TaxTMI 
TaxTMI 
2022 (7) TMI 1209
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....; for short]. The contention of the Ld. A.R. 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....
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....here is no reason to make an addition of Rs.17.64 lakhs being 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....
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....ly explained credit of Rs.57.11 lakhs in his books of accounts. Being 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 sam....
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....f some other party, the addition to be deleted. In view of this, we delete this addition of Rs.51 lakhs. 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 adjus....
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....ed for under valuation which has not been done by the A.0 by writing to the Stamps and Registration Authorities. 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/-,....
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....inst Rs. 1,00,00,000/-received on that date). Similarly, vide document no.6934/05-06 dated 03.08.2005 sold by 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 da....
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....nclude that the appellant did not receive Rs. 15 lakhs per acre as sale consideration. 6.5 The Ld. A.R. submitted that the assessee had an agreement with M/s Sapphire Infrastructure Pvt. Ltd. to transfer about 40 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....
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....d by holding that the assessee due to arithmetical error accounted the sale consideration in respect of document No.6938 only a sum of Rs.19,37,500/- as against Rs.19,87,500/-, in aggregate the learned CIT(A) confirmed 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. Kuppen....
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.... of land and adjusted an amount of Rs.1,83,78,000/- and balance amount was Rs.4,44,90,750/-. According to the ASO, M/s. Sapphire Infrastructure company has paid an amount of Rs.15 lakhs per acre. According to them the total consideration for 37 acres 16.5 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 brou....
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....cross-examine the manager of the bank with reference to the statements made by him. Nor was there any explanation regarding what happened when the manager appeared in obedience to the summons referred to in the letter dated March 9, 1957, and what statement he 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 ....
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....t no evidence or document can be relied upon unless it is shown to the assessee. Kishanchand Chellaram v. CIT. Similarly, the requirement of cross-examination as the requirement of the rules of natural justice has been underlined by the Bombay High Court in VasanjiGhela and 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 ques....
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....ty against whom such oral evidence is being used must be allowed the opportunity of examining the person because, both the types of evidences need to weighed properly before rejecting one for the other. 6.13 In Sunrise Tooling Systems Pvt. Ltd v. ITO 2012 (11) TMI 1081 - ITAT Delhi, 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 ....
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....had furnished ledger extracts of Mr. Venkataramana and had contended vide its submissions that the balance of Rs. 68 lakh reflected as payable is part of the Sapphire transaction. The Learned Commissioner after verifying the facts of the case deleted the additions made in this regard. It is submitted 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 assesse....
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....amount of Rs.6.25 lakhs on 15.11.2006 towards sale of flat. The transaction was not materialized and in the assessment year under consideration the same has been shown as outstanding in the books of accounts of the assessee. The property was registered to the above party on 25.7.2008 and the details were furnished 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 execut....
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....tted that the Joint Development agreement was not implemented and the same was cancelled and all payments were made through banking channels and were duly recorded. The assessing officer failed to appreciate that the impugned sum of Rs. 23,45,000/- was a part of overall JDA for which payments of Rs. 76,45,000/- were made. 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....
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....bout 75 acres of land at a cost of Rs.21,58,50,000/- per acre subject to various conditions stipulated therein. This was later amended to procure about 100 to 150 acres in and around the same place at the same agreed consideration vide supplementary agreement dated 17.11.2006. Amongst other conditions, the important ones are (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 ....
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....s towards the above MOU and the assessee could procure only about 55 acres out the agreed 75 acres of land. Even in this respect of 55 acres quite a number of issues were pending and for the lands situated in valley zone, the assessee was entitled to only Rs. 30 lakhs per acre. Further some portions of the agreed areas have been registered in the name of certain persons as per 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 co....
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....tter of arbitration which is pending for award. Further, as per MOU, assessee has to arrange total land of 75 acres out of this assessee arranged only 55 acres of land and 20 acres of land still to be procured and the issue is under litigation. The AO is not justified in bringing an amount of Rs.7 crores to taxation unless the contract is completed. 10.6 Further, it is also brought 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. Thu....
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.... the gaps between the lands will also be covered by conveying the lands in out favour or in favour of our nominees. If not for the specific inducements and representations made by you as stated above, we would not have made the excess payment. 28. Once again, we have to bring to your notice that till date you have not performed your obligations. In spite of having received excess payment of Rs.34,19,92,250/-, many of 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, V....
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....s of DD charges. As stated hereinabove we had paid nearly Rs.1,00,31,125/ - in excess of the amounts liable to be paid by us towards consideration of property in Survey No.75/ .3, 76/1, 76/3 and 80/2 of Mullur Village, measuring an extent of 1 Acre 35.75 Guntas. Apart therefrom as stated hereinabove would have so far paid an amount of Rs.34,19,92,250/ - in excess of the amount liable to be paid in respect of the entire transact ion. 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 ....
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.... Ltd. seeking the refund of Rs.34.2 crores with interest of 18% p.a. out of Rs.53.1 crores even by them for non-fulfillment of condition laid down in MOU cited (supra). Further, the entire receipts received by the assessee cannot create any incidental tax in the hands of the assessee as per relevant accounting standards. 10.8 According to the AO the income accrued to the assessee to the extent of Rs.7 crores in the assessment year under consideration. 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, ....
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....n rights of entire Rs.7 crores is assessable to tax. The AO rejected the appellant's further contention that Rs.5.50 crores out of Rs.7 crores were transferred to M/s E-City Developers and then to Mr. D K Sharma who had paid tax on the above sum and taxing the same amount in the hands of the assessee amounts to double taxation. 10.10 When consideration related to assessee is not determinable with certainty, the assessee is justified in postponing the recognition of income and it is appropriate 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 substi....
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....0 (Kol)(SB) : (2002) 83 ITD 87 (Kol)(SB) and Dy. CIT vs. Crest Hotels Ltd. (2002) 75 TTJ (Mumbai) 771 : (2001) 78 ITD 213 (Mumbai) relied on." (ii) B.L Subbaraya Vs. DCIT, 9 SOT 297 (Bang. - Trib.), wherein the Tribunal held as under:- (iii) "The fact which is undisputed is that the entire settlement is still a subject-matter of dispute being sub judice and there is no finality attained even during the year under consideration. This is clear from the following facts. Subsequent to the deed of settlement between 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 insti....
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....has become unviable to continue. Hence, no interest had accrued to the assessee in the year under consideration. Accordingly, the addition of Rs. 4,99,260 is directed to be deleted. Conclusions: Because of non-availability of FSI on the plot of land for which assessee had entered into development agreement, assessee could not develop the said property in view of statutory restrictions and thus, the whole project having become unviable, no interest accrued to the assessee on its deposit with the owner, hence the addition of notional 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 assess....
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....ned, Sri. Nanda Kumar stated that it was the receipt of the assessee and M/s. Ind-Sing had shown in their books as the receipts from M/s. Shobha Developers which is also confirmed by M/s. Shobha Developers. Not accepting the assessee's explanation the A.0 added the entire sum of Rs.1 crore i.e. Rs. 30 lakhs + Rs.70 lakhs. The assessee in their grounds of appeal has objected to both these additions and has stated that these receipts were part of the overall consideration received from M/s. Shobha Developers. No port ion of money received by Sri. Nanda Kumar 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 inco....
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....her received Rs. 70 lakhs as additional consideration for the lands transferred as part of the agreement. The learned assessing officer had alleged that the sum of Rs. 1 crore was the undisclosed income of Mr. Nandakumar. The assessee had contended that the sale of land was part of the overall transaction with M/s Sobha and that no portion of the money received by Nandakumar was neither taxable in Nandakumar's hands nor in the hands of assessee since the said amount was not at all receivable on account of lack of performance of assessee's duties. The assessee 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....
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....ith M/s Klene pack to dispose of the property through the said company to Shri RB Nataraj. The AO summoned Shri Karthik Krishna but he stated that he was neither a director nor had any idea about the existence of such company. He denied having signed any such documents. AO held that Smt. Rajyalakshmi was desirous of disposing of the property through M/s Klene pack in favour of Shri R B Nataraj. AO issued notice to Smt. Rajyalakshmi asking her to state as to why the said nomination should not be treated as bogus and the nomination fee of 21.05 cr received in the name 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....
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....try but the fact that the payment had been made was treated as cost of consideration for the land and even the appellant had treated it as advance it should be reduced from the total consideration received at the time of the closure of the MOU. The AO concluded that the direct beneficiary is the appellant and it has received the amount though it had no role to play. The assessee had stated it to be a wrong journal entry but the AO did not agree that the explanation justifies the transaction. The AO finally concluded that there had been an attempt to camouflage the 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 balanc....
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....ered as income of the assessee and he supported the order of AO. 12.4 On the other hand Ld. A.R. submitted that the assessee had entered into a MOU with M/s Sobha Developers Ltd to procure 75 acres of land on behalf of M/s Sobha at Mullur and Chikkabellandur Village. It is submitted that some portions of the agreed areas have been registered in the name of certain persons as per various sale deeds and M/s Sobha have made payments to the landlords directly. The amount paid by M/s Sobha to landlords have been debited to land advance account and credited to Sobha account 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 act....
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....is count. The finding of Ld. CIT(A) on this issue is confirmed. This ground of appeal of revenue is dismissed. 13.5 In the result, revenue's appeal in ITA No.203/Bang/2012 for the A.Y. 2007-08 is dismissed. AY 2008-09:- ITA Nos.109/Bang/2012 (Assessee's appeal for AY) & 204/Bang/2013 (Revenue's appeal) for AY 2008-09 13. Ground Nos.2 to 3 in assessee's appeal are with regard to invoking jurisdiction u/s 153A of the Act in assessee's appeal. As discussed in ITA No.108/12 in earlier appeal for assessment year 2006-07, these grounds are dismissed on similar lines. 14. 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....
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....pletion of the transaction. It was also stated that the total cost of the land was 21,05,68,326/- wherein the same was sold for a consideration of 98,55,245/- incurring losses. It is also stated that the same is submitted to the department as part of the schedule to the Balance Sheet as on 31.03.2008 and is part of schedule 9 under the head purchases. At the time of hearing when it was pointed out to them that the sum of Rs.1,05,68,326 is shown as cost of land in SY no.64/2,65/2 and 66/2, the assessee clarified that inadvertently instead of 64/4 they have mentioned 66/2 and the same-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 25.5....
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....ing channels. It is submitted that when the primary transaction with M/s Sobha itself is under tremendous litigations, it is not correct in law to pick out an isolated transaction from amongst a basket of transactions and bring it to tax. Without prejudice, it is submitted that if the impugned transaction was taxable as income, the cost incurred towards acquisition of Rs. 1,05,68,326/- must be allowed as deduction on the facts and circumstances of the case. Further the department has also preferred an appeal contending that the CIT(A) is not justified in computing the cost of land at Rs. 40 Lakhs based on fresh evidence. 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 opport....
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.... attorney giving the possession of another land in the same sy. No. to the extent of 3 acres 8 guntas was made on 20.06.2007 for a consideration of Rs.1,34,00,000/- The details were submitted with regard to a claim made by Smt. Rajalakshmi in her return u/s 54B. It was claimed by the assessee that the land was held by the company in the name of Sri. C. Narasimhmurthy since it was an agricultural land. The appellant's books show amounts received from Sri! Narasimhamurthy towards the sale of land in Sy no. 18 for a consideration of 21.06 crores only. The A.O observed that no sale proceeds were offered in respect of this transaction. 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 ac....
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....claimed that the appellant had received Rs.1.34 crores from Smt. Rajalakshmi as advance for sale of property measuring 3 acres 8 guntas at chickawodeyarpura. It is claimed that the same was shown as liability in their books since the sale had not taken place. It is also claimed that provision of section 2(47) of the Act are applicable only for computing capital gains and not for business income. After considering the appellant's arguments on this issue it is held as under: 15.3 Sri Narasimhamurthy, one of the Directors of the assessee company had executed sale deed dated 27.07.2007 having sold 26 guntas of land at Sy. No. 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 ....
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.... cost of the entire 3 acres 34 guntas was Rs. 90,87,667/- which includes cost of the land of Rs. 81,87,667/- as per the books and development expenditure of Rs. 9.25 lakhs. The assessee had submitted that in respect to the land of 26 guntas, surplus will work out to Rs. 4,64,635/- and for the remaining 3 acres 8 guntas the surplus will amount to Rs. 8,46,614/- after deducting the cost of acquisition and other costs that will be incurred and the same would be offered to tax after fulfilling all the obligations towards the purchaser. This was clearly explained by the assessee, however the assessing officer brought to tax a sum of Rs. 87,37,333/- 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....
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.... to be considered to arrive at net income from this transaction. In our opinion, this plea of the assessee is valid. The A.O. cannot overlook certain expenditure incurred relating to this transaction and he has to give due deduction to all the expenditure incurred in relation to the receipt of this sale consideration of Rs.26 lakhs. The Ld. A.R. submitted that the net income arouse from this transaction only at Rs.4, 64,635/-. In view of this, we direct the AO to give due credence to the all expenditure incurred by assessee in relation to impugned property purchased by Smt. Rajya Lakshmi vide sale deed dated 27.7.2007. The assessee has to furnish 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 tha....