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TMI Blog2010 (6) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is a partnership firm engaged in the business of builders and developers. The assessee purchased plot of land and constructed a residential building in the name and style of Saibaba Enclave on Plot no. A, building no.3, S V Road. Goregaon, Mumbai. The construction work was given to Labour Contractor and the material was supplied by the assessee. . The assessee filed its return of income for the assessm ent year 2006-07 on 31.10.2006 declaring total income at Rs.73,46,120/-. The assessee declared net profit on the basis of work completed during the year. The return of income accompanied by Audit Report u/s 44AB, Balance Sheet, Profit and Loss Account, statement of total income, TDS certificate, challans etc. During the course of assessment proceedings the AO asked the assessee to explain the source of income which has been offered to tax and number of flats sold during the year and the area of each such flats. The assessee vide its communication dated 17.12.2008 explained that the assessee is engaged in the business of Builders and Developers and constructed a residential building on Plot no. A, building no.3, S V Road. Goregaon, Mumbai. The assessee also explained that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates of flats are concerned. The CIT(A) has also confirmed the addition towards brokerage as estimate at the rate of Rs.30,000/- per flat and the car parking charges at the rate of Rs.1,00,000/- for 21 flats. The CIT(A)'s order is based mainly on the impounded document at page 8 of the loose sheets which contains the details of 31 flats out of which only 21 flats were part of the flats sold during the year relevant to the assessment year under consideration. In this way, the CIT(A) has took the rate as mentioned in the impounded documents at page 8 of loose sheets, whereas the AO estimated the rate per sq.ft.at Rs.4500/-. But the CIT(A) made enhanced assessment on the basis of the area of the flats in respect of 21 flats because, the AO di d not dispute the area of the flats sold and disclosed by the assessee. Whereas the CIT(A) made the addition as per the area mentioned in the documents no.8 of the impounded document. 6. Ground no.1 is regarding whether the CIT(A) is justified in confirming the additions of Rs.4,02,11,000/- out of tot al additions of Rs.7,91,78,829/- made by the AO as unexplained income on estimate basis (Rs.3,74,81,000/- out of on-money on sale of flats of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- which is not supported either by docum ents impounded or by the statement which are full of contradiction. He has referred the statement of Shri Anthony Fernandes recorded on 10.03.2006 and answer to the question no.8 as well as question no.23 and stated that while replying question no.8, the average rate per sq.ft. allegedly stated as Rs.3800/- per sq.ft in respect of flats which were already sol d and the current booking were at the rate of about Rs.4500/- per sq.ft. for the remaining consisting about 25 per cent. He has further pointed out, the answer to the question no.23 that the flats were sold at the rate of Rs.3525 per sq.ft., as stated in the said statement. Thus, the learned AR has submitted that when the statement itself is full of contradiction the same cannot be relied upon and the creditability of the statement is also doubtful. Similarly, he has pointed out the various contradictions in the statement i n respect of answer to question no.4,5 and 30 of Shri Anthony Fernandes and answer to question no.7 by Shri Kamlesh Yadav. The ld. AR has further contended that none of the loose sheet impounded during the survey were prepared by the assessee or on behalf of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of open terrace and flat can be same. He has relied upon the decision of the Hon'ble Kerala High Court in the case of Paul Mathews and Sons V/s CIT reported in 263 ITR 101 and the decision of the Hoh. Madras High Court in the case of CIT V/s S Khandar Khan Chand reported in 300 ITR 157 and submitted that the statem ent recorded during the course of survey under the provisions of section 133A has no evidentiary value in the absence of material or record to prove and corroborate the contends of the statem ent. Therefore, no addition can be made solely on the basis of the statement recorded during the survey proceedings. He has also relied upon the following decisions : . i) Kailashchand V/s ITO (29 SOT 63(Jodh) ii) Ravindrakum ar V/s DCIT (33 SOT 251) (Delhi) iii) CIT V/saulikkumar K Shah (307 ITR 137) iv) Embee Cl earing and Shipping Services Pvt ltd V/s ACIT (12 SOT 227 (Mum Tribunal v) Addl.CIT V/s Shailesh S Shah (31 ITD 153) vi) M/s United Products ltd V/s ITO (22 SOT 429) (Mum) Thus, the learned AR has submitted that when no oath was administered to the persons whose statements were recorded then the statements cannot be taken into account as relevant evidence. 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nandes, Real Estate Agent. 11.1 The AO has made the addition by adopting the estimated rate of sale price of the flat at the rate of Rs.4500/- per sq.ft. which is not born out from an y of the impounded documents. Therefore, the said rate of Rs.4500/- as estimated by the AO is purely based on the statements of Shri Anthony Fernandes and Shri Kamlesh Yadav is not sustainable particularly when these two persons in their own statements have stated while answering the question no.8 that the rate of flats sold is Rs.3800 per sq.ft. and the current booking was stated at around Rs.4500/ - per sq. ft.. As far as the assessed incom e for the assessment year under consideration is concerned, the same is assessed only with respect to the flats sold during the year and not for the booking of the flats undertaken by the assessee. 12. Even otherwise as per the statements of Shri Anthony Fernandes and Shri Kamlesh Yadav, the rate of Rs.4500/- per sq.ft. is not pertaining to the flats which were already sold. Needless to say, Shri Anthony Fernandes was not cross- examined by the assessee during the course of assessment proceedings and later on when the CIT(A) allowed the cross- examination in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no documentary evidence with respect to the sale of car parking area except the document no.15 of the impounded documents with respect to flat no.C-38, wherein also Rs,.50,000/- are mentioned against car parking. Therefore, there is no basis for making addition of Rs.1,00,000/- for each flat f or car parking. The AO had not made any inquiry or verification to examine the facts regarding the rate of sale, area, on money payment of brokerage charges and car parking charges from an y of the available sources including the buyers of flats as none of the buyers of the flats was examined by the department to verify the involvement of on-money payment and other charges as alleged by the revenue. Even the understatement of area is not examined by the AO at any stage of proceedings. Therefore, it cannot be presumed that all the flats were sold by the assessee through the Real Estate Agent and involved brokerage charges. 16. In view of the above discussion and facts and circumstance of the case, we are of the view that when the statements u/s 133A were recorded at back of the assessee and were subsequently retracted by the wit nesses have no evidentiary value to the extent of contents ..... X X X X Extracts X X X X X X X X Extracts X X X X
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