2013 (9) TMI 1220 - AT - Income Tax

Summary

Issues Involved:
1. Addition of Rs. 4,78,40,628/- u/s 153A r.w.s 143(3) of the I.T. Act.
2. Addition of Rs. 1,70,91,150/- related to 9 flats in Cabo Project.
3. Addition of Rs. 7,85,90,105/- as alleged undisclosed receipts from the sale of Cabo project.

Summary:

1. Addition of Rs. 4,78,40,628/- u/s 153A r.w.s 143(3) of the I.T. Act:
The Assessee is governed by the provisions of Sec. 5A of the Income Tax Act, and 50% of the income is apportioned in the hands of his wife. The total addition of Rs. 4,78,40,628/- confirmed by CIT(A) in each case of the Assessee is general in nature and does not require separate adjudication as the Assessee has taken separate grounds for each addition included in this sum.

2. Addition of Rs. 1,70,91,150/- related to 9 flats in Cabo Project:
The Assessee entered into an agreement with M/s. Landscape Developers for the sale of property, receiving 42 flats as consideration. This agreement was amended, and the Assessee agreed to assign 9 flats back to the Developer due to escalated construction costs. The AO added Rs. 1,70,91,150/- to the Assessee's income, treating the agreement as a colorable device. The CIT(A) confirmed the addition. However, the Tribunal found that the 9 flats were indeed transferred by M/s. Landscape Developers, and the Assessee did not receive any consideration for these flats. The Tribunal deleted the addition, stating that no income accrued to the Assessee from the sale of these flats.

3. Addition of Rs. 7,85,90,105/- as alleged undisclosed receipts from the sale of Cabo project:
During the search, documents indicated that the sale consideration for flats sold at Cabo was received partly in cash and partly by cheque. The AO added Rs. 7,85,90,105/- to the Assessee's income based on these documents. The CIT(A) confirmed the addition, stating that the Assessee failed to substantiate the surrender of 9 flats to Landscape Developers. The Tribunal found that the sale of these 9 flats was accounted for by M/s. Landscape Developers, and any cash received from the sale should be assessed in their hands, not the Assessee's. The Tribunal deleted the addition and directed the revenue to assess the cash portion as income of M/s. Landscape Developers if they chose to do so.

Conclusion:
The Tribunal allowed both appeals filed by the Assessees, deleting the additions of Rs. 1,70,91,150/- and Rs. 7,85,90,105/-, and directed the revenue to assess the cash portion related to the sale of 9 flats in the hands of M/s. Landscape Developers. The order was pronounced in the open court on 27/09/2013.