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TMI Blog2016 (8) TMI 994X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed by assessee at ₹ 1,84,32,204/-. To this extent the assessee‟s expenditure can be allowed and the balance sum of ₹ 16,84,032/- can be disallowed. Accordingly, we allow the claim of the assessee to the extent of ₹ 1,67,48,172/- and retain the addition in respect to disallowance of expenses in the absence of the vouchers at ₹ 16,84,032/-. This issue of Revenue's appeal is partly allowed. Estimation of cash component - Held that:- The survey party has accepted the average sale price rate @ 3750, which includes the sale price as per the sale agreement of ₹ 2,500/- and cash component of ₹ 1,250/- in the earlier year relevant to assessment year 2006-07. Even otherwise, the average PSF rate of 7 flats @ ₹ 4020/- which is almost corroborating with the statement of Shri Kamlesh Savla admitting the average rate of ₹ 4000/- PSF (per sq.feet). Even otherwise, there is no evidence relating to the assessment year 2006-07. This is merely an exploration of rate by the AO without any evidence based on earlier year evidences. In view of the above facts and circumstances of the case, we are of the view that the CIT(A) has wrongly estimated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese employees and CIT (A) has confirmed the disallowance with reasons. We also confirm the orders of the lower authorities. This issue of assessee's appeal is dismissed. Levy of penalty u/s 271 (1)(c) - Held that:- We find from the orders of the lower authorities that both the authorities below have assumed concealment in respect to on money received for the post survey period. The on money was received by the assessee for the assessment year 2006-07, being the date of survey on 21-02-2006, for the reason that some papers for the financial year 2005-06 were found. But, no paper relating to financial year 2006-07 relevant to this assessment year 2007-08 was found. On this basis only the Tribunal has deleted the addition of on money addition and once addition is deleted, penalty will not survive. Accordingly, we delete the penalty and allow the appeal of the assessee. - ITA No.4326/Mum/2014, ITA No.4621/Mum/2010 & 2558/Mum/2014, ITA No.4621/Mum/2010 & 2558/Mum/2014 - - - Dated:- 21-7-2016 - SRI MAHAVIR SINGH, JM AND SRI RAMIT KOCHAR, AM For The Revenue : Shri A. Ramachandra, DR For The Assessee : Shri Vipul Joshi, AR ORDER PER MAHAVIR SINGH, JM: Out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm, Build Well Developer has shown rate per sq. ft @ ₹ 300. M/s Darshan Construction has also shown the cost of construction at ₹ 799 per sq. ft. The AO has not accepted the architect‟s certificate submitted with the executive engineer on 16-12-2006. Accordingly, the AO rejected the book results by invoking the provisions of section 145(3) of the Act and made disallowance on the followings being construction related expenses:- Sr.No Head of exp. Expenses claimed/disallowed Rs. 1) Payment to Contractors 1,26,99,717/- 2) Aluminium window work 10,61,904/- 3) Plumbing work 3,04,480/- 4) Garden development 3,71,900/- 5) BMC Water Connection Charges 1,69,421/- 6) Other cost of construction 38,24,782/- Total 1,84,32,204/- Aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y him as there is payment to BMC for Water Connection charges which cannot be disallowed merely on the ground that occupation certificate was obtained much earlier. Similar is the fact in respect of other cost of construction which correctness has not been doubted by the Assessing Officer but has been disallowed only on the basis of occupation certificate. This cost of construction includes site expenses as under:- Nature of Expenses Amount (Rs) 1. Site Expenses ₹ 6,050/- 2. Refund for not carrying work Rs.8,25,000/- 3. CR Sheets Rs.6,44,994/- 4. Cement Rs.3,26,250/- 5. Electrical Works ₹ 75,000/- 6. Rabbit removing ₹ 37,400/- 7. Intercom Rs.1,12,000/- 8. Pipes Rs.5,40,042/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the contractor was mainly related with the finishing work, segmental work and other works and further the plan of construction of Clun-House was approved in May, 2007 which is after receipt of occupation certificate. Similar is the situation in respect of construction of compound wall. It is a normal practice of the builder and developers to continue the work of various nature including the miscellaneous work, beautification, modification of various looks of the project without altering the main structure of the building. Therefore, only on the basis of presumption no such expenditure can be disallowed. Therefore, I do not see any convincing arguments whatsoever with the AO to discard the genuine expenditure incurred by the assessee and proved the same before him. The points raised by Ld. AO may be relevant for further investigation but certainly not the ground for rejecting the genuine expenditure. Hence disallowance of such expenses of ₹ 1,84,32,204/- is directed to be deleted from the assessment. 5. We have heard the rival contentions and gone through the facts circumstances of the case. From the very nature of expenditure it makes clear that all the expenses are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of ₹ 30,00,000/- alleged income as cash component . 7. Briefly stated the facts of the case are that during the course of survey operation 133A of the Act on the business premise of the assessee on 16-02-2006 the survey party papers relating to transactions of on money/cash component transactions recorded. The AO made the addition of on money i.e. cash component on account of sale of flats of ₹ 2,20,57,111/-. According to the AO, the partner of the assessee firm during the course of survey proceedings admitted the cash component in sale of these flats. The AO referred to Question Nos. 21 23 of the statement of the partner, Shri Rajendra Khemchand Kothari. According to the AO the sale price for the flats is at ₹ 4,500/, ₹ 4,570/ and ₹ 5,000/- and ₹ 5,500/-. Accordingly, the AO adopted the sale price rate @ ₹ 5,000 per sq. ft and worked the sale price of 17 flats at ₹ 8,33,46,111/-. The AO reduced the disclosed amount in the return of income i. e. recorded amounts in the agreements. Accordingly, the AO estimated the undisclosed income on account of cash component in respect of 17 flats at ₹ 2,20,57,111/- and added the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B Wing 4 302 9,80,000 5 601 7,77,000 6 802 17,50,000 7 1001 13,87,500 8 1102 17,50,000 9 1103 14,25,000 Further, out of the rest of 8 flats, flat No. 103 was sold out @ ₹ 4,603/- hence it was over and above general selling price included in on money receipt, therefore, only following flats are remained to be considered for receipt of on money in this year. The details of the same areas under:- SN FLAT Area in sq mtr Area in sq ft. Price as per sale deed PSF rate Offered in AY 2006-07 A Wing 1 103 84 903.84 42,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crores disclosed on this project during survey conducted at assessee s premises on 02.12.2006, over and above regular profit. The assessee has also furnished all the relevant details called for. After going through the details/documents filed, the returned income of the assessee is accepted. 9.4 thus selling rate, on the basis of which disclosure of income was accepted by the department was ₹ 3,750/- per sq. ft. This material facts, evidences and background of the case gives basis for selling price of the flats is to be taken @ 3750/- which booking were made in earlier years, accordingly, on money element or more selling price of flats worked at ₹ 30,00,000/- in respect of 7 flats as narrated above is sustained against the addition of ₹ 2,20,57,111/-. Therefore, assessee gets relief of ₹ 1,90,57,111/-. Aggrieved, against the restriction of addition of ₹ 30 lakhs as against the addition made by the AO at ₹ 2,20,57,111/-, the assessee as well as the revenue both in cross appeals before the Tribunal. 8. We have heard the rival contentions and gone through the facts and circumstances of the case. First of all the assessee submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 133A of the Act and consequent action on a real estate broker, Shri Kamlesh Savla was conducted during the FY 2005-06 relevant to Asst. Year 2006-07. It is fact that out of these 17 flats 9 flats were sold during the assessment year 2006-07 and cash component was offered in that very year, which is included in the declaration made for ₹ 5,16,00,000/- and assessment made therein u/s. 143(3) of the Act. 9. As regards to remaining 8 flats, one flat no. 103 was sold out @ ₹ 4603 per sq. ft. Hence, it is over and above general selling price including cash component. In regard to other 7 flats, we find that Shri Kamlesh Savla has given a general statement admitting the sale price at ₹ 4,000/- per sq. ft in his statement vide Question No. 24, which reads as under:- Question 24: From the above page No.125 it is seen that the sale value for 9th floor and 10th floor is ₹ 5400 square feet. What is the cash component involved in this quotation? Ans: At that time the cash component was between 15 to 20%. However, the flats were not sold at this price but the actual price was around 4000 per square feet . We also find that the survey party has accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eason for making disallowance of these expenses. Hence, we confirm the order of the CIT (A) deleting these additions. This issue of Revenue‟s appeal is dismissed. 12. The next issue in the appeal of the assessee is against the order of the CIT (A) confirming the disallowance of salary payments. For this, the assessee has raised the following ground No.2:- 2. The Learned Commissioner of Income Tax Appeals erred in confirming addition of ₹ 3,45,000/- payment of Salary on the ground that payment were made on One time basis not periodically 13. We have heard the rival contentions and gone through the facts and circumstances. We find that the AO disallowed salary of ₹ 3,45,000/- claimed by assessee to paid to four employees for supervision work. According to AO the assessee has not paid the salary on monthly basis but it was one time yearly payment. Accordingly, the AO disallowed the salary paid to the four persons mentioned in Assessment Order at page 13. Accordingly, he made disallowance of ₹ 3,45,000/-. The CIT (A) sustained the addition on the basis that salary expenditure was debited as on 31st March, 2007, i. e. at the end of the year. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on money element or more selling price of flats worked at ₹ 30,00,000/- in respect of 7 flats as narrated above is sustained against the addition of ₹ 2,20,57,111/-. Therefore, assessee gets relief of ₹ 1,90,57,111/-. On these observations, the AO levied the penalty on the following reasons:- 4. I have considered the facts of the case and also the submissions made by the Assessee carefully. The submission filed by the assessee is not found satisfactory due to the following reasons:- Thus, it is clear that on one hand the assessee has inflated its expenses at his own will, whereas on the other hand suppressed the sales. The assessee failed to justify its claim towards salaries before the AO and the CIT (A). The fact of receipt of on money in cash was admitted by the assessee during the survey proceedings relevant to F. Y. 2005-06. In the current year, the sale rate of some flats was even less than the sale rate submitted by the assessee before the survey proceedings. When these queries were raised before the A. R. of the assessee, the A. R. failed to furnish a proper justification. Accordingly, the additions made on these grounds made by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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