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2018 (1) TMI 656

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..... is devoid of any merit since the assessee is unable to prove any expenditure is incurred for the receipt of on money for the sale of the flats. Therefore, this ground raised by the assessee is rejected. - Decided against assessee. - ITA Nos.352, 353, 354 & 355/Bang/2014 - - - Dated:- 3-11-2017 - Shri George George K, JM Shri Jason P.Boaz, AM For the Appellant : Shri H.N.Khincha, CA For the Respondent : Shri Ajit Kumar Varma, CIT ORDER Per Bench These four appeals instituted, at the instance of the assessee, are directed against the consolidated order of the CIT (A)-VI, Bangalore dated: 28.01.2014. The relevant assessment years are 2008-09 to 2011-12. 2. The assessee, in his grounds appeals for all the assessment years under dispute, has raised the following issues namely; (i) the CIT(A) erred in confirming that the assessee had received on money for sale of flats. (ii) that the gross amount cannot be taxed but at best the income element on sale therein can be taxed. Briefly stated, the facts of the issue are as follows: 3. The assessee, an individual, is engaged in manufacture of incense sticks in the name of Charu Perfumeries as its proprie .....

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..... r of bed rooms area in sft, rate in sft, basic cost, deposit amount, car parking amount, maintenance amount and total cost etc., When the assessee was required to explain as to why these amounts should not be taken as actual sale considerations, the assessee had contended that it was only a rough estimate before starting the project and it had no implementation at all. 3.5 After due consideration of the assessee s contentions and also extensively quoting the assessee s confession in the statement recorded u/s 132(4) of the Act on 01.07.2010 as recorded in the impugned orders under dispute, the AO had rejected the assessee s arguments and, accordingly, added the on money transactions relating to the FYs 2007-08, 2008-09, 2009-10 and 2010-11, the details of which are as follows: On money received in F.Y.2007-08: (1) Receipt of ₹ 10 lakhs by cash on 15.01.2008 (2) Receipt of ₹ 10 lakhs by cash on 26.01.2008 (3) Receipt of ₹ 15 lakhs by cash on 05.02.2008 (4) Receipt of ₹ 08 lakhs by cash on 16.02.2008 On money received in F.Y.2008-09/ AY 2009-10: (1) Receipt of ₹ 10 lakhs by cash on 12.01.2009 (2) Receipt of ₹ 05 lakhs b .....

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..... 2 whereas the income in respect of the said flats has been declared in AYs 2012-13 and 2013- 14. 7. As regards flats sat 4 and 5 above, i.e., CA 202, Flat No.CA 003, the facts as recorded by the assessing officer are as under: (iii) During the course of assessment proceedings, the details pertaining to flat No.CA 202 was questioned vide questionnaire dated 27.02.2012 was put across to the assessee, same is reproduced below: Page No.44-48 of annexure A2/CPH/10-11 which is material seized from factory primes (sic) premises of charul perfumery which is a sale agreement with Mr. C Sandeep DR for consideration of ₹ 62,11,000/- for the flat CA 202 but the actual sale consideration shown is ₹ 46,05,000/-. The submission given by the assessee that the client had not turned up for a month and when he got back only market rate was paid was rejected. This is an afterthought explanation. The sale agreement dated 26.03.2010 signed between M/s Charu Developers and C Sandeep in respect to flat No.CA 202 mentions the sale consideration of ₹ 62,11,000/-. (the copy enclosed). While the final sale deed copy registered on 14.10.2010 signed between M/s Charu .....

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..... with regard to flats at Sr.No.1,2 and 3 covered in AYs 2008-09, 2009-10, 2010-11 2011-12 that the on money receipts should be considered for the A.Y relevant to the financial year in which the sale of the said flat is declared i.e., AY 2011-12 2012-13, as applicable is examined. 9. I find force in the alternative claim of the appellant that since income from the sale of these flats [CJ 304, CJ 003 and CJ 103] is offered to tax in a subsequent year which has been accepted by the assessing officer, the case of the assessing officer that on money received in respect of the same transaction should be brought to tax in the year of receipt is not tenable. Having accepted that the receipts of these unaccounted amounts in question are on account of sale of flats (which has matured in a subsequent year), the additional income, if any, is also to be brought to tax in the year in which the accounted income is declared/assessee. 10. With this finding, the additions made in these years in question cannot be upheld and is deleted. 5. Aggrieved, the assessee has come up before us with the present appeals. During the course of hearing the submissions made by the learned cou .....

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..... proceedings, accepted the receipt of on money . A.Y 2009-10: Addition of ₹ 30,47,500/-: - that in the instant case, it is reiterated that no other extra cash or other assets was found during the course of search which fact falsify the allegations of the AO that the assessee had received on money on sale of flats and that the assessee emphasizes on the fact that in none of the proceedings, the assessee had accepted the receipt of on money . A.Y 2010-11: Addition of ₹ 5,41,000/-: - that the assessee had sold flat Nos. CJ 003 and CJ 103 being sale considerations of ₹ 64 lakhs and ₹ 66 lakhs respectively, the date of sale was 25.5.2012 and, accordingly, offered the income there-from to tax in the assessment year 2013-14 as business profits. However, the AO in the impugned assessment order had stated that during the course of search operation, the seized document contained acknowledgements of Bharath Kumar with regard to receipt of following amounts which were unaccounted: (i) Receipt of ₹ 23,00,000 by cash on 10.02.2010 Flat CJ 003 (Ii) Receipt of ₹ 16,00,000 by cash on 24.05.2010 Flat CJ 003 (iii)Receipt of S .....

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..... 2013-14 CA 202 C Sandeep 46,05,000 14.10.2010 2011-12 CA 001 Dr.Dhanu 31,10,000 11.10.2010 2011-12 and the income thereform was offered as business profits . - However the AO stated, in his impugned order under dispute, that the incriminating documents unearthed in the course of search in the assessee s premises [Charu Perfumery Works] contained acknowledgements of Bharath Kumar with regard to receipt of following unaccounted amounts, namely: (i) Receipt of ₹ 23,00,000/- by cash on 10.02.2010 in respect of flat CJ 003 (ii) Receipt of ₹ 16,00,000/- by cash on 24.05.2010 in respect of flat CJ 003 (iii)Receipt of ₹ 23,00,000/- by cash on 10.02.2010 in respect of flat CJ 103 (iv) Receipt of ₹ 16,00,000/- by cash on 24.05.2010 in respect of flat CJ 103 - With regard to Flat No. CJ 003, the first agreement was entered into with Mrs.Syed Ajaz Banu and Mrs. Syeda Mafuraza Bhanu to sell a premium apartment. However, they have refused to buy the same and, hen .....

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..... ash payment of ₹ 20 lakhs. The AO had, by ignoring this agreement, calculated the difference between the first sale agreement and the sale deed. In fact, the sale was concluded at higher price of ₹ 46.05 lakhs. Thus, the AO was wrong in considering the first sale agreement by ignoring the latter one; - With regard to sale of CA 002 to Dr. Dhanu, it is clarified that Dr Dhanu bought CA 001 which was registered vide sale deed dt.11.10.2010 for ₹ 31.10 lakhs instead of Flat No.CA 002 for which an earlier sale agreement was entered into;. and that Dr Dhanu confirmed the same before the AO during the assessment proceedings and, thus, there was no receipt of any on money as alleged. 5.1 In conclusion, the learned counsel had reiterated that the AO being erroneous on facts and law for all the assessment years under consideration, the additions made by the AO which were subsequently sustained by the CIT(A) deserve to be deleted. To substantive his assertion, the learned counsel, during the course of hearing, furnished a paper book which contained, among others, copies of (i) various letters filed during the course of assessment proceedings; (ii) written submiss .....

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..... ompletion of the project(s) and other considerations 8.2 However, the claim of the assessee was not accepted by the assessing officer in view of clear evidences found during the course of search operation which were duly signed by the parties concerned in the presence of witnesses and the fact that the noting in the seized documents pertained to both accounted and unaccounted receipts. 8.3 The assessee had, further, contended that the signatures in the loose papers based on which additions made were not the buyers and that the signatures in the loose sheets do not match with the signatures of buyers and this fact could be verified from the registered sale deeds [AY 2010-11]. The incriminating papers were unearthed only in the premises of the assessee and so the assessee was legitimately required to identify the person(s) who were the signatories (parties) for such transactions. No person(s) could have affixed their signatures without the connivance/knowledge of the assessee as those seized papers were in the custody of the assessee only. The AO had, in her impugned order(s), observed that - (ii) .. The submission made by the assessee was examined a .....

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..... r Shantilal was examined on this issue in his statement recorded u/s 132(4) on 01.17.2010 (sic) 01.07.2010 at his residence. Extract of the relevant portions of his statement is reproduced as below: Q.5. I am showing page no. 01 to 38 of evidence marked as Annexure A/2/CPH/10- 11. Please go through the same and explain the transaction contained. Ans: I have gone through the page no. 01 to 38 of evidence marked as annexure A/2/CPH/10-11. These pages contain agreements for sale with the parties who have flats in the project by name Charu Jasmine , No.3, Leanard Lane, Richmone Town, Bangalore of M/s. Charu Developers. The page-wise details are mentioned under: Flat Name of the buyer/date of agreement Total area (in sft) Rate as per agreement Page no. of A/2/CPH/10-11 CJ 304 PraveenKu mar Shetty 5.2.2008 1864 1,36,70,800 1 13 CJ 003 Mrs.SyedaAjaz Bhanu Mrs.Syeda Mafreeza Bhanu 5.12.2009 1834 1,03,00,00 14 21 .....

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..... the only net profit element in undisclosed sale is to be taxed. This contention of the learned Counsel is devoid of any merit since the assessee is unable to prove any expenditure is incurred for the receipt of on money for the sale of the flats. Therefore, this ground raised by the assessee is rejected. 10. The learned AR further contended that the first appellate authority has exceeded jurisdiction in directing to bring to tax the on money received by the assessee in the assessment years 2012-2013 and 2013-2014 of flat No.CH304, Flat No.CJ-003, respectively. According to the learned Counsel for the assessee, the CIT(A) was concerned with the assessment years 2008-2009 to 2011-2012 and since the assessment years 2012-2013 and 2013-2014 was not considered / dealt by her, the CIT(A) has exceeded the jurisdiction in giving the direction in para 9 of the impugned order. According to us, the CIT(A) has not given any specific direction. It is a statement while adjudicating issues before her for the assessment years 2008-2009 to 2011-2012 that the amount of on money should be brought to tax in the assessment years 2012-2013 and 2013-2014. Even assuming that the CIT(A) has given a spec .....

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