TaxTMI 
TaxTMI 
TaxTMI 
2022 (7) TMI 1209
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..... is that mandatory condition to invoke the jurisdiction u/s 153A of the Act did not exist, as such issue of notice u/s 153A of the Act is bad in law. He relied on the judgement of jurisdictional High Court in the case of C. Ramaiah Reddy Vs. ACIT (339 ITR 210). 3.1 We have heard the rival submissions and perused the materials available on record. In this case, there was search u/s 132 of the Act on 26.8.2008. Consequently, notice u/s 153A of the Act dated 11.11.2009 was issued seeking assessee to file the return of income which was served to the assessee on 20.11.2009, consequent to which assessee filed a letter dated 8.9.2010 stating that the return filed u/s 139 of the Act on 13.11.2007 may be treated as return filed in response to notice u/s 153A of the Act. Now the contention of the Ld. A.R. is that the mandatory condition to issue notice u/s 153A of the Act were never fulfilled, as such, assessment to be quashed. In our opinion, the assessee not able to demonstrate how the condition laid down u/s 153A of the Act has not been fulfilled. More so, assessee is dis-entitled to agitate the issue with regard to the validity of the search proceedings in view of the amendment to sect....
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....the difference between the amount due as per assessee's books and that of Mr. Raghunatha's books. Any entry other than the entry shown in the books of accounts of the assessee cannot be considered as unexplained entry in the hands of the present assessee u/s 68 of the Act. He submitted that lower authorities without verifying the genuineness of the transaction, the additions were made in the hands of the assessee and on this reason also, the department's appeal on this issue to be dismissed. 4.4 On the other hand, Ld. D.R. submitted that the assessee has not explained the difference between the assessee's books of accounts and books of accounts maintained by Mr. Raghunatha. Hence, the addition made by AO to be sustained. 4.5 We have heard the rival submissions and perused the materials available on record. In this case, assessee's books of accounts shown the credit balance of Rs.57.11 lakhs in the name of Mr. Raghunatha of Chaitanya Properties as against this Mr. Raghunatha shown a sum of Rs.74.75 lakhs. Now the contention of the Ld. D.R. is that assessee has to explain at least the balance standing in his books of accounts in the name of Mr. Raghunatha at Rs.57.11 lakhs. It is t....
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....g so, we do not find any infirmity in the order of Ld. CIT(A). Accordingly, the deletion of addition by Ld. CIT(A) is justified. This ground raised by the assessee is allowed and department is dismissed. 5. Next ground of appeal by assessee is with regard to the sustaining addition of Rs.51 lakhs in case of unproved loans from Mr. Rajendra (Neriga Land) out of Rs.1.75 crores made by AO. An amount of Rs.1.75 crores has been given by Shri Rajendra Runwal from the period 9.12.2005 to 4.2.2006 by different DDs and cheques drawn on Canara Bank, SBM, Bank of India and Ing Vysya Bank. The assessee shown total unsecured loans in the name of Shri Rajendra at Rs.2.26 crores. Out of this, assessee produced confirmation to the tune of Rs.1.75 crores from Shri Rajendra. Therefore, AO made addition of Rs.51 lakhs. The Ld. CIT(A) confirmed the same. Against this assessee is in appeal before us. 5.1 The contention of the Ld. A.R. is that Mr. Rajendra Runwal had paid to the assessee a sum of Rs.1.75 crores as advance towards sale of land at Neriga village on various dates during the assessment year under consideration and same was shown as a liability. The assessee repaid the same amount since th....
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....khs. Accordingly, this ground of appeal of assessee is allowed. 6. Next ground in assessee's appeal is with regard to sustaining of addition of Rs.24,44,500/- as income from sale of lands from M/S Sapphire Infrastructure transaction. The revenue is also in appeal before us with regard to partially confirming addition of Rs.24,44,500/-, out of total addition of Rs.3,09,40,750/- made AO towards sale of land from M/s Sapphire Infrastructure Pvt. Ltd. 6.1 Facts of the case are that the assessee had agreed to sell certain extent of lands to M/s. Sapphire Infrastructure Pvt. Ltd., which was floated by Sri. Kuppendra Reddy and Others. The assessee had received Rs.6,28,68,750/- on various dates during the FY 05-06 from the above company. According to Sri. N. Krishna, one of the Directors of the assessee company, they had entered into an oral agreement for transfer of 40 acres of land at Neriga Village at the rate of 5 to 6 lakhs per acre: Since the assessee had sold 37 acres 17 guntas of land, they had adjusted a sum of Rs.1,83,78,000/- and the balance sum of4,44,90,750/- was not adjusted. As against the assessee's version of consideration of Rs.5 to 6 lakhs per acre, Mr. Kuppendra Reddy....
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....ities. It is also stated that considering their objections, M/s. Sapphire Infrastructure initially agreed to compensate them at least to the extent of the conversion charges incurred by them for which there were some negotiations and they even refused to sign the settlement deed. The copies of the settlement deed dated 02.08.2005 signed by the assessee's representative not signed-by the representatives of M/s. Sapphire Infrastructure are available on the records of the A.O, it is claimed. After considering the assessee's submission on this issue it is held as under: 6.3 The documentary evidences available with the A.O. and as quoted by him in -his assessment order indicates receipt of Rs. 6,28,68,750/-. The ledger account of the assessee indicate receipt of only Rs.5,28,68,750/-, from M/s. Sapphire Infrastructure. The other sum of Rs.1,00,00,000/- is shown as received from Sri. Venkatramana of M/s. Sapphire Infrastructure though the entire sum of Rs.6,28,68.750/- was received from Corporation Bank, Koramangala either by cheque or DD. Out of this sum of Rs. 1,00,00,000/-, Rs.32 lakhs was adjusted towards sale of land and the balance amount of Rs.68,00,000/- was shown as payable....
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....y him on behalf of the assessee Sri. Narasimha Murthy to the extent of 1 acre 20 guntas for a sum of Rs.1,50,000/- and a proposed settlement for a further sum of Rs.4,50,000/-, which is only signed by Sri. Narasimha Murthy but not by Sri. Venkataramana, since that mentions the receipt of Rs.4,50,000/- by cheque no.693548 drawn on Corporation bank, Koramangala, both these amounts are to be regarded as received towards sale of the land (unfortunately the cheque no. 693548 of Corporation bank, Kormangala Bangalore, dated 22.06.2005 is for a sum of Rs.1,00,00,000/-and the same no. is mentioned for Rs.4,50,000/- putting the date as 21.06.2005 - perhaps a sum of Rs.4,50,000/- was proposed to be set off against Rs.1,00,00,000/- received on that date). In view of non accounting of these transactions the following picture emerges: Sale consideration Settlement (1) unaccounted sale proceeds Document no. 6398/05-06 dated 03.08.2005, Sri. Narasimha Murthy Extent : 6 acres 25 guntas 19,87,500/- 6,62,500/- (2) unaccounted sale proceeds Document no. 6394/05-06 dated 03.08.2005 - Sri. Narasimha Murthy Extent : 1 acre 20 guntas 1,50,000/- 4,50,000/- (3) settlement amount in respe....
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....acres of land for a consideration of about Rs.5-6 lakhs per acre. In connection with the said agreement, the assessee had received Rs.6,28,68,750/- from M/s. Sapphire on various dates during the year under consideration. Out of the said amount, Rs.1,00,00,000/- was received by Mr. Venkataramana, Director of M/s. Sapphire. The copy of ledger extract of M/s. Sapphire was also produced for verification. During the year under consideration, the assessee transferred about 36 acres 20 guntas in favour of the nominees of M/s Sapphire including transfer of certain lands to Mr. Venkataramana for Rs.32,00,000/-. In respect of the lands registered in favour of the nominees of M/s Sapphire and Mr. Venkataramana, the assessee declared Rs.l,83,78,000/- as income and duly offered the same for tax. It is further submitted by Ld. A.R. that the assessee had shown Rs.3,76,90,750/- (advance of Rs.6,28,68,750 minus income offered of Rs.1,83,78,000 minus amount reflected in Mr. Venkataramana's ledger account of Rs.68,00,000/-) as a liability in the balance sheet since the entire lands were not registered in favour of M./s Sapphire. During the search proceedings in the case of Mr. Kuppendra Reddy, Di....
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.... a sum of Rs.24,44,500/- [Rs.23,94,500/- + Rs.50,000/-] on this account. It is submitted that the assessee had accounted the settlement amounts properly in the books of account and thus the addition confirmed by the learned CIT(A) to the tune of Rs. 24,44,500/- is against the facts of the case and needs to be deleted in the interest of equity and justice. Further the department has also filed an appeal for confirming an amount of Rs. 24,44,500/- as against the addition made of Rs. 3,09,40,750/-. It is submitted that the learned Commissioner has looked into the documents and has provided proper findings and the assessing officer ought to have summoned Mr. Kuppendra Reddy in order to prove the genuineness of the claim made by him. Thus, the appeal filed by the department be dismissed and that of the assessee be allowed for the advancement of substantial cause of justice. 6.7 Ld. D.R. submitted that the Ld.CIT(A) erred in holding that the oral statement of Sri. Kuppendra Reddy Director of Sapphire Infrastructure (P) Ltd has no evidentiary value, ignoring the fact that the said statement was recorded on oath and legal consequences were made aware before recording the statement. The Ld....
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....6.5 guntas works out at Rs.5,61,18,750/-. Accordingly, M/s. Sapphire company shown outstanding amount of Rs.67.5 lakhs as receivable in their books of accounts. Accordingly, AO arrived profit on these transactions at Rs.3,09,40,750/- as unaccounted sale proceeds. However, Ld. CIT(A) sustained only addition of Rs.24,44,500/- out of Rs.3,09,40,750/-made by AO. In our opinion, the basis for addition made by AO is with regard to oral statement made by Shri Kuppendra Reddy. The assessee has asked for cross examination of Mr. Shri Kuppendra Reddy before AO. On the appointed day Mr. Kuppendra Reddy failed to appear before cross examination. Contrary to this, AO recorded that assessee's counsel A. Shankar failed to come for cross examination on the appointed day. The Ld. A.R. pleaded that assessee has filed a letter on the appointed day stating the non-appearance of Kuppendra Reddy. However, AO records contrary to these facts. It is also brought on record by the Ld. CIT(A) that one Mr. Shri M. Krishna who is the director of Sapphire Infrastructure company stated that they have agreed to pay sum of Rs.4 lakhs for non-converted land and Rs.6 lakhs for converted land and these facts has been ....
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....e had made." 6.10 Further, the Hon'ble Calcutta High Court in the case of CIT v. Eastern Commercial Enterprises, 210 ITR 103 (Cal) held as follows:- "8. We have considered the contesting contentions of the parties. It is true that Shri Sukla has proved to be a shifty person as a witness. At the earlier stages, he claimed all his sales to be genuine but before the Assessing Officer in the case of the assessee, he disowned the sales specifically made to the assessee. This statement can at the worst show that Shri Sukla is not a trustworthy witness and little value can be attached to what he stated either in his affidavits or in his examination by the Assessing Officer. His conduct neutralises his value as a witness. A man indulging in double-speaking cannot be said by any means a truthful man at any stage and no court can decide on which occasion he was truthful. If Shri Sukla is neutralised as a witness what remains is the accounts, vouchers, challans, bank accounts, etc. But, we would observe here that which way lies the truth in Shri Sukla's depositions, could have been revealed only if he was subjected to a cross-examination by the assessee. As a matter of fact, the right....
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....d Co. v. CST [1977] 40 STC 544. It is trite law that cross-examination is the sine qua non of due process of taking evidence and no adverse inference can be drawn against a party unless the party is put on notice of the case made out against him. He must be supplied the contents of all such evidence, both oral and documentary, so that he can prepare to meet the case against him. This necessarily also postulates that he should crossexamine the witness hostile to him. 10. In any case, we have nothing to rely upon to come to a decision this way or the other. The first thing is that which of the statements of Shri Sukla is correct, is anybody's guess. Therefore, it is necessary to delve out the truth from him and for that matter a cross-examination is necessary. Secondly, if the statement of Shri Sukla as a witness against the adverse party, the assessee, is relied upon as truthful, still remains the question of estimation of the profit. The assessee no doubt has given a comparative instance of gross profit rate but it is also necessary for the Department to come to a finding as to the norm of the gross profit on the basis of comparative cases. Therefore, it is the duty of the A....
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....i, the Tribunal held as under:- "The opportunity of cross-examining, Sh. Nitin Aggarwal, a partner of Shree Laxmi Industrial Corporation has also been denied to the assessee on wrong basis by the authorities below that an opportunity of cross examines needs to be given only when third party is involved or a party not known to the assessee or a hostile witness is involved and further that the onus for cross examination does not lie with the department but lies with the assessee who allegedly made purchases in his books of accounts from the said concerns." 6.14 Further it is to be noted that the Hon'ble Supreme Court judgment in Andaman Timber Industries v. Commissioner of Central Excise, 281 CTR 241 (SC) wherein it was held that opportunity of cross-examination not given, leads to nullity and assessment order to be quashed. It is also pertinent to mention herein the decision of Special Bench of the Tribunal in ACIT v. Vireet Investments (P) Ltd. 165 ITD 27 (Delhi - Trib.) (SB) wherein it was held that when two reasonable constructions of a taxing provision are possible, that construction which favors the assessee must be adopted, which is in line with the Supreme Court judgment ....
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....that the department has also filed an appeal contending that fresh evidence was considered by the Commissioner against the order of CIT(A) for deleting the additions made of Rs. 68,00,000/-. Further the department has also contended that the assessee's books of accounts did not reflect real and true picture of sale of lands. It is submitted that the powers of the Commissioner are co-terminus with that of the assessing officer and the assessee is entitled to file fresh evidence. Further the department ought to have rejected the books of account if the same do not reveal a true picture and ought to have estimated the income. Thus, the contention of the department that the books of account do not reveal the true picture is unwarranted and unsustainable and therefore considering the facts and circumstances of the case, the appeal filed by the department be dismissed and that of the assessee be allowed. 7.4 We have heard the rival submissions and perused the materials available on record. In this case, there was an amount of Rs.68 lakhs outstanding in the name of Shri Venkata Ramana in the books of accounts of the assessee. According the Ld. D.R., assessee has not filed any details or ....
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....ed to AO vide letter dated 16.12.2010. However, the AO treated the same as unexplained loan credit and added the same. The Ld. CIT(A) observed that the said amount has been received on sale of Spring Field Apartment, opposite to Bellandur Gate, Sarjapur Main Road, Bangalore 560 102 and the flat was sold to Smt. Geeta Aggrawal and Shri Hari Om Aggrawal and the sale deed mentioned with PAN No. As ABNPA2921J and ABNPA2922M and the sale deed was registered on 25.7.2008 and on that basis he deleted addition. Against this revenue is in appeal before us. 8.2 We have heard the rival submissions and perused the materials available on record. In our opinion, the Ld. CIT(A) considered the subsequent sale deed dated 25.7.2008 towards sale of flat in Springfield and apartment complex which was developed jointly with M/s. Parkway Developers and this is evidenced by the sale deed executed on 25.7.2008 between M/s. Parkway Developers and Geeta Aggrawal & Mr. Hari Om Aggrawal placed at paper book page Nos.403 to 411, which was duly brought to the notice of Ld. CIT(A) and as such the deletion of above addition is justified. This ground of appeal of the revenue is dismissed. 9. Next ground in reven....
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.... The learned Commissioner accepted the submissions made by the assessee and held that the impugned amount is part of the total amount shown in balance sheet at Rs. 76,45,000/- and thus the addition made in this regard was deleted. The department has filed an appeal by reiterating its stand that the transaction was not accounted in the balance sheet and failed to appreciate the findings of the learned Commissioner that the amounts form part of the total amount shown in the balance sheet at Rs. 76,45,000/- and thus the appeal filed by the department in this regard be dismissed on the facts and circumstances of the case. 9.4. We have heard the rival submissions and perused the materials available on record. The assessee has received an amount of Rs.76.45 lakhs and an amount of Rs.8.45 lakhs vide cheque no.237577 of Vijaya Bank, Infantry Road, Bangalore on 18.5.2006 and Rs.15 lakhs vide cheque No.61812 dated 31.10.2006 of the same bank. These amounts were received by assessee vide JDA with M. Krishna Reddy and Smt. Naga Ratnamma and Shri K. Jagadish on 18.5.2006 for the development of property at Mullur village, Varthur Hobli. These payments were duly recorded in the books of accounts....
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....(i) the land should be contiguous (ii) the land should provide an access road of 40 feet width with clear 200 foot frontage (iii) the property should have clear and marketable title (iv) barbed wire had to be provided to the entire land (v) super imposed drawing of the land clearly indicating all Sy. nos. and sub nos. shall be mentioned and (vi) the land should fall in residential and transformation zone in the CDP. 10.2 Besides the above, the conditions included obtaining NOCs from the concerned authorities regarding land reform cases, removal of High tension lines, obtaining NOC from BDA, sorting out the ADLR problems regarding survey disputes and the issue of public notices and settlement of civil disputes regarding Hindu Succession Act, Minors' claims, Partition related issues, issues relating to Specific Performance had there been any earlier contracts etc,. It was argued that only some portions of the agreed areas were registered in the name of the nominees of M/s Shobha Developers. It was stated that copies of the sale deeds were produced for verification of the AO. It was claimed that they had received certain amount as advance in respect of this transact ion....
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....er various sale deeds and M/s Sobha have made payments to the landlords directly. The assessee had submitted that they had received certain amount as advance in respect of the transaction and some amounts have been given directly to the land owners. In connection with the transaction, the assessee had entered into a nomination agreement in pursuance of which the assessee company received Rs. 7 crores in consideration of the nomination of all the rights acquired by the assessee from the original vendors of the property. It was submitted that the assessee had spent money in excess of Rs.7 crores to acquire rights in the various agreements thus enabling the assessee to nominate. Since the assessee had spent more money than what was received, the transaction resulted in a loss and no portion of the money received could be treated as income of the assessee. The assessee further submitted that entire transaction is under tremendous litigations and differences have arisen among the parties to the transaction. The assessee had contended that once the transaction materializes the real income would arise and that the income would be declared on actuals. The learned assessing officer did not ....
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....rought to our notice that the assessee has not complied with the obligation under the MOU dated 19.6.2006 and supplement agreement dated 17.11.2006 entered by assessee with M/s. Shobha Developers Ltd. and he also gone through the relevant correspondence made by M/s. Shobha Developers Ltd. with the assessee vide letter dated 10.12.2010 placed at paper book page no.381 to 390. For brevity we reproduce the relevant para 26 to 32 of that letter, which shows that the translation was not completed and pending in the AY under consideration. "26. We have so far registered 55 Acres 4.25 Guntas comprising Mullur and Chikkabellandur Villages. Out of this 55 Acr8 4.25 Guntas, an extent of 9 Acres 30 Guntas of land falls in Sensitive Zone and 22 Acres 17 Guntas falls under Agricultural zone and non conjoint. Thus leaving the balance extent of 22 Acres 37 Guntas. Accordingly for the registration done in our favour as stated above, we are liable to make the payment of only Rs.18,88,87,750/- as follows : a) For the land measuring 1 Acre 20 Guntas in Sy.No.70/1 registered prior to the Supplemental Agreement, the amount payable would be Rs.2,30,25,000/- calculated @1,53,50,000/- per Acre b) ....
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....the obligations as stated above are not performed and most of the lands are useless for the purpose of development as stated above. You are aware that on account of the delay caused by you in performing your obligations, we have suffered Innumerable losses and damages. Out of 55 acres 4.25 Guntas registered so far, about 25 acres fall under Agriculture and Sensitive Zone. Besides this, about 25 acres 20.75 guntas is under litigation. By virtue of this, the entire project has become useless and un-developable. Due to these defects, the lands cannot be developed conjoint and has no marketabIe value. Please note that though we have paid the amounts in excess, you have not fulfilled your obligations of making these lands conjoint, lifting them from Agricultural, Valley / Sensitive Zone status, clearing all the litigations, fencing the lands etc. though we have been are and continue to be ready and willing to discharge our obligations as and when the time for that. arises, you have been defaulting on the same, we have, to therefore once again call upon you to discharge your obligations as agreed upon. 29. You have in your letter dated 9.8.2010 falsely alleged that entire consideratio....
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.... Hence it is always open for you to make payment out of the excess amount retained by you to settle the matter Taking into account the amount already paid in excess, we are not liable to make payment of any amounts to you. It is a matter of fact and record that it is you, who are delaying the performance of the obligations. I t is a matter of fact and record that we have been ready and willing, are ready and willing and continue to be ready and willing to discharge our obligations of making payment of the amounts subject to your fulfilling the obligations. It is a matter of fact and record that we have in our possession necessary amounts for making payment. It is a matter of fact and record that you have not discharged your obligations and registered 75 acres of land which are required to be registered being conjoint to each other form a compact block of land and all of them being situate in residential/transformation zone. 30. If indeed as stated by you the litigants are willing to settle the matter as stated in your letter dated 9.8.2010 you may make payment of the monies due to them from your own understanding with them and close the matter subject to reconciliation of accoun....
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..... On the other hand, the Ld. A.R. strongly contended that there is no accrual of income and there was no fulfillment of all the conditions laid down in the MOU which is subject matter of litigation. No income could be recognized in certainty in this assessment year under consideration. The recognition of the revenue is not possible as the ultimate performance of the entire MOU in its entirety is doubtful. It is pending before the arbitration constituted for the purpose of settling the dispute between the parties and the Ld. A.R. also filed details of petition and other documents filed before the Hon'ble Arbitral Tribunal presided by Shri M.N. Shankar Bhat, Dist. Judge (Retd), No.61, 4th Cross RMV 2nd Stage, Judicial Officers Layout, Sanjay Nagar, Bangalore 560094. Accordingly, it was brought to our notice that there was dispute which is continuing till date and the recognition income in the assessment year under consideration cannot be possible and the income cannot be said to have accrued from the said project to the assessee. Further, it was noticed that as per MOU, the assesse has to fulfill the following conditions which the assessee failed to comply these conditions:- (i) th....
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....te to recognize the income only when it is reasonably certain that ultimate realization is possible. Hence, income cannot be recognized at the time of sale agreement where the assessee is specifically consenting party and not the owner of the property. The department cannot thrust upon to the assessee so as to tax future income. 10.11 In our opinion, the assessee has to recognize the income in accordance with the true terms of the agreement and if there is any inconsistency in recognizing the income only then revenue authorities can disturb the same. Once the assessee recognizes the income in accordance with applicable accounting standards and provision of the Act, the AO cannot substitute the assessment to say that the assessee has postpone the tax liability. There is no basic deviation in the method followed by the assessee regarding recognition of income. However, the AO was of the opinion that there is basic flaw in the method followed by the assessee to recognize the income. When there is no deviation in recognizing the income by the assessee, the AO cannot recompute the profit of the assessee by observing that there is basic flaw in the method followed by the assessee. Furth....
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....etween the assessee and Smt. S on 9th Aug., 1997, the disputes arose on its implementation. The assessee filed a company petition against E under s. 433 of the Companies Act, 1956, seeking winding up for its failure to pay the dues to the assessee. Incidentally, subsequent to the deed of settlement dt. 9th Aug., 1997, the business of the partnership firm E was taken over by a private limited company, E Ltd. The said winding up petition came to be dismissed by the High Court of Karnataka on 2nd March, 2000 on the plea that there was no sum due from the company inasmuch as the settlement was between the assessee and the individual, Smt. S. Subsequently, the assessee instituted a suit or recovery for the amount in terms of the settlement before the Civil Court. Therefore, undisputedly the entire settlement agreement dt. 9th Aug., 1997 is in jeopardy. Of course, the assessee has withdrawn a sum of Rs. 23 lakhs from the firm. Therefore, where an amount was in dispute, it could not be treated as income, there is no infirmity in the conclusion of the CIT(A) that a sum of Rs. 77 lakhs cannot be brought to tax during the year under consideration as the matter had not attained finality. Howe....
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....l interest was liable to be deleted." 10.12 In our opinion, the assessee received only an advance amount and treated it as a liability in its books of accounts. The mere receiving of amount does not create any legal enforceable right to receive the same. Hence, without any right to receive the said amount, it cannot be treated as income of the assessee only on receipt basis. Such a right accrues only when the other party has either agreed to pay the amount in accordance with terms of MOU or as per verdict by an appropriate forum or arbitration, only then the income could be charged to tax as there was accrual of income. Where an assessee does not have any legal enforceable claim on the amount so received, the basis of taxability cannot be receipt basis. Even if the assessee treated it as income in its books of accounts, it is not material where the income is not accrued to the assessee to tax the same on receipt basis. 10.13 The conduct of the assessee in treating an income in a particular manner is a material fact whether income had accrued or not. Although the conduct of the assessee is relevant whether income had accrued or not, yet the ipse dixit of the assessee cannot be th....
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....mar was taxable either in his individual hands or in the hands of the assessee. However, it was stated that the overall income or loss arising on the above transaction would be offered to tax on conclusion of the contract. It was also stated that entire transaction with M/s. Shobha Developers was in litigation and once the transactions materialize the income arising on the transaction would be offered for taxation. After considering the assessee's arguments on this issue, it was held by the Ld. CIT(A) that in the earlier paragraph while deciding the issue of taxation of nomination fees it was discussed at length that the income or loss arising on the transactions with M/s. Shobha Developers could not be assessed at this stage as the contract was not completed either as on 31.03.2007 or even now. Also, in view of various pending issues even after transfer of certain lands it was held that the income could not be computed even adopting percentage completion method. In the light of the same, it was seen that Rs.30,00,000/- was received on 13.03.2007 and Rs.70,00,000/- received on 21.03.2007 from M/s. Shobha Developers to Sri . Nandakumar pertaining to 32 guntas in Sy. No. 64/3 and....
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.... had further submitted that once the transaction materializes the real income would arise and that the income would be declared on actuals by the assessee. The learned assessing officer did not accept the contention of the assessee and brought to tax the entire sum of Rs. 1 crore. The learned CIT(A) deleted the additions made by holding that the transactions with M/s. Shobha Developers could not be assessed at this stage as the contract was not completed and income could not be computed even adopting percentage completion method. It was also noted that the transactions though had not reflected for the year ending 31.03.2007, it was shown in the overall sum received as on 31.03.2008 amounting to Rs. 52,59,80,000/- and hence it was held that no income arose on these transactions. The department has filed an appeal for having deleted the additions made in this regard. It is submitted that the assessing officer picked certain transactions from the basket of transactions with M/s. Sobha and made additions by treating them as independent transactions which is not permissible in law and thus it is prayed that the appeal filed by the department in this regard be dismissed. 11.4 We have he....
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....ame of M/s Klene Pack should not be treated as part of the total consideration received by her towards sale of the property and assessed accordingly. She submitted her reply on 16.12.2010 and claimed that she received only Rs.37.5 lakhs as sale consideration and she had no knowledge of any such nomination deed. She has denied that the bank accounts maintained by her or her children do not reflect any such receipt. The AO issued notice to Axis Bank and obtained details and found that the payments were encashed by M/s Klene Pack at Kotak Mahindra Bank, MG Road on 10.01.2007 Rs.45 lakhs and on 17.01.2007 Rs.60 Lakhs. M/s Klene Pack's account was opened on 31.01.2006 and was operated by Shri Vimal Sipani. The AO issued another notice to M/s Klene Packs Limited since it was bearing similar name as that appearing on the nomination agreement with different address and different directors. On 29.10.2010 reply was received stating that the payments were received from two parties from M/s Jyothika Polypacks, Satara and M/s Sonica Plastics, Madras. These payments were adjusted against the sales made by them. The company denied having any idea of the transaction with either the assessee or....
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....e entire transaction and concluded that it was their income. 12.1 The assessee in their grounds of appeal has stated that the AO is not correct in assessing the same as income and neither they had claimed it as expenditure as it was an advance amount received from M/s Shobha Developers. In their statement of facts they have again repeated details of the transactions with M/s Shobha Developers and have stated that no income arose with the transactions with M/s Shobha Developers. It is also stated that the total amount received from M/s Shobha Developers of Rs.55,22,68,346 up to the end of 31.03.2007 and the closing balance of Rs.44,18,75,596 includes these two amounts of Rs.60 lakhs and Rs.45 lakhs as on 27.12.2006. It is also mentioned by the assessee that when they re-casted the ledger account for FY 07-08 they have accounted under the head "by Smt. Rajyalakshmi (Sy 68 (1 acre 19 guntas)) being the amount paid by M/s Shobha Developers to M/s Klene Pack on 27.12.2006 (Previous year transaction brought to books)" both the amounts Rs.60 lakhs and Rs.45 lakhs. The assessee has also submitted it to the AO on 10.11.2010 and the same is also available in the AO's records, it was sta....
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.... in the assessee's books. It is submitted that M/s Sobha had made payments to the tune of Rs. 1,05,00,000/- directly to M/s Klene Pak in connection with the procurement of lands and the assessee duly recorded the entries during the year 2007-08 after receiving the details from M/s Sobha Developers . The impugned amount of Rs. 1,05,00,000/- was not claimed as expenses in its books by the assessee but was reflected as land advance and debited in the assessee's books. There is no provision in law to add debit as income. It was submitted that the transactions with M/s Sobha was a comprehensive transaction of several activities. The compliance has to be performed on a total basis and all the amounts have been disbursed by M/s Sobha directly to various parties and M/s Klene Pak is one among them. This aspect was totally ignored by the assessing officer and the assessee further contended that it had not claimed it as an expense in its books and that there was no credit balance to be explained. The learned assessing officer did not accept the contention of the assessee and brought to tax a sum of Rs. 1,05,00,000/- as income from other sources. The learned Commissioner after considering the....
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....Next ground in assessee's appeal in ITA No.109/Bang/2012 i.e. ground no.4 (a), (b) & (c) are with regard to sustaining addition of Rs.58,55,245/- towards sale of land by Nanda Kumar. 14.1. Facts of the case are that the A.O. observed that the land in Sy No. 64/2 of Mullur Village was sold by Sri. D. Nanadakumar on 10.04.2007 for a consideration of 298,55,245/- to Smt. Rajalakshmi. This land was subsequently sold by Smt. Rajalakshmi to Sri H.G. Sandesh nominee of M/s. Shobha Developers for a consideration of 21,08,62,500/-. The A.O observed that the assessee had not offered any sale consideration towards this transaction. It is also observed by the A.O that Smt. Rajalakshmi had offered the difference between 21.09 crore and 20.98 crores to tax. It is also observed by the A.O that the entire amount of 21.09 crores is shown as cost of the property apart from the advances from M/s. Shobha Developers. The A.O held that the land has been sold by the company to Smt. Rajalakshmi and at that point of time the transfer took place which was chargeable to tax. The assessee had replied that it was not proper to bifurcate the transactions and it was claimed that this was part of the transaction....
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....-is requested to be corrected accordingly. After considering the assessee's submission on this issue, it is held as under from schedule 9 of the Balance Sheet as on 31.03.2008, it is seen that the assessee had shown cost of the land at SY no.64/2, 65/2 and 66/2 at Rs.1,045,68,326. Since the assessee has now clarified that 66/2 should have been 64/4, taking that into consideration the land holding and the purchase cost in respect of these three survey nos. are as under: Survey No. Acreage Amount Sy.64.2 1A0G NA Sy.65/2 1A08G NA Sy.64/4 0A17.5G NA Total 2A 25.5G 1,05,68,326 Average price per acre = 1,05,68,326/105.5 x 40 = 100173 x 40 = 40,06,948 rounded off to 40 lakhs per acre. [1 Acre = 40 guntas] 14.2 Considering the fact that the assessee has sold 1 acre in Sy 64/2 to Smt. Rajyalakshmi, it is directed to adopt the cost at Rs.40 lakhs per acre to work out the profit arising on this transaction. Since a sum of Rs.98,55,245 is shown as sale consideration on this transaction, it is directed to allow Rs.40 lakhs towards cost and balance Rs.58,55,245 is directed to be assessed as income as against Rs.98,55,245 assessed by the AO. 14.3 The Ld. A.R. submitted tha....
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....ence. It is submitted that the cost computed by the CIT(A) was based on the cost of the land as per schedule 9 of the balance sheet and the details of the same were already available with the authorities below and thus the appeal filed by the department in this regard be dismissed and that of the assessee may be allowed for advancement of substantial cause of justice. 14.4. Ld. D.R. relied on the order of Ld. CIT(A) and submitted that the Ld. CIT(A) not justified in computing the cost of land at Rs.40 lakhs per acre based on the fresh evidence without providing opportunity of being heard to the AO. The assessee has not given the details of cost of land before AO. Thus, he relied on the order of AO. 14.5. We have heard the rival submissions and perused the materials available on record. This impugned transfer of land was part of the transaction in M/s. Shobha Developers. This property was purchased by Nanda Kumar on behalf of assessee company from Chikka Muniappa and it is the part of the transaction with M/s. Shobha Developers. Total amount incurred by the assessee on this count was Rs.1,05,68,326/-. Late, the land in question was sold to Smt. Rajya Lakshmi and these transactions....
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....ransaction. The appellant had claimed that only 26 guntas of land was registered to her vide sale deed dated 27.07.2007 for a consideration of Rs.26 lakhs. The appellant had claimed that the profit had to be worked out after taking into consideration further requirements of funds for laying road which requires Rs. 4,64,635/-. It was stated that they wanted to complete all aspects of transactions and after the other portion is registered they wanted to offer for taxation. it was also claimed that lot of expenditure are to be booked pertaining to land settlement account which is shown under the head advance for land purchase. It was also stated that they were not able to link the other items which have a bearing on the working of profit. It was claimed that a sum of Rs.1 lakh was to be paid to Sri. Gopallappa which should have been reduced from this Rs.26 lakhs received for 26 guntas. It was claimed that the transaction resulted in loss and left to the discretion of the A.0 to decide the issue. The A.O summed up their arguments which stated that the property was not yet registered and the balance property of 3 acres 8 guntas khata was still in the name of Sri. Narasimha Murthy, provi....
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..... 18, chickawodeyarpura village for a sum of Rs.26,00,000/- which is reflected as per seized document A/RLK/HDFC/01/08-09. Similarly, he had registered an agreement for sale and power of attorney was given on 20.06.2007 regarding Sy. No. 18 of the sar1he village to the extent of 3 acres 8 guntas for which the appellant through Sri. Narasimhamurthy had received Rs.1,34,00,000/-. Since the appellant had executed the registered sale deed, received consideration and had handed over the possession of the property by executing the GPA, it is to be regarded as sale in the hands of the appellant. It is also seen from the records of Smt. Rajalakshmi that she had claimed exemption u/s 54B on the purchase of these agricultural lands. In view of the same, it is held that the appellant should have shown sale consideration of Rs.1,60,00,000/-. It is held that the A.0 has appreciated the facts properly and A.O's finding that - the appellant should have shown the sale proceeds and computed the income - is upheld. However, while allowing the cost, the A.0 in para 7.5 of assessment order has held that the total cost debited is Rs.90,87,667/-out of which cost of the land is Rs.81,87,667/-. The di....
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.... as surplus and the learned Commissioner confirmed additions to the tune of Rs. 78,12,133/-. It is submitted that the assessee had received a sum of Rs.1,34,00,000/- from Smt. Rajyalakshmi as advance for sale of property measuring 3 acres 8 guntas. The same was reflected as a liability in the books of accounts since the sale had not taken place. The assessee vide its letter filed before the assessing officer, contended that the provisions of section 2(47) relating to transfer of capital asset were not applicable to business income. Reliance is placed on the decision of the Bombay High Court in the case of CIT vs. Ace Builders Pvt. Ltd., 281 ITR 210. The learned CIT(A) without understanding the facts of the case brought to tax an amount of Rs.78,12,333/- (Rs. 1,60,00,000/- minus Rs. 81,87,667/-) by holding that since the assessee had executed the registered sale deed, received consideration and handed over the possession of the property by executing GPA, it is to be regarded as sale. The assessee had stated and it is reiterated that in respect of the balance portion, the assessee had not registered the property and hence there is no question of treating the same as completed and tha....
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....all the details to the AO with regard to the expenditure incurred with regard to this receipt of Rs.26 lakhs. The AO has to decide it fresh after giving opportunity of hearing to the assessee and to tax the only net income arise out of this transaction This ground of appeal of assessee is partly allowed for statistical purposes. 15.8 In case of 3 acres and 8 guntas wherein the possession taken vide registered sale agreement and power of attorney dated 20.6.2007 for a consideration of Rs.1.34 crores. The contention of the assessee is that the net income from this transaction is only Rs.8,64,614/- and even this amount cannot be taxed in the assessment year under consideration since there was no sale of property by absolute sale deed and in view of the judgement of Hon'ble Supreme Court in the case of Balbir Singh Maini (398 ITR 531), the income to be taxed only on execution of registration of sale deed. In our opinion, there was no execution of absolute sale deed in this case, as such, we direct the AO to tax the net income from this transaction only on actual registration of sale deed of said property. In our opinion, since there was no registered sale deed was executed in the case....