trade inquiries. During the course of appellant had demonstrated the fact that noting mentioned seized diary in the form of buyers sale rates & date of sale etc. are not matching with the actual registered documents. Thus such demonstration c1earl corroborates the fact that the noting in the seized diary were not related to the appellant and were merely trade inquires which had not crystalized into an material transaction. Also this fact adequately proves that the seized diary being relied for the alleged addition is nothing but a "dumb document" as department failed to link the same with another corroborative evidence and therefore it has no evidentiary value in the eyes of law. The following is the summary of judicial pronouncements in support to our contentions and may kindly be considered by your honours:- S.No. Citation Proposition 1 CIT vs Kabul Chawla 380 ITR 573 (Del) Since no incriminating material was unearthed during the search, no additions could have been made to the income of assessees. 2 Shri Kamal Kishore Kotwani Vs. CIT I.T.(SS) ANo. 186/Ind/2016 dtd 04.07.18 (Hon'ble Bench of ITAT Indore) 3 CITVs S.M. Agrawal 293 ITR 043(Del) No addition....
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....iance in the case of Dy. CIT v Rungta Mines Ltd (IT (SS) Appeal Nos. 30 to 33 (Kol) of 2015 dated 9-3-2018 which has held as under on the issue of public documents not being additional evidence 25. In the revised grounds of appeal, the department has challenged the aforesaid action of the Ld. CIT(A) as violation of Rule 46A, wherein the Ld. CIT(A) has not confronted these materials with AO and elicited a Remand Report before taking into consideration these new materials. which the AO was not privy to during assessment proceedings. We note that as per the scheme of the Act, the Ld. CIT(A) enjoyss plenary &, co-terminus powers as that of AO while deciding the appeal before him. The appel1ate proceeding before the Let CIT(A) is akin to continuation of assessment proceedings. The Let CIT(A) after giving notice to assessee has power to even enhance the assessment made by AO. As per rule 46A of Income-tax Rules, the Ld. CIT(A) has to give opportunity to AO before admitting Additional Evidences. We note that the Ld. CIT(A) has based his decision on the materials produced before the AO. However, in addition to it has gone through the financial result of similar companies located at O....
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..../s N.R. Company who took us through the paper book running from page 1 to 89 and reliance was placed on the following written submissions specifically with regard to the alleged undisclosed sales receipts of sale of plots of 'N.R. Estates'. i) The assessee submits that the above addition was made by Learned AO solely relying upon certain information provided to her by DCIT (Central) , Indore. According to the said information , during the course of the proceedings of search at one Apollo Group of Indore and certain other persons including the residential premises of a broker named Kamal Goyal, certain documents were found and according to the said document and in particular a diary seized from residential premises of the broker Kamal Goyal, it was revealed that the rates of Plots in the colony 'NR Estate' were in the range of Rs. 1150 to Rs. 1311 per Sq Ft. As according to the information these were the rates quoted to the customers by said broker Kamal Goyal , the DCIT, taking cognizance of the information available from the diary seized from broker Kamal Goyal worked out year wise estimated average rates and forwarded the information to the AO . Based on the said information an....
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....d in (2012) 28 Taxman.com 134 ii) The assessee submits that in response to the above proposal of AO for making addition on the assumption of sales at higher rate, the assessee submitted detailed replies from time to time and emphatically denied the allegation regarding unaccounted income or sales at higher rate than those reflected in relevant documents and the books of accounts. The summary of the replies submitted by assessee is as under:- a) Reply dated 27/11/2015 ---In response to the summons dated 23/11/2015 issued by AO requiring the assessee to show cause against proposed addition of the difference between the rates as per broker's diary and the actual rates as per the books of the assessee, it was submitted that the assessee has no business connection with said broker Kamal Goyal and the material / information contained in his diary could not be used against the assessee for any making allegation of sales at higher rates . In support of its contention that assessee has no connection with said broker Kamal Goyal , assessee submitted details of brokers who had worked for assessee along with details of the brokerage paid to them . The assessee also submitted a detailed l....
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.... in respect of which brokerage was paid to them . Copies of A/Cs of the brokers who had acted as brokers for assessee were also filed. Not only this, the assessee also submitted copies of accounts of all buyers / parties to whom the sales were effected by assessee in the year under consideration. The assessee also submitted a detailed chart with names of the parties to whom plots were sold along with details of Plot Nos. , areas , rates at which the plots were sold and brought to the notice that none of the transactions matched with the information collected from broker's diary . By bringing on record the mismatch between the names , the dates of transactions , plot areas etc. as collected from broker's dairy and the actual transactions effected by assessee , the assessee successfully demolished the allegations of the AO and also brought on record the facts that the information available in the broker's diary could not be said to be reliable evidence for making any addition in the hands of assessee and no addition could be made solely on the basis of information contained in the broker's diary . iii) The assessee t submits that ignoring the submissions made by assessee and ignori....
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....with the actual sales effected by the assessee. Under the circumstances, the addition made by AO placing heavy reliance upon the broker's diary is in fact an addition without any basis to support the same and thus was rightly deleted . In fact there is no evidence at all either available in the broker's diary or brought on record by AO which can justify the conclusion regarding unaccounted sales drawn by AO . v) The assessee further submitted that no attempt has been made by AO to corroborate the information from the broker's diary with that of assessee's transaction of sale of Plot before making allegation of receipt of unaccounted money in sale of Plots. As a matter of fact the assessee had himself provided all details of the transaction of sale of plots effected by assessee during period under consideration which contained details of Plot Nos. , date of sales, names of parties in whose favor the documents were registered and the sale consideration received by assessee but the AO even did not summon the respective buyers to verify the facts . The assessee , therefore, submitted that in absence of any nexus between the information contained in broker's diary and the assessee's t....
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.... of any attempt on the part of AO to establish nexus of the material with the assessee and in absence of any clinching evidence against the assessee having been brought out by department , department's burden is not discharged and the addition must fall to the ground . The same principles are reiterated in following judgments . b) CIT Vs. Vedprakash Choudhary reported in (2008) 305 ITR 245 (Del), in this case also the addition based on the allegation of transfer of money was held to be without any corroborative evidence and accordingly deleted . c) CIT Vs. SM Agrawal reported in (2007) 293 ITR 43 (Del), addition deleted for want of relevant or admissible evidence as also for want of opportunity of cross examination . d) CIT Vs. DK Gupta reported in (2009) 308 ITR 230 in absence of corroborative or direct evidence , the addition based on presumption that notings or jottings had materialized into transactions giving rise to undisclosed income deleted . vi) The assessee also submitted that the legal position that suspicion cannot take the place of proof and that no assessment can be made on the basis of surmises and conjectures is also settled by number of decisions some of ....
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....lf. The notings of the diary have thus no evidentiary value in the eyes of law and no addition on that basis can be made . Reliance in this respect is made upon the decision of ITAT, Indore Bench in the case of Shri Parshwanath Construction v/s ITO reported in (2014) 24 ITJ 409 , where the Hon'ble ITAT has applied the aforesaid principles of the Evidence Act and held that when the sale is evidenced by registered sale deed duly signed and verified i.e when the document is in writing and registered , the oral evidence loses its credibility . In the instant case there is not even an oral evidence ( because broker's reply relied upon by AO cannot be equated with statement). A reference in this respect may also be on following decisions . a) Decision of Delhi High Court in case of CIT v/s Rajeev Mehta reported in (2008) 171 Taxmann 198 at 200 b) Paramjeet singh v/s ITO (2010) 195 Taxmann 273 (P&H) .= 323 ITR 588 . c) CIT V/s Mahesh Kumar (2011) 196 Taxmann 415 (Del) . In the said judgment their Lordships' have also held that the primary burden of proof regarding understatement or concealment is upon the revenue. d) In case of Smt. Sunita Dhadda Vs. DCIT reported in 148 TTJ 719 (....
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....ported in 30 Taxmann.com 117 (ITAT-Hyd) x) Without prejudice to all the above grounds , the assessee further submitted that assuming without admitting that any addition on the ground of understatement of consideration i.e suppression of sale is to be made , the entire sales consideration cannot be added but only appropriate net profit rate can be applied to such differential consideration . The said principle is well settled by several judicial pronouncements which are as under :- a) In case of CIT Vs. Balchand Ajit Kumar reported in 7ITJ 324(MP) , b) In case of Man Mohan Sadani Vs. CIT reported in 11 ITJ 587 MP, c) In case of . Sharda Real Estate Private Limited Vs. ACIT reported in 21 ITJ 20(ITAT , Indore ) , d) In case of CIT Vs. Sharda Real Estate Private Limited reported in 23 ITJ 233 (MP) e) In case of DCIT Vs. HVAC Systems (P. ) Ltd. reported in 44 SOT 81 (URO- Banglore) , f) In case of ITO Vs. Ankur Garg reported in 42 ITR (Tri ) 475 (Agra) . 17. We have heard rival contentions and perused the records placed before us and carefully gone through the written submissions filed by both the parties. The first common issue relates to the addition made for the alleg....
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....,71,700 2013-14 136927 327.93 1300 13,31,02,629 N.R. COMPANY Assessment Year Area in Sq.ft Rate per Sq.ft disclosed in books Rate per Sq.ft applied by A.O Alleged suppressed income 2009-10 114768 334.91 500 1,89,47,047 2011-12 58125 313.29 900 3,41,02,519 2012-13 270835 320.28 1100 21,11,75,466 2013-14 346146 325.65 1300 33,72,67,725 19. We further observe that in the case of M/s N.R. Finance Pvt. Ltd Ld. CIT(A) deleted the alleged addition for suppressed sales/income observing as follows:- 3.2 I have gone through the assessment order, the written and verbal submission made by the appellant. The Assessing Officer has relied on Page Nos. 64, 66 and 68 of LPS A-3, Page No. 29 of LPS A-5 and Page No. 5 of LPS A-16 found and seized from the premises of Shri Kamal Goyal, a broker. In Para 9.6 of the assessment order it is stated that on the perusal of various pages and the seized dairy it can be seen that it contains details of the transactions in respect of the plots of 'N.R. Estates' in which the rates were reflected at Rs. 1150/- to 1131/- per sq. ft. However, the assessee had recorded the sales at Rs. 325/- to Rs. 350/- per sq. ft. 3.2.1....
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....e premises of Shri Kamal Goyal and it contains details of transactions in plot of 'N.R. Estate' for the period of 01.01.12 to 20.09.12 at a rate of Rs. 1150/- to Rs. 1131/-. Therefore, it provides clear details about the rates at which the transaction have been undertaken in the plots of the colony developed and the document cannot be ignored. 3.2.4 Further, The Assessing Officer rebutted the submissions of the assessee for the following reasons: i) The assessee has stated that it does not know any person named Shri Kamal Goyal and further no brokerage has been paid to him as per books of accounts of the assessee company. However, the fact that Shri Kamal Goyal is a broker is not in dispute. The rates at which plots were sold in the project developed by the assessee company were higher than the rates at which the transactions were recorded in the books of the assessee. Since the assessee could not record the full brokerage in respect of sale of plots in the books of account, it might have paid the brokerage in cash. As regards the brokerage in respect of the sale value reflected 'in' the books which has not been paid, it would be sufficient to state that the a....
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....ant. The Assessing Officer has estimated the sale price the plots as per the p age nos. 64, 66 and 68 of LPS A-3 which are reproduced in Para 3.1 3.3.2 P age No. 64 of LPS A-3 bearing the date 01.05.2012 is in respect of Plot No.. G 12AG. On the left hand side of the said page it is written - N R Estate, G12A, 4800 sq. and 1211/-. On the right hand side it is written that it is sold by Nanak and purchased by Sanjeev. In the assessment order on top of the reproduction of seized document it is typed that 'Shri Nanak has sold a plot to some Sanjeev Gang. Shri Nanak Ram Kalra is a partner in N.R. Company'. The appellant has submitted with documentary proof that the plot G 12A was first time sold to Mrs. Shweta Kedia in March 2013. The sale consideration is shown at Rs. 14,49,900/- for the 4833 sq. ft. plot which works out to Rs. 300 per sq. ft. 3.3.3 Page No. 66 of LPS A-3 bearing the date 15.05.2012 is m respect of Plot No.D20. On the left hand side of the said page it is written - N R Estate, D20, 4000 sq. And 1275/-. On the right hand side it is written that it is sold by Kothari and purchased by AL. The appellant has submitted withG documentary proof that the plot D20 w....
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..../loose slips in absence of any other material to show that the assessee has made investment in land. The relevant observations and findings of the Tribunal in this case read as under:- 17 We have heard the arguments of both the parties, perused the record and have gone through the orders of the authorities below. In this case, the addition was made by the AO based on the loose paper and the same, in our view, cannot be considered as conclusive evidence. As held by the CIT(A) in the impugned order "except relying, the notings in the loose slips, no attempt has been made to corroborate the notings with independent evidence. The parties to the 'transaction particularly the vendor has not examined. In every transaction there is a circle concerning two parties. It is not known whether the vendor has disclosed the consideration as noted in the diary. Therefore, merely on the basis of presumption and some corroborated notings additions cannot be made." In our opinion, the deletion of addition by the CIT(A) is justified and no interference is called for in the order of the CIT(A). The following cases support the action of the CIT(A): 1. CIT Vs. Anil Bhalla [2010) 322 ITR 191 (Del....
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.... sufficient enough for making a sustainable and justified addition. 3.4.4 ITAT Delhi 'E' Bench in the case of Atul Kumar Jain (1999) 64 11J 786 (Delhi) vs. DCIT held that when the seized papers have being not corroborated by any independent evidence it cannot be considered as a reliable document or acceptable piece of evidence as a proof of investment in the house property and therefore, these kind of documents/papers are liable to be ignored and addition made on the basis of such document is not sustainable and in accordance with law. 3.4.5 In CIT v / s Kulwant Rai (2007) 291 ITR 36 (Del) the ruling of the Supreme Court in Dhakeshwari Cotton Mills Ltd v CIT (1954) 26 ITR 775 (SC) was relied upon. The Supreme Court held that even though Income Tax Authorities including the Assessing Officer has unfettered discretion and not strictly bound by the rules and pleadings as well as materials on record and is legitimately entitled to act on the material which may not be accepted as evidence, nevertheless such discretion does not entitle them to make a pure guess and base an assessment entirely upon it without reference to any material or evidence at all. Given the above state ....
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....ched to the conclusion that the figures mentioned therein are to be read by adding 3 zeros and thereby he came. to conclude that there is undisclosed income m these 6 assessment years. In our opinion, the document recovered during the course of was a dumb document and led nowhere. The CIT(A) rightly came the conclusion that it cannot be acted upon and deleted the addition. 29. Other than the loose paper, the AO has not brought on record any corroborative* material or evidence to show that the inference made by him is correct. The CIT(A) after taking the totality of the circumstances into consideration came to the conclusion that the addition made by the AO is not justified and the argument put forth by the assessee is supported by documentary evidence. This was not a case where relevant evidence had been ignored by the CIT(A) and their relevant evidence has been taken into consideration. The only test that was required to be applied was whether on the facts found and the state of evidence on record, the conclusion arrived at by the CIT(A) was one which could be arrived by a reasonable person properly informed in law. Applying this test, it could not be said that the decision ....
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....ned in law. 3.4.11. The Hon 'ble Delhi High Court in the case of CIT vs. Vivek Agrawal 231 Taxman 392 (Del) has held that unless the amounts stated the document were actually paid it cannot be presumed that the amount mentioned in the sale deed was not correct. 3.4.12 The Hon'ble M.P. High Court in the case of CIT vs. Kantilal Prabhudas Patel (2008) 296 ITR 568 (MP) has held that the addition cannot be made on guess work or estimates. 4. Turning to the factual matrix of the present case, if we logically analyze the contents of the documents seized from the premises of the broker, Shri Kamal Goyal and its reliability in the light of the documentary evidences submitted by the appellant regarding the actual registered sale documents in respect of plot nos. G-12A and D-20 of N R Estate, the sale price mentioned in the seized documents 64, 66 and 68 of LPS-A3 cannot be made the basis of the estimate made in the appellant's case. It is seen that . the plot nos. G-12A and D-20 have been sold for the first time in March- 2013 and at rates of Rs. 300 per sq. ft. and Rs. 325 per sq. ft. respectively. Further, on both page nos. 64 and 68 the plot no. mentioned is G-12A but t....
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.... the course of assessment proceedings M/s N. R. Finance Pvt. Ltd. had asked for opportunity to cross examine Shri Kamal Goyal but the same was not granted. 2.8 The Assessing Officer during the course of assessment proceedings of the appellant company issued summons to Shri Kamal Goyal who filed his submissions on 30/11/2015. The same are reproduced as under:- "During the course of summon proceeding as issued U/s 131 of the Income Tax Act, you have shown certain papers as found and seized during the course of search in my residential and business premises wherein certain details were recorded in connection with the sale and purchase of plots in NR Estates. In this respect I have to submit as under:- 1} I have seen all the papers as shown by you at the time of hearing which was seized during the course of search in my possession. 2.1} I act as a property broker and engaged in the business c purchase and sale of plots houses etc. 2,2} That in broking business entire transactions were executed through brokers only and we are not in touch with the actual buyer and seller. 2.3} That in most of the transactions three brokers involved for execution of a deal, one broker represe....
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....ind the back of the assessee of a third party, the same should be confronted to the assessee, otherwise the same material cannot be used or read against the assessee. The Hon'ble ITAT has relied on the recent decision of the Hon'ble Bombay High Court in the case of H.R. Mehta vs. ACIT in ITA No. 58 of 2001 in its order dated 30/06/2016 wherein it is held that the revenue was not justified in making addition at the time of reassessment without having given the assessee an opportunity to cross examine the deponent on the statement relied upon by the ACIT. Forget about denial of cross examination, the Revenue did not even provide the material on the basis of which the Department short to conclude that the loan was bogus transaction. This not having been done, the denial of such opportunity goes to the root of the matter and strikes at the very foundation of the reassessment. Further reliance is placed on the decision of Hon'ble M. P. High Court in the case of Prakash Chandra Nahta V / s CIT 201 ITR 134. 2.11 The Assessing Officer has primarily relied upon the notings on page nos. 64, 66 and 68 of the diary seized from Shri Kamal Goyal. As discussed above, the additio....
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....any consideration over and above the disclosed sale consideration in the books of accounts has been received. It is not in dispute that the sales recorded in the books of assessee are duly supported by registered sale deed signed by both the buyers and sellers and stating the consideration paid/received before the registering authority and transaction has taken place through proper banking channel. Ld. A.O has not rejected the books of accounts u/s 145(2) of the Act. 25. We further observe that revenue has failed to prove that both the assessee(s) ever entered into any transaction of any nature with Mr. Kamal Goyal. Even in the affidavit given by Mr. Kamal Goyal he has not stated anything about the assessee(s) except that some plot of land of 'N.R. Estate' was sold and it is also pertinent to note that even after specific request assessee was not offered any opportunity to cross examine Mr. Kamal Goyal which itself defies the principal of natural justice. 26. We observe that the contents of the seized diary showing few transactions of sale of plot at 'N.R. Estate' are totally different with the actual transaction which took place for plot numbers mentioned in the seized diary. Be....
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....dgment of Hon'ble Delhi High Court in the case of CIT v/s Vatika Landbase (P) Ltd (2016) 383 ITR 320 (Del) wherein the Hon'ble court held that:- "the addition made by the Assessing Officer on the basis of documents found and seized from the computer of an employee of the assessee company showing that the rate of sale of floor space in commercial was higher than the rate shown by the assessee was not sustainable as the rates mentioned in the seized documents did not represent any completed or materialized transaction. Moreover, the Assessing Officer did not make any enquiry from the said employee or from the buyers of flats in respect of actual price paid by them". 29. The Hon'ble M.P. High Court in the case of CIT vs. Kantilal Prabhudas Patel (2008) 296 ITR 568 (MP) has also held that the addition cannot be made on guess work or estimates. 30. The Hon'ble Madras High Court in the case of N. Ramanna Reddy Vs. JCTO reported in (1971) 28 STC 683 where it is held :-- that if the taxing authority intends to bring to tax the turnover of dealer, which, according to him , has escaped assessment by reason of deliberate attempt on the part of dealer to avoid net of taxa....
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.... A.O has himself mentioned the phrase that "brokerage might have been very much in cash" in the assessment order which shows that Ld. A.O himself was not certain about the transaction of brokerage. (v) No other effort was made by Ld. A.O to enquire from the plot holders so as to prove that excess amount was paid by them to the assessee. 32. In the result finding of Ld. CIT(A) is confirmed and the respective grounds of Revenue challenging the deletion of additions at Rs. 2,72,71,700/- and Rs. 13,31,01,675/- for Assessment Year 2012-13 and Assessment Year 2013-14 in the case of M/s N.R. Finance Pvt. Ltd and challenging the deletion of addition of Rs. 1,89,47,147/-, Rs. 3,41,02,145/-, Rs. 21,11,75,397/- and Rs. 33,72,67,720/- for Assessment Years 2009-10, 2011-12, 2012-13 and 2013-14 respectively in the case of M/s N.R. Company are dismissed. 33. Now we take up the additional ground raised by the revenue in the case of M/s N.R. Finance Pvt. Ltd for Assessment Years 2012- 13 and 2013-14 contending that Ld. CIT(A) erred in accepting the additional evidence in the form of registered sale deeds without giving any opportunity to the Ld. A.O as provided under Rule 46A of the I.T. rules ....
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....25/-. Since this amount is paid in excess of expenditure to be incurred u/s. 37(1) under this head the assessee was asked to explain the same. Also the excessive expenditure incurred on this excess area @ 55.85 per sq. ft. i.e. (4825 X 55.85 per sq. ft.) = 269476/- is not allowable . The assessee has not given any satisfactory reply for the same stating that the difference may be due to the reason of differences in plots size given to the developer at the time of actual possession. The assessee has admitted that the extra charges are paid beyond the agreement amounting to Rs. 15,67,401/- (Rs. 12,97,925/- plus Rs. 2,69,476/-) and therefore the same are disallowed u/s. 37(1) an4 added back to the total income. 37. Aggrieved assessee preferred appeal before Ld. CIT(A) and succeeded. 38. Now the revenue is in appeal before the Tribunal. 39. Ld. Departmental Representative vehemently argued supporting the order of Ld. A.O. 40. Per contra Ld. Counsel for the assessee relied the finding of Ld. CIT(A) and also referred to the following written submissions reproduced below:- b) Disallowance of development expenses to the tune of Rs. 1567401/- With reference to the addition on accoun....
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....veloper throughout various assessment years. m)The addition made on this account is not justified because when the extra area sold to the Developer is already included in the -Gross sales just like . sales to other parties and the profit arising thereon has already been offered for tax just like other sales to third parties, where is the question for disallowance of Development expenses when the appellant assessee has charged for the said area. n)In practical it may be a position that when the appellant assessee could not find a buyer of a plot in the open market, it had sold the plot to the Developer just like sales to other parties and accordingly credited the sales a/c and debited the account of the developer. 0)It may further be appreciated that against the total PIN area of 14,63,796 Sq. Ft. to be developed by the Developer, only 12.87,315 sq. ft. was developed by the developer up to AY 13-14 details of which are enclosed herewith. Thus there is no claim of extra development charges since development expenses have been claimed for 12,87,315 sq. ft. as per bills year wise received from the developer copy of which are enclosed herewith. TDS was also deducted accordingly. ....
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.... plots given to M/s N.R Finance Pvt. Ltd as per the supplementary agreement. The ledger account of the development charges paid to M/s N.R. Finance Pvt. Ltd is also placed on record for F.Ys. 2008-09 to 2012-13 and it is seen that the total development charges paid till F.Y 2012-13 amount to only Rs. 20,32,41,397/-. Therefore, no excess development charges have been paid by the appellant company. 8.4 In view of the above, the addition of Rs. 15,67,401/- is deleted. Ground No.2 is allowed. 42. From perusal of the finding of Ld. CIT(A) we find no inconsistency since sale consideration received from sale of extra land to M/s N.R. Finance Pvt. Ltd is already included in the gross sales shown by the assessee and the profit arising there from has been offered to tax. This fact is duly verifiable from the development charges paid to M/s N.R. Finance Pvt. Ltd for Assessment Year 2009-10 to Assessment Year 2013-14. We thus confirm the finding of Ld. CIT(A) and dismiss Ground No.3 raised by the revenue for Assessment Year 2013-14 in the case of M/s N.R. Company. 43. Now we take up the Cross Objections filed by the assessee namely M/s N.R. Finance Pvt. Ltd for Assessment Year 2012-13 an....