9911796707
TMI Blog2015 (10) TMI 2430X X X X Extracts X X X X X X X X Extracts X X X X ..... however it strong may be. It is also noted that even the ld. Assessing Officer vide his remand report dated 11/01/2011 categorically stated that the impugned five parties were actually given possession of the property in lieu of the surrender of the tenancy rights. Even in the remand report, it has been concluded the by Assessing Officer that the noting on the seized paper and the agreement does not tally and rather the parties received the area as per the agreement, thus, the totality of facts, clearly indicates that the addition was merely made on presumptive basis, which cannot stand on its legs, therefore, the addition was rightly deleted, consequently, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals). - Decided against revenue Net profit on sale of bogus tenancy of 22 flat in Siddesh apartment and shop in riddhi apartment - CIT(A) deleted the addition - Held that:- Because the addition was made merely on the basis of certain statements and without corroborating the same with the material whereas, as mentioned earlier, as per the MHADA the actual tenants were 101, whereas, as per the assessee, they were only 97, thus, there is no q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nants, wherein, assessee created bogus tenancy rights in two apartments. It was pleaded that one Mr. Harish Mehta and Ms. Joshi Choula admitted that version of the Department while recording their statements and further certain documents were recovered from residence from which the Assessing Officer rightly drew inference that cash was taken in other cases also, on the basis of which, addition was made. Our attention was invited to page 39 of the paper book. It was asserted that while granting relief the ld. Commissioner of Income Tax (Appeals) disregarded the statements recorded from aforementioned two persons. Our attention was invited to pages 45, 46 of the paper book, wherein, the assessee offered 23 crores and page 5 of the paper book containing the statement. It was also submitted that the statement tendered by Ms. Joshi was completely ignored by the Commissioner of Income Tax (Appeals) and merely relied upon the remand report sent by the Assessing Officer. The crux of argument of Shri N.P. Singh, ld. DR, is that number of tenants were inflated by the assessee for which our reliance was placed to page 9 (para 28) of the impugned order. 2.2. On the other hand, the ld. couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d it was explained that there were different partners/persons in the different group, thus, no addition can be made on the statement of any person unless and until it is corroborated with effects. It was also pleaded that the statement of Ms. Choula Joshi was never given to the assessee and Ms. Choula Joshi was again examined pursuant to remand of the case. Before coming to any conclusion, we are reproducing hereunder the relevant portion and factual finding recorded by the ld. Commissioner of Income Tax (Appeals) for ready reference and analysis:- 28. I have considered the submissions of the appellant, comments of the A.O. on the remand report and the various judicial pronouncements cited by the appellant. It is evident from the comments of the assessing officer in the remand report that the area mentioned in the seized documents and the actual area given to the persons concerned differs. 29. Further, in my view, no addition on account of receipt of on money can be made due to the fact that AO in. his remand report has clearly stated that the area mentioned in the seized document the actual area given to the persons concerned, differs. He confirmed that the actual area ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property and the appellant had to give them flats in lieu of surrender of the possession of the tenancy rights/ property. It was further observed that the entire addition in the assessment was made on the basis of the loose paper seized from the residence of Chaula Joshi, which is perused to be rough noting. It is observed that the area mentioned in the noting on the seized paper does not tally with the actual area allotted to those parties as per the agreement and the response letters to notice u/ s. 131. In fact, the AO has concluded in the remand report that the noting on the seized paper and the agreement does not tally and factually the parties have received area as per the agreement only. Thus, the agreements, comments in the remand report, the statements recorded in the remand proceedings, corroborates with the submissions made by the appellant. Therefore, as there is nothing material on record to prove otherwise, the addition on account of receipt of on money by the AO cannot be sustained. In the result the ground of appeal is allowed in favour of the appellant. Accordingly, the addition ofRs. 1,40,39,036/- is deleted. 45. I have carefully considered the submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch were nearing completion. On 10/08/2006, a search and seizure operation was carried out, on Rohan Group of Companies, u/s 132 of the Income Tax Act, 1961 (hereinafter the Act) by the investigation wing of the Department. Consequently, notice u/s 143A of the Act was issued to the assessee to which return of loss of ₹ 1,54,71,811 was filed on 31/3/2008. The ld. Assessing Officer made addition of ₹ 1,40,39,036/- (net profit on account of money receipts) , ₹ 5,44,32,840 (net profit on sale of bogus tenancy of 22 flat in Siddesh apartment) and ₹ 66,03,316/-(net profit on sale of bogus tenancy of shop in riddhi apartment an dflat in Siddhesh Villa). 2.4. On appeal, before the ld. Commissioner of Income Tax (Appeals), it was claimed by the assessee that project completion method of accounting is followed by the assessee and the profit from the project is offered for taxation in the year of substantial completion of the project, therefore, it was claimed before the ld. Commissioner of Income Tax (Appeals) that the profit from Siddhesh apartment was offered in financial year 2006-07 (A.y. 2007-08), wherein the project was substantially complete. The claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re number of tenants. 2.5. We further note that certain additional evidences were filed before the ld. Commissioner of Income Tax (Appeals), with respect to alleged five parties, therefore, the additional evidence was remanded back to the file of the ld. Assessing Officer with a direction to cheque the actual area allotted to this five parties. The Assessing Officer carried out verification and vide remand report dated 11/01/2011 did not raise any objection to the admission of additional evidence and rather vide remand report (received in the office of the ld. Commissioner of Income Tax (Appeals) on 18/01/2011.) annexed the statement of five parties, the extract of which has been reproduced in para 22 (page-7) of the impugned order. The crux of the remand report and the statement is that in lieu of allotted flat, no money was ever transacted with Rohan Group. In the remand report, the Assessing Officer duly confirmed the actual area given to the concerned persons matches with the respective agreements and one Mr. Kamlesh Baheti, in response to notice issued u/s 131 of the Act specifically tendered that he received flat in lieu of surrender and he sub tenanted the property to fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rux of arguments, advanced by ld. CIT-DR is identical to the ground raised and broadly as was canvassed for the aforesaid ground by contending that the addition was rightly made which was pursuant to search proceedings by creating bogus tenancies and none of the alleged tenants appeared in response to summons issued by the Assessing Officer. On the other hand, the ld. counsel for the assessee defended the conclusion arrived at in the impugned order. On ground no.3, identical argument was advanced by ld. CIT-DR, whereas, the ld. counsel for the assessee strongly defended the conclusion arrived at in the impugned order. 3.1. We have considered the rival submissions and perused the material available on record. We note that broadly the addition was made by the Assessing Officer on the plea of creation of bogus tenancy rights. The assessee developed the projects Siddhesh Apartment by clubbing its three old properties namely Seksaria Bhawan, Govardhan Niwas and Manek House. The whole addition made by the ld. Assessing Officer is that the assessee manipulated tenancies to create extra FSI in the name of bogus tenants and thus, the Assessing Officer computed the total number of 65 tena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s confirmed that the area mentioned in the seized document the actual area given to the persons concerned, differs. It is also confirmed that the actual area given to the persons concerned viz. (i) Shri Kamlesh Baheti, (ii) Shri Ramanlal Jain, (iii) Shri Mahendra Jain (iv) Shri Sanjay Agarwal (v) Shri Rajiv Agarwal, is as mentioned in their respective agreements mentioned in their respective agreements submitted to your during these appellate proceedings by the assessee, the details of which are summarized below for ready reference:- Sr. No. Name of the tenant As per seized document As per Agreement Flat No. Area Sq. Ft. Flat No. Area Sq. Ft. 1. Kamlesh Baheti 2301 1450 1705 1802 1803 567.04 404.40 551.32 1522.76 2. Ramanlal Jain 2401 1450 1805 567.04 3. Mahendra Jain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material on record. How the Revenue is aggrieved is not known? However, without going into much deliberation, it is not disputed that MHADA made a detailed survey/certification process including verification of relevant documents, on-site verification, measurement and being the monitoring body of the government actually certified the units at 101 against the claim of 97 made by the assessee. In support of its claim, the assessee placed reliance upon the decision of the Tribunal in the case of ACIT vs R.R. Chaturvedi and Ors. (ITA No.4735/Mum/2008) order dated 04/06/2010 which was affirmed by Hon ble jurisdictional in ITA No.1196 of 2011 (Bombay), we find that the claim of the assessee is squarely covered by the ratio laid down in the aforesaid order. Because the addition was made merely on the basis of certain statements and without corroborating the same with the material whereas, as mentioned earlier, as per the MHADA the actual tenants were 101, whereas, as per the assessee, they were only 97, thus, there is no question of bogus tenancy, more specifically when alternate accommodation was provided to, claimed, 97 persons in lieu of surrender of their tenancy rights. So far as, se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er consideration is the seized material found in the residence of Chaula Joshi. The notings on the said loose papers are incorrect and does not represent the factual position and thus held to be rough notings. d. The addition in respect of sale of bogus tenancies has been made by the AO on the basis of incorrect facts. 17. It is also observed that the appellant has provided this party with permanent alternate accommodation as per the provisions of rule 33(7) of the BMC rules. On perusal of the various material evidences available on record like the agreement copies, electricity bills, telephone bills, etc, it is observed that the property against which Flat of Siddhi Apartment was allotted was possessed by Mrs. Jayaben Kanober. In my view, no presumptions can be made as there is no Material or evidence on record. More so, on perusal of the electricity bills, declaration by the school, etc, the tenancy of the said party since long back is established. These bills are issued by government companies and authorities i.e. Mahanagar Telephone Nigam Ltd. The same cannot be disapproved unless there is any contrary evidence. Therefore, as no other evidence were found indicating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... la Joshi and the contentions raised in assessment year 2006-07. More so, the AO has not got any evidence with respect to sale of bogus tenancies for the current year. 17. It is observed that all the contentions and the findings relied upon by the AO had arisen for consideration before me in the appellants own case for AY 2006-07 ~d vide order dated 31/01/2011 the same was decided in favour of the appellant for the following reasons given in para nos. 45 - 47 of the said order:- a. The AO erred in counting the no. of tenants. The total no of tenants in the 3 buildings were 101 out of which the total no. of tenants to whom permanent alternate accommodation was provided was 97. b. The four parties are the sub-tenants of M/s. Mehta Trading Company and the appellant provided permanent alternate accommodation to these parties in lieu of the sub-tenancies. c. The entire addition made by the AO on the ground under consideration is the seized material found in the residence of Chaula Joshi. The notings on the said loose papers are incorrect and does not represent the factual position and thus held to be rough notings. d. The addition in respect of sale of bogus t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued by CBDT and lCAl, the same cannot be questioned, unless there is a finding by the Revenue that the method adopted by the taxpayer results in distortion of profits. Therefore, I am of the opinion that since the appellant has consistently followed project completion method the income of the appellant ought to have been considered on the same basis. Accordingly, the said ground of appeal stands allowed in favour of the appellant. ITA No.3225-2011 15. I have carefully considered the submissions of the appellant and the order of the AO. It is evident from the assessment order, that the AO has referred and relied upon the findings for the AY 2006-07. It is seen that the AO has not raised any additional contention apart from those raised for the assessment year 2006-07. It is also observed that the entire addition made by the AO on the ground under consideration is the seized material found in the residence of Chaula Joshi and the contentions raised in assessment year 2006-07. More so, the AO has not got any evidence with respect to sale of bogus tenancies for the current year. 16. It is observed that all the contentions and the findings relied upon by the AO had ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted the project completion method as an appropriate method of computing income. The tribunals have also accepted the treatment by the assessee to offer income to tax in the year when the project was completed in the following decisions: i. In Champion Construction Company 5 ITD 495 (1983) ii. M/s Unique Enterprises Vs ITO [201O-TIOL-737-ITATMum iii. In Prestige Estate Projects (P) Ltd Vs DCIT (2010) 33 DTR 514 iv. CIT v Bilahari Investment (P) Limited (299 ITR 1) v. DCIT v OTIS Elevator Co. India Ltd. (284 ITR 173) vi. CITy Ashokbhai Chimanbhai (56 ITR 42) vii. T. K. International Ltd. V ACIT (275 ITR 101) viii. Asia Resorts Limited (96 TTJ 909) 23. On perusal of the decisions cited above, it is observed that it has been held that the method of accounting which has been consistently followed by the Company and which is in accordance with the Accounting Standards issued by CBDT and lCAl, the same cannot be questioned, unless there is a finding by the Revenue that the method adopted by the taxpayer results in distortion of profits. Therefore, I am of the opinion that since the appellant has consistently followed project comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no material or evidence on record. More so, the tenants are certified by MHADA, a government agency, the same cannot be disapproved by me unless there is any contrary evidence. Therefore, as no other evidence were found indication that the appellant had received an on more in respect of free sale flats tenants certified by MHADA., the addition on account of receipt of on money cannot be made. 32. Considering the aforementioned facts, and, on examination, it is observed that no material has been found indicating that the appellant has received on money. On going through the agreements filed by the appellant, the response of the five parties to notice u/ s. 131 issued by the AO, and the comments made by the AO in the remand report dated 11.01.2011, it is observed that these five parties were actually in possession of the property and the appellant had to give them flats in lieu of surrender of the possession of the tenancy rights/ property. It was further observed that the entire addition in the assessment was made on the basis of the loose paper seized from the residence of Chaula Joshi, which is perused to be rough noting. It is observed that the area mentioned in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, as there is nothing material on record to prove otherwise, the addition on sale of flats to bogus tenancies by the appellant cannot be sustained. In the result, the appeal is allowed in favour of the appellant. ITA No.3230-2011 10. I have carefully considered the submissions of the appellant and contentions of the AO in the assessment order. It is evident from the assessment order [hat the AO has referred and relied upon the findings for the A. Y 2006-07. It is seen that the AO has not raised any additional contention apart from those raised for the assessment year 2006-07. It is also observed that the entire addition made by the AO on the ground under consideration is the seized material found in the residence of Chaula Joshi and the contentions-raised in assessment year 2006-07. 11. It is observed that all the contentions and the findings relied upon by the AO had arisen for consideration before me in the appellants own case for AY 2006-07 and vide order dated 31/01/2011, the same was decided in favour of the appellant for the following reasons given in para nos.27, 28, 29 and 30 of the said order:- 1. The notings on the said loose paper incorrect and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T-DR, Shri N.P. Singh opposed the condonation of delay by contending that the assessee has to explain the delay of each day by submitting that the cross objections of the assessee may be dismissed as it is and delay may not be condoned. 5.1. On condonation of delay, We have considered the rival submissions and perused the material available on record. Now, question arises whether there was sufficient and good reason explained by the assessee for condoning the delay. If the reasons were found to be sufficient and bonafide, the delay deserves to be condoned. Before, we evaluate, the sufficiency of reasons, it would be of relevance to keep in mind the broad judicial thoughts on the issue. No doubt filing of an appeal is a right granted under the statute to the assessee and is not an automatic privilege, therefore, the assessee is expected to be vigilant in adhering to the manner and mode in which the appeals are to be filed in terms of the relevant provisions of the Act. Nevertheless, a liberal approach has to be adopted by the appellate authorities, where delay has occurred for bona fide reasons on the part of the assessee or the Revenue in filing the appeals. In matters concernin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the message does not appear to have percolated down to all the others courts in the hierarchy. 5.3. Furthermore, the Hon ble Supreme Court in the case of Vedabai Alia Vaijayanatabai Baburao Patil vs. Shantaram Baburao Patil 253 ITR 798 held that the court has to exercise the discretion on the facts of each case keeping in mind that in construing the expression sufficient cause , the principle of advancing substantial justice is of prime importance. The court held that the expression sufficient cause should receive liberal construction. Considering the entire gamut of facts, explanation of the assessee and in the absence of any contrary material, we deem it fit and proper to hold that assessee had a bona fide and sufficient reason for the delay in filing the cross objections, therefore, respectfully, following the observation made by Hon ble Apex Court (Supra), the delay is condoned. 5.4. Now, we shall deal with the cross objections filed by the assessee. In Assessment years 2001-02, 2004-05, 2005-06, 2006-07 and 2007-08, the first ground raised by the assessee is with respect to returned loss was ignored by the Assessing Officer and the ground so raised was not decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d document the actual area given to the persons concerned, differs. He confirmed that the actual area given to the persons concerned is as mentioned in their respective agreements. In the said case, it was also observed that Mr. Kamlesh Baheti, one of the five parties, in response to notice issued u/s. 131 stated to have received flat in lieu of surrender of property. He admitted to have sub tenanted the property to four other parties and specifically stated that he has not received or paid any money. Further, on perusal of response of all the parties to whom notices were issued, it is observed that they have received flats upon surrender of the property and they have also stated that they have not paid any money to the appellant. 20. It is also observed that as per the noting in the seized paper, Flats no 2501 and Flat No. 2505 is allotted two parties. However, it is perused that the building Siddhesh Apartment was constructed only upto 24 floors. On the basis of the above it is seen that the noting made in the seized material proved to be incorrect and thus, does not represent the factual position. It is observed that the entire addition in the present proceedings has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on the seized paper and the agreement does not tally and factually the parties have received area as per the agreement only. Thus, the agreements, comments in the remand report, the statements recorded in the remand proceedings, corroborates with the submissions made by the appellant. Therefore, as there is nothing material on record to prove otherwise, the addition on account of receipt of on money by the AO cannot be sustained. 23. In the present case, the only distinctive factor is the fact relating to receipt of on money from Pastidevi K. Mehta as noted in the seized material. In the seized material it is noted that an amount of Rs. 8,70,250/ - was received in cash from the said Pastidevi K. Mehta who has been allotted Permanent Alternate Accommodation in the appellant s project. At the same time it is noted that the area of the flat mentioned in the seized material is factually incorrect as can be observed from the copy of agreement. Thus, like in other cases, the noting in the seized material cannot be fully relied upon for the various reasons cited herein above. Further, it has been consistently held by courts that extrapolation of income cannot be made without any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer is that the assessee received on money on sale of flats in its project and thus addition was made to the total income of the assessee. Likewise, for A.Y. 2006-07, addition of ₹ 26,94,604/- and ₹ 1,44,51,239/-(A.Y.2007-08) were made. It is worth mentioning there no evidence was brought on record by the Revenue evidencing that any on money was ever received by the assessee and even the Assessing Officer in the remand report clearly stated that the area mentioned in the seized documents and the actual area given to the concerned persons differs i.e. the area given to the concerned persons matches with the respective agreement. The tenants were duly certified by MHADA. We note that the facts and the issues are identical to the appeal of the M/s Meridian Construction Pvt. Ltd., wherein, we have perused the record and on consideration of arguments and the judicial pronouncements, affirmed the stand of the ld. Commissioner of Income Tax (Appeals) by dismissing the appeal of the Revenue, therefore, we find no merit in the claim of the Revenue in these appeals also. The stand of the ld. Commissioner of Income Tax (Appeals) was arrived at after considering the various judi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
