TaxTMI 
TaxTMI 
2021 (5) TMI 714
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....f hearing." "Grounds of assessee's C.O.: 1. That the Hon'ble Commissioner of Income Tax (Appeals) Kota grossly erred in not quashing the assessment order and deleting entire additions of Rs. 18530430/- ignoring that the learned AO has grossly erred in converting the limited scrutiny into complete scrutiny without entire facts before him and thereby making addition of Rs. 18530430/-. 2. That under the facts and circumstances of the case the Hon'ble Commissioner of Income Tax (Appeals) Kota also failed to appreciate that as the learned ACIT had gross erred in moving for conversion from limited scrutiny to complete scrutiny without possession of full facts before him and therefore as Hon'ble Principal CIT, Kota has accorded mechanical approval without considering that sanction sought by learned AO was ignoring CBDT instructions dated 29.12.2015 and 14.07.2016 and therefore it suggests for annulment of order. 3. That the appellant therefore prays for annulment of order. 4. That the appellant craves leave to add, alter, amend, modify and / or otherwise substitute any of the foregoing grounds as and when required." 2. The hearin....
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....added to the income of the assessee. In response the assessee submitted his reply. The reply of the assessee has been considered and the same is found to be not acceptable. At the time of assessment proceeding , considering the submission of assessee and facts available on records AO found that there is a difference of Rs. 1,85,30,430/- between the actual sale consideration recorded as impounded annexure (per page No. 9) and sale price shown is books. Therefore the same is added to the total income of the assessee. Against the order of the AO assessee moved to the CIT(A) Kota. The CIT(A) allow the appeal of the assessee partly deleted for Rs. 18454800/- out of addition made Rs. 1,85,30,430/-and confirm the addition for Rs. 75,630/- relying on decision of the various appellate Authority and further stating that : A.O's examination of Annexure AS-2 was very casual and not based either on the possible further enquiries or workings or on the appreciation of statements and change in the status of several flats & onwards. He has just made a one sided assessment based only on the loose sheet without bringing on record the other corroborative evidences t....
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....o the sale price of flat No. 202 & 302, it is evident that the sale amount shown on this paper and in books are same, Considering the facts that sale price shown on this paper are actual and Sh. Anil Mundra has also stated that this paper belongs to M/s Shri Ganpati Developers. From the above it is clear that there is a difference of Rs. 1,85,30,430/- between the actual sale consideration recorded as per page No. 9 of annexure and sale price shown in books. The tax effect involved in the case being Rs. 59,87,336/-, which is more than the limit prescribe by the Board vide Circular No.03/2018 for filing appeal before the Hon'ble ITAT. Therefore, further appeal is recommended against the order of the CIT(A), Kota." The ld DR has relied on the following judicial pronouncements: (i) K.Sakthivel Vs The ACIT TCA No. 1083 of 2005, dated 14/06/2012 (ii) CIT Vs M/s Hotel Meriya, ITA No. 551 of 2009, dated 26/05/2010 of Kerala High Court." 6. On the other hand, the ld. AR appearing on behalf of the assesse has reiterated the same arguments as were raised before the ld. CIT(A) and relied on the written submissions filed before the Bench and the same i....
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....b) That purchasers of flat no. 203, 603, 701, 702, 703 and 104 are different persons than those dummy mentioned in Page 9 of AS-2;- flats sold are skeleton and flat area is also reduced. (c) That Sale Price is accepted by Service Tax Authorities. (d) That sale price' is accepted by District Stamp Authorities i.e. there is no variation in sale price as shown in Sale Deed and as determined by Stamp Authorities. 6. That all purchasers are assessed to tax. Their PANs are given in Sale Deeds. However no enquiries are made from them. 7. The Id. AO as such totally ignored all these facts and just concentrating on figures mentioned in this Dummy Sheet (Page 9) made addition of Rs. 18530430/-.While doing so, the Id. AO erred in taking sale price of Flat No. 804 at Rs. 4491080/- which was mentioned in Page 9 of AS2 also t Rs. 2978100/- which the Id. AO in his Assessment Order mentioned as Rs. 4491080/- & thus the learned AO made addition of difference Rs. 1512980/- also. 8. We submit addition made by the Assessing Officer based on the undated and unsigned loose paper which has many noting jottings is not a conclusive evidence and, therefore, t....
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....erences of Rs. 1260500/-by Hon'ble CIT(A) is also uncalled for' which we agitate. We support rest part of Order of Hon'ble CIT(A). 11. We pray that addition of Rs. 18530430/-made by the learned AO is uncalled for and the same be deleted. Even addition of Rs. 75630/- sustained by the Hon'ble CIT(A) Kota needs deletion." 7. We have heard the ld. Counsels of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. From perusal of the record, we noticed that the ld. CIT(A) has restricted the addition from 1,85,30,430/- to Rs. 75,630/- by holding as under: "The Grounds of appeal no. 2 to 4 pertain to addition made based on a paper (loose sheet) found in possession of Sh. B.D. Mundra, one of the partners in the assessee firm during the course of search proceedings on the Mundra Group on 13/08/2013 & as intimated to the present A.O. by DCIT Central Circle, Kota. The seized document is detailed at page 2&3 of the assessment order. As per the A.O. the di....
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....opted for "skeleton" flats so the difference in price was there but the agreements were finally registered on actual prices. For some flats, part amounts were received till then & some of the partners namely Sh. Ashok Maheshwari, Rajendra Jain, Anil Mundra himself & Bhuvanesh Lahoty's names were on the sheet so as to show to prospective buyers that only a few flats were available for sale. In response to Q. 58 where specific question has been put up regarding the cash receipts reflected on the page the above situation was claimed. Detailed examination was made in the statements flat wise. However, the A.O. has not brought out flat wise explanation in the order & has merely relied on the loose paper to make the addition of the difference amount. In response to Q. 64 the authorized officer has asked the details about difference of Rs. 82 'lakhs' noted on the page to be reconciled with the books. In response, the position has been explained by the appellant assessee's partner and no further cross questioning has been resorted to. Annexure AS-2 seized by the investigation wing had 65 pages as under;- Page 58 to 65 was agreement with S....
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.... same. Pages 3 to 5 are hooking forms signed by prospective buyers. Thus, in my view, the A.O. has relied only on the sheet at page 9 of the above referred Annexure AS-2, to make the additions of the difference amount shown in the sheet. In this regard, he has only taken the following 9 flats lakshya Tower' out of the total 24 (including 3 blanks) detailed in the sheet namely Flat nos. 102, 203, 403, 603, 701. 702, 703, 104 86 804, His action has several lacunae which are detailed as under- (1) It is seen that there flats no. 203, 603, 701, 702 86 703 & 104 were purchased by different persons than those mentioned in the 'loose sheet' referred to by the A.O. in his order. Their registration documents have also been made available and it is observed that the stamp valuation authority has not recorded any adverse findings on the sale price, which should have been there if the flats were sold at much higher prices than claimed by the assessee. (2) Despite the availability of the names, other details 86 PAN etc. of the buyers, the A.O. has not cross verified the details of purchase, payments etc. to verify the version advanced by ....
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....he issue and reaching conclusive findings through proper examination of evidences & persons. (7) A copy of some of the sale deeds spread from 23.06.2014 to 01.12.2014 shows that in respect of one case, the sale amount is even higher and recorded in the books of accounts as such. In some cases it is clearly mentioned as a 'skeleton' flat in respect of buyers who were not even in the list contained in the loose sheet. Why would the stamp valuation authority assess the flats in same building at different stamp rates if the going 'circle' rate is the same unless there is a conceptual difference in actual value, is also a point which the A.O. seems to have missed out. Further a perusal of the Service Tax return shows no such discrepancy in the period under review here. (8) The 'Skelton' flats' rate is coming to Rs. 3200 to Rs. 3400/- per square feet itself while the 'completed' or 'fully furnished' flat is sold @ 4967/- which difference if not real, would involve an adverse finding from both the service tax department as well as the SRO for tax avoidance if some flats of same measurement are sold at different rates to 'ac....
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....nsaction. This is only an unsigned /undated loose paper with the Department to substantiate its stand. No cheque transaction has taken place between the Sudhiksha Singh and the Assessee during the financial year 2008-09. The addition has been made merely on the basis of this loose paper without any corroborating evidence and on conjecture and surmises. Therefore, the presumption u/ s. 292C of the Act is a rebuttable presumption. The presumption as envisaged in section 292C is limited to the correctness of the documents found at the time of search or survey, but that presumption has not been extended by the statute to be presumed to be the income of the assessee. ITAT Jabalpur in the case of ACIT vs Satyapal Wassan (295 1TR (AT) 352 (Jabalpur)) wherein elucidating with respect to the same issue, the Tribunal has held as under : "The crux of these decisions is that a document found during the course of search must be a speaking one and without any second interpretation, must reflect all the details about the transactions of the assessee in the relevant assessment year. Any gap in the various components as mentioned in section 4 of the Income Tax Act must be....
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.... containing loose sheets of papers are not book and hence entries therein are not admissible under section 34 of the Evidence Act, 1872." In Riveria Properties (P) Ltd. Vs. ITO (ITAT Mumbai) in ITA No. 250/Mum/2013 86 ITA No. 2748/Mum/2016 Date of Judgement/Order: 27/10/2017 held that- Assessing officer is not correct in coming to the conclusion that on money is exchanged between the parties based on a loose sheet found in the premises of a third person. To sustain the addition, the assessing officer should have conducted an independent inquiry about the value of the property and ascertain whether any 'under valuation is done, if so what is the correct value of the property. Further, the assessing officer did not brought on record any evidence to support his contention to say that there is on-money exchanged between the parties. In the absence of proper inquiry and sufficient evidences, we find no reason to confirm addition made by the assessing officer towards on money. Therefore, we direct the assessing officer to delete addition of Rs. 3,05,00,000 made towards on money. Thus, it is clear that the A.O.'s examination of the Annexure AS-2....
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....arch proceedings on Mundra Group on 13/08/2013 & as intimated to the present A.O. by DCIT Central Circle, Kota. The seized document is detailed at page 2&3 of the assessment order. As per the A.O. the difference between the sale price mentioned in the page no 9 of Annexure AS-2 (of the seized documents) and that shown in the books of accounts in respect of a flats sold comes to Rs. 1,85,30,430/-. The assessee in response to show cause given by the A.O. in this regard mentioned that the paper (Annexure AS-2 having 65 pages) was a rough working and had no link with the actual sale. He mentioned that the actual flats sold were not to the same persons in all cases and there were different prices due to buyers opting for 'skeleton' or 'completed' flats as well. As per the statement copy of the partner recorded at the time of the post-search proceedings u/s 131 on various dates viz. 17.10.2013, 18.10.2013, 22.10,2013, 24.10.2013, 8.11.2013, 09.11.2013, 11&12.11.2013 and on the relevant annexure AS-2 mostly on 13.11.2013, it is noted that Sh. Anil Mundra, Partner, has in response to the questions related to annexure AS-2 pages 4 to 65 mentioned and elaborated the details o....
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....rom both the service tax department as well as the SRO for tax avoidance if some flats of same measurement are sold at different rates to 'accommodate' cash proceeds. No adverse findings have been gathered by the A.O. from these two departments in respect of the assessee's project. The service tax ledger account shows flat wise tax paid from 2011 to 2016 even on individual payments credited. Hence, just on the basis of one loose sheet of paper with miscellaneous, unconfirmed 86 uncorroborated notings, to make an addition of Rs. 1,85, 30,430/ - is not fair as this would also mean a suppressed sale of of about 25% against the shown project revenue and jack up the profit to 30% (5.43% already shows) which appears to be astronomical as well as impractical on a single project. The addition dwells more in the realm of presumption than real. Thus, it is clear that the A.O.'s examination of the Annexure AS-2 was very casual and not based either on the possible further enquiries or workings or on the appreciation of statements and change in the status of several flats & owners. He has just made a one sided assessment based only on the loose sheet without bringing on recor....
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....beral approach while interpreting the expression 'sufficient cause' for condonation of delay. In case of Collector, Land Acquisition Vs. Mst. Katiji (1987) 167 ITR 471, the Hon'ble Supreme Court has laid down the principle that the power to condone the delay provided under the statute is to enable the Courts to do substantial justice to the parties by disposing of the matter on merits, therefore, while considering the matters for condonation of delay, the law must be applied in a meaningful manner which subserves ends of justice and technical considerations should not come on the way of cause of substantial justice. There is no quarrel that the explanation and reasons explained for delay must be bonafide and not merely a device to cover an ulterior purpose such as laches on the part of the litigant or an attempt to save limitation in the underhand way. If the party who is seeking condonation of delay has not acted in malafide manner and reasons explained are factually correct then the Court should be liberal in construing the sufficient cause and lean in favour of such party. A justice-oriented approach has to be taken while deciding the matter for condonation of delay. However, th....