9911796707
TMI Blog2012 (9) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... essees were engaged in the construction business and were developing the Sukh Niwas Project jointly with 50% share each. Both the assessees for the relevant assessment year had declared loss from Sukh Niwas Project. Mrs. Hansa Shah had declared loss of Rs.7,84,419/- whereas, Shri Mohanlal M Shah had declared loss of Rs.4,25,982/-. The assessment order in the case of Mrs. Hansa L.Shah had been passed earlier which was followed in case of Shri Mohanlal M Shah in which the addition made in the case of Mrs. Hansa L. Shah has been followed. 2.1. The AO during the course of assessment proceedings in the case of Mrs. Hansa L.Shah had obtained the details of sales effected, rate of sale, area etc for the current year as well as in the earlier years. The AO noted from the details filed that the assessee had sold even commercial properties at the same rate as that of residential properties and in some cases even residential properties which had been sold at higher rate in earlier years had been sold at lesser rate during the current year. The AO vide letter dated 6.10.2008 asked the assessee to explain the sale proceeds shown in the books of account and also explain as to why the boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive. The AO further observed that no one would incur loss on the project after making so-much efforts over a long duration of time. The AO concluded that though the entire difference with respect to the stamp duty value could not be considered for assessment, the assessee had agreed for suppressing sales of Rs.50 lakhs by the two developers. He, therefore, added a sum of Rs.25 lakhs in the case of the assessee to the total income of the assessee. 2.4 The assessee disputed the decision of the AO and submitted before the CIT(A) that the assessee had made true and full disclosure of sale receipts and there was no suppression of sales. It was also submitted that the assessee had never agreed for addition of Rs.25 lakhs. It was pointed that, soon after, receiving the order of assessment, the assessee vide letter dated 13.1.2009 had filed rectification petition u/s 154 in relation to addition of Rs.25 Lakhs based on the alleged admission. The assessee had also applied for the copy of the ordersheet dated 17.12.2008 which had not been provided by the AO till date. The assessee further submitted that the AO had relied on the statement of disclosure of Shri Mohanlal Shah in his assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee soon after receiving the assessment order filed rectification petition u/s 154 in relation to the alleged agreed addition. It was also submitted that the statement of Shri Mohanlal M Shah could also not be considered as basis for addition in assessee's case as the statement had been made after the assessment in case of the assessee dated 5.12.2008. Even otherwise, the assessee had not been confronted with any such statement. The assessee had also filed an affidavit dated January, 2010, a copy of which has been placed at page 65 of the paper book in which the assessee had categorically denied any agreed addition. It was pointed out that Shri Mohanlal M Shah had also filed an affidavit a copy of which is placed at page 68 of the paper book in which he has clearly mentioned that he was unaware that by signing the ordersheet, he was being made to agree for addition. Similarly, Shri Nimesh C Dedhia, the Accountant has also filed an affidavit stating that he was present at the time of hearing on 17.12.2008 and that Shri Mohanlal M Shah had never agreed for any addition on account of suppressed sales. 2.7 The ld. AR referred to various letters addressed by the assessee to the AO p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the other hand, the ld. DR strongly supported the orders of the authorities below and placed reliance on the findings given in the respective orders. 2.10 We have perused the records and considered the rival contentions carefully. The dispute is regarding addition on account of suppressed sales from construction activities. Both the assessees were engaged in the business of construction activities and were codevelopers of Sukh Niwas Project. Both the assessees had declared loss from the project. It was found by the AO that sale consideration shown by the assessee was lowered by more than 25% than stamp duty value of the properties. The AO had asked for the explanation of the assessee regarding lower sale value declared. The explanation given by the assessee had not been accepted as the same was general in nature and not supported by any documentary evidence. The estimated addition has been made at the rate of 25 Lakhs in each case and the basis given is that the assessee had agreed for addition to the above extent. We have carefully considered the various aspects of the matter. There is no dispute that the flats/shops sold by the assessee were held as trading assets. The transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment orders. In our view, the additions made on the basis of alleged statements of the assessees cannot be sustained. 2.12 However, it is also to be noted that the AO had not made addition only on the basis of the statements of the assessees. The AO had made the addition on the ground that the assessee had not explained properly the very low value declared with respect to the stamp duty value. It is only while making the estimate, he had based the same on the statements of the assessees which in our view is not justified. We agree with the AO that the sale account cannot be accepted as reliable on the facts of the case. The judgments relied on by the Ld.AR are distinguishable on facts. However, the estimate made by the AO has to be based on some proper material. In this case, neither the assessee had explained with proper evidence the lower sale value with respect to the stamp duty value and other discrepancies pointed out by AO nor the AO conducted any inquiry to gather material on comparative cases. The matter in our view requires fresh examination for arriving at a fair conclusion in the matter. We, therefore, set aside the order of the CIT(A) on this point in both the cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared income from bank interest against which it had claimed deduction of Rs.1,58,338/- on account of interest paid . The AO observed that the assessee was asked to justify the claim of deduction on account of interest but the assessee could not prove the nexus between borrowed funds and the corresponding investments. The AO, therefore disallowed 50% of interest claim amounting to Rs.77,669/- which in appeal was confirmed by the CIT(A) aggrieved by which the assessee is in appeal before the Tribunal. 4.1 Before us, the ld. AR for the assessee submitted that the AO had made disallowance only on adhoc basis which could not be sustained and therefore the same should be deleted. The Ld. DR on the other hand, supported the orders of the authorities below. 4.2 We have perused the records and considered the material carefully. The dispute is regarding disallowance of interest claimed by the assessee against the interest income assessed under the head "income from other sources". The assessee had claimed deduction on account of interest against the income from bank interest. The AO has given a finding that the assessee could not give any evidence to show nexus between the borrowed fu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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