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TMI Blog2012 (3) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... ction, the assessee is assailing the decision of Ld CIT(A) in confirming the addition of ₹ 4,90,915/- relating to sale of property located at Thankakkunnu. 4. The facts relating to the case are stated in brief. The assessee company is engaged in Real estate business. The department carried out search and seizure operation in the hands of the assessee herein on 29-01-2003. The assessee company had entered into an agreement for development of 86 cents land located at Fort Road, Kannur and construction of commercial complex thereon by the name "City Centre" thereafter both the company and the land owners would sell the space in the commercial complex along with the proportionate land area. Accordingly, they started so selling the commercial space and the proportionate share of land from the year 2000 onwards. The land owners would sell the proportionate share of land and the company would sell the commercial space. Simultaneously the search and seizure operations were also carried on in the hands of the owners of 86 cents of land viz., Shri Arunkumar H Dattani and Shri Satish Chandra H Dattani. 5. Consequent to the search operations, the block assessment was completed in the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he commercial complex and for that purpose he entered into an agreement with the assessee company on 05-4-1999, which was renewed later on 27.7.2000. As per the agreement, the cost of pent house was determined at ₹ 71.00 lakhs. According to the AO, the company has debited a sum of ₹ 50.00 lakhs only in its books of account and accordingly brought the difference of ₹ 21.00 lakhs (Rs.71.00 (-) ₹ 50.00) as undisclosed income in the hands of the company. 7.1 Before the Ld CIT(A), the assessee company submitted that the construction of pent house was not complete and in fact, it had spent only ₹ 50,000/- towards its construction. It also produced a non-completion certificate in support of its claim. The Ld CIT(A) also observed that there is no seized material in this regard. Accordingly he deleted the above said addition of ₹ 21.00 lakhs. 7.2 We have heard the rival contentions. The department contends before us that the Ld CIT(A) has violated Rule 46A of the Income tax Rules by not confronting the noncompletion certificate with the AO. However, we notice that the Ld CIT(A) has deleted the above said addition mainly on the ground that there was no s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law that the income relating to the transactions already recorded in the books of account prior to the date of search cannot be considered in the block assessment proceeding. Hence these aspects also need to be verified at the end of the AO. 8.2 There is dispute with regard to the view of the AO with regard to the sale price of land. The AO has noticed that the amount realised on sale of proportionate land should belong to the owners of the land. It was also noticed that the amount payable to the owners had been fixed by the company @ ₹ 5.00 lakhs per cent. However, there were variations in the cost of land sold to the various prospective buyers. The contention of the assessee, which has also been accepted by Ld CIT(A), is that the cost of land pertaining to each shop may vary on the basis of location of the shop. However, from the point of view of the block assessment proceeding, what is important is about the assessability of the difference, if any, between the actual sale value of land and the price agreed to be given to the land owners. In our view, the AO has tried to quantity the said difference and treated the same as the undisclosed income of the assessee. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances, we are also of the view that no addition could be made in block assessment proceeding on the basis of post search documents that too on the basis of inferences. Accordingly, we uphold the order of Ld CIT(A) on this issue. 10. The next issue relates to the addition of ₹ 50.00 lakhs relating to the unaccounted receipts on sale of commercial space to M/s Malabar Tower and Superior Décor, the partnership firms in which Shri Jamaluddin and Sri V. Muneer together with others were partners. The department carried out survey operations in the case of two firms cited above prior to the date of search operations in the hands of the assessee company. During the course of survey proceedings, certain loose papers evidencing on-money payment made towards the purchase of commercial space from the assessee company were found. In the sworn statement taken u/s 131 of the Act, Shri V. Muneer admitted that they entered into an agreement with the assessee company for purchase of about 2633 Sq. ft. (1711 Sq. ft. + 922 Sq. ft.) of commercial space for a value of ₹ 1,01,50,000/-, out of which only ₹ 51,50,000/- only was documented. 10.1 Subsequently, during the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of survey in the case of Shri Jamuldeen, Shri V.Muneer and others has culminated into search in the hands of assessee herein. We may recall that during the course of survey operation conducted in the hands of Shri Jamuldeen, Shri V.Muneer and others, certain loose papers evidencing on-money payment were found. They were confronted with Shri V.Muneer while examining him u/s 131 of the Act and at that time, he has agreed that there was on-money payment of ₹ 50.00 lakhs to the assessee herein. 10.4 The Ld CIT(A) has taken the view that the statement taken from Shri V.Muneer does not have evidentiary value and for that purpose he has taken support from the decision of Hon'ble Kerala High Court in the case of Paul Mathew & Sons (263 ITR 101). We have carefully gone through the said decision and notice that the same is not applicable to the facts of the instant case. In the case of Paul Mathew & Sons, supra, the Hon'ble Kerala High Court considered the evidentiary value of the statement taken during the course of survey operation u/s 133A of the Act and the statement taken u/s 132(4) of the Act during the search operation. Since the statement u/s 133A is taken w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion only. During the course of search operations, evidence concerning Shri Jamuldeen in the form of page no.2 of Agreement was found, which was included in ORF 67. In the said document, the sale price of 1711 Sq. ft. commercial space sold to Shri Jamuldeen was shown as ₹ 5000/- per sq. ft. The AO could link this document to the documents found during the course of survey and also the sworn statement taken from Shri V. Muneer. In the sworn statement, Shri V. Muneer has stated that the purchases were initially negotiated @ ₹ 4400/- per sq. ft. for 1711 Sq. ft of area and @ ₹ 4000/- per sq.ft. for 922 Sq. ft. of area. However the deal was finally struck for a total consideration of ₹ 1,01,50,000/-, out of which ₹ 51,50,000/- only was documented, meaning thereby there was on-money payment of ₹ 50.00 lakhs. The question of on-money payment came to be posed to Shri V.Muneer only on the basis of certain loose sheets evidencing such payment found during the course of survey. 10.7 Thus the information relating to receipt of on-money amount of ₹ 50.00 lakhs could be linked by the AO to the evidence found during the course of search. When such eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X
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