TaxTMI 
TaxTMI 
2022 (4) TMI 1177
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....essment Year 2001-02. 3. Brief facts of the case are, assessee has filed return of income on 30.10.2001 declaring income of Rs..16,03,415/- under normal provisions and Rs..43,03,130/- under section 115JA of Income-tax Act, 1961 (in short "Act") along with financial statement and tax audit report in the form No. 3CA and 3CD. It is processed u/s. 143(1) of the Act and subsequently selected for scrutiny and statutory notice u/s. 143(2) and 143(1) of the Act were issued and served on the assessee. The assessee is in appeal before us raising following grounds in its appeal: - "GROUNDS OF APPEAL 1. The ground or grounds of appeal are without prejudice to one another. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the view taken by the AO in assessing surplus of Rs. 43,44,700/- realised on surrender of rights to acquire the flats as "Short term capital gains" as against "Long term capital gains" shown by the Appellant. 2. The Ld. CIT(A) failed to appreciate that the flats were surrendered after a period of 36 months and as such surplus realised on such surrender ought to be taxed as "Long term capital gains" al....
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....ary, 1998. Aggreived assessee preferred appeal before the Ld.CIT(A) and Ld.CIT(A) concluded that the Assessing Officer was justified in treating the capital gains as short-term capital gains and dismissed the appeal of the assessee. Against this order of the Ld.CIT(A) the assessee is in appeal before us. 7. At the time of hearing, Ld. AR of the assessee submitted as below:- "4. The Assessing Officer erred in holding that the Flat Nos 601 and 602 were booked in the name of Mrs Manju Ramsinghani and Mrs Sonia S Chhabria by relying upon part of the seized material Contained in the file marked as Annexure A-1 seized on 13.07.2001 (hereinafter referred to as "file"). The appellants submit that - 4.1. Flat Nos. 601 & 602 in Ronak Residency, Khar were booked in the name of the appellants by the agreement dated 10th July, 1997. The payments for the said flats were made by the appellants and, by LKP Merchant Financing Limited and Mrs Sonia Chhabria on behalf of the appellants. The payments for the said flats to the tune of Rs. 1,10,00 000 were made prior to the execution of the agreement. The payment schedule is given below - Date of payment Cheque no Amount (R....
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....ookings of the said flats were not in their name. 4.4 The appellants further, submit that the other papers cannot be considered "more reliable" than the signed agreement executed on the stamp papers. Considering the fact that the payments for these agreements were made by the appellants and by other parties on their behalf, the contention booking of the flats in the name of Mrs. Manju and Mrs. Sonia cannot be held to be correct. Only an amount of Rs. 10,00,000 was paid by Mrs Sonia that too on behalf of the appellants whereas amount Rs..80,00,000 was directly paid by the appellants.to the developers as evidenced form their books of account. 4.5. The appellants further, submit that the Assessing Officer has made unsustainable presumption on the basis of conjectures and surmises that the agreements for purchase of flats in the name of the appellants were executed after December, 1997 by executing a post dated agreement on Rs. 20 stamp paper. This is far from the truth as the stamp papers used for executing the agreements were issued by the Stamp Office on 15th May, 1997 and were actually executed on 10th July, 1997. Further, the payments for the same were made in th....
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....s on page no 169 and the amended writing clearly indicates that Flat Nos 601 and 602 were to be allotted to the appellants, referred to by the name of Mrs. Manju, whose name is written in the representative capacity for the appellants. 5.5. The Assessing Officer held that the name of the appellant,'-'company is not appearing on the said page no 169. The appellants submit that the name of Mrs Manju is stated against Flat No 601 and 602 on the said page. The appearance of name of Mrs. Manju is in lieu of the name of the appellants was very common and, as explained above her name and the name of Mrs Sonia appear in all the correspondences papers written by the developers during the course of meeting for negotiations in the representative capacity of the appellant-company. 5.6. The appellants further, submit page no 165 of the file (dated 12.0 1.98) contains the minutes of the meetings held on 11.0 1.98 between the owners of the land (Mr. Pasari's), developers (Mr. Chawla's) and the purchasers (other parties). As per this page, the anomaly in the distribution of the flats is corrected and the final proposal was approved in the meeting. The appellants w....
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....t of the three cheques aggregating Rs. 30,00,000 paid by LKP Merchant Financing Ltd on behalf of the appellants. The document on page no 93 is the receipt acknowledging the receipt of Rs. 10,00,000 paid by Mrs Sonia on behalf of the appellants. 6.3. The appellants submit that these receipts were issued in the month of December, 1997 whereas the agreements for purchase of the flats were executed on 10th July, 1997. This clearly shows that the developers had issued the receipts acknowledging that the said payments have been received from the appellant-company. However, as per their practice, the developers have written the names of Mrs Manju and Mrs Sonia as representatives of the company. In this context, the appellants submit that neither Mrs Manju nor Mrs Sonia have recorded these payments as payment for purchase of the flats in their books of account. 6.4. The appellants further submit that since they are a closely held company and the the directors are family members, there were no disputes that could have arisen in the future. The directors remained under a bona fide belief that the names of Mrs Manju and Mrs Sonia were used in the representative capacity of t....
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....latter part of the page, the developers have confirmed having received Rs. 10,00,000/- from Mrs Sonia for the flats and have further confirmed having received Rs. 60,00.000, each for the Flat Nos. 601 and 602, which were purchased by the appellants from the developers. 6.9. The Assessing Officer contended that the said page depicts that for the purchase of those flats, monies were advanced by Mrs Manju. which were subsequently recovered. The appellants submit that the monies were advanced by Mrs Sonia to the tune of Rs. 20,00,000 as a temporary friendly loans to the developers, which were received back during the year. As such, the appellants submit that the reliance placed upon this page be regarded as untenable inasmuch as it only recorded the transactions of the friendly loan advanced and at the bottom of the page, a summary of the payments made for the flats purchased by the appellants. 7. The Assessing Officer further, observed that the payments for the said flats were never made by the appellants and that the balance in the account of Premraj Developers Pvt. Ltd., sister concern of Prem Santosh Properties Pvt. Ltd., was adjusted towards the payment to be mad....
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....chant Financing Limited and Rs. 10,00,000 was paid by Mrs Sonia Chhabria to the developers on behalf of the appellants for purchase of the said flats in Ronak Residency. The said payments have been made as part payments towards the consideration payable by the appellants to the developer and are duly reflected in the agreements. These payments have been recorded in the books of account of the appellants for the year ended March, 2000. As the payments were directly made by the third parties to the developers (M/s. LKP Merchant Financing Limited and Mrs. Sonia) to the developers - Prem Santosh Properties Pvt. Ltd., inadvertently, the said sums were not accounted in the books or accounts in the year of payment. However, LKP Merchant Financing Limited properly accounted for the said payments in the books of account for the year ended 31 March, 1998 as having being made on behalf of the appellants. During the financial year ended 31st March, 2000, the appellants noticed this error and rectified it by passing the entries for the sum of Rs. 30,00,000 paid by LKP Merchant Financing Limited and Rs. 10,00,000 paid by Mrs Sonia Chhabria on their behalf. It was just an inadvertent error and th....
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....ssessee has got additional compensation, this gain, which assessee has offered as long term capital gain, whereas the Assessing Officer, by relying on the certain documents, as per which was found during the search in which the builder recorded the receipt of money are recorded in the name of Mrs Sonia and Mrs Manju and similar recordings were made by the builder in the subsequent meeting documents. The question is whether the documents, which denote that the names used by the builder as a representation for the assessee or it may be booked by these people on behalf of the assessee since all these individuals are related parties. Merely because the builder recognize this transaction on the representation basis, the ownership will not devolve on the individuals who are not party to the agreement. We observe that the agreement entered by the assessee even before the search took place. What is relevant is the existence of agreement and relevant payments made by the assessee, we observe that the substantial payments were made by assessee. It clearly indicate that the actual beneficiary is the assessee and the persons have acted in a representative capacity. We observe that atleast Mrs ....