9911796707
TMI Blog2019 (3) TMI 682X X X X Extracts X X X X X X X X Extracts X X X X ..... s were submitted. It is always subjective when the transactions involved are to do with cash. Department has not found anything to show that the landlords actually received the payments. The additions can be made only based on actual evidence and not based on presumptions. Particularly, when the deal is not through and department can always verify whether this agreement was acted upon and sale was completed by proper registration. Since allegedly the deal is not completed and there is no proof for making further payments, the evidence available on the agreement to sell alone can be considered as actual payment made relating to this deal. In the absence of any evidence, we have no choice, but, to accept the contention of the assessee and delete the addition Addition u/s 40(a)(ia) - Violation reported by the Special Auditor on no deduction of TDS and short deduction of TDS - scope of amendment in act - HELD THAT:- There is no dispute but the legislature has softened the stand on the default by the assessee subsequent to various judicial precedents and amended the sections like 40(a)(ia), 201(1), etc. The Courts have held that these amendments are retrospective in nature. Consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as during the search operations in the case of the assessee group, seized material in the nature of Agreements for Sale, Development Agreements, Sale Deeds, Receipts issued by land owners etc., were recovered - peak credit addition - HELD THAT:- We notice that AO has arrived the peak credit based on the information found during the search - assessee has submitted audited balance sheet and cash book. AO has to analyse the information based on the reliable sources offered by the assessee and the audited cash book. It is common that books are not complete at the time of search. Assessee should be given opportunity to submit proper information. In this case, assessee has submitted audited cash book. This should be considered and arrive at the peak credit as per cash flow or AO should take the reliable sources on record and make addition of unexplained cash outflow as unexplained investment in cash payments made to land owners. We direct the AO to verify the audited cash book entries with the payments to landlords and also the reliable source of cash available for such payments to landowners. Therefore, ground raised by the assessee is allowed for statistical purposes. Unexplained i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yd/2017 were filed by the assessee with a delay of 128 days before the Tribunal. In this connection, assessee has filed a condonation petition along with an affidavit wherein it was stated that its AR, who was entrusted to file the appeals before the ITAT, was having a severe medical problem which resulted in a major surgery to him, due to which, the appeals filed belatedly. It was therefore submitted that the delay may be condoned and admit the appeals for hearing and adjudication as the reason is genuine and not wilful. 3. After considering the submissions of the assessee, we are of the view that the assessee was prevented by a reasonable cause for not filing the appeals in time. Therefore, we condone the delay and admit the appeals for hearing and adjudication. ITA Nos. 1139 1140/Hyd/2017 and ITA Nos. 215 216/Hyd/2017 by the assessee and revenue, for AY 2007-08 2008-09 respectively. 4. These are cross appeals, directed against a common order of CIT(A) 11, Hyderabad, dated 30/08/2016. ITA No. 1139/Hyd/2017. 5. In this appeal, the assessee has raised the following grounds of appeal: 1. The order of the Appellate Commissioner is erroneous, contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20 days from the date of agreement. The balance payment of schedules of ₹ 2.25 crores are mentioned at Point No.2 of the agreement as under: ₹ 45,00,000/- by 15.03.2007 ₹ 45,00,000/- by 15.07.2007 ₹ 45,00,000/- by 15.11.2007 ₹ 45,00,000/- by 15.03.2008 ₹ 45,00,000/- by 15.07.2008 6.3 The AO asked the assessee company to furnish the sources of their payments mentioned in the above said agreements vide letter dated 12.11.2009 and 08.07.2010. It was noticed from the copy of the agreement that except ₹ 15,00,000/- the balance sum was agreed to be paid in the form of cash. The show cause notices were duly served on the assessee, but, the assessee did not file any explanation and in turn they made written-submission on 04.08.2010 requesting for an opportunity to explain the transaction during the course of hearing. The AO noted that the assessee has chosen not to file any reply till last date of assessment. 6.4 The AO observed that as the agreement clearly speaks about the nature of the transaction and part of the payment was also paid through cash and cheque for which the landlords have given their acknowledgment of receipt, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound anything to show that the landlords actually received the payments. The additions can be made only based on actual evidence and not based on presumptions. Particularly, when the deal is not through and department can always verify whether this agreement was acted upon and sale was completed by proper registration. Since allegedly the deal is not completed and there is no proof for making further payments, the evidence available on the agreement to sell alone can be considered as actual payment made relating to this deal. In the absence of any evidence, we have no choice, but, to accept the contention of the assessee, particularly, when allegedly the deal is not through. Therefore, the addition cannot be made merely based on presumption. Accordingly, ground raised by the assessee is allowed. 7. As regards the additional ground pertaining to section 40(a)(ia), the AO noted that the Special Auditor has observed that the assessee had not deducted tax at source on a sum of ₹ 4,48,65,718/- and short deduction of tax of ₹ 55,93,439/-, totalling to ₹ 5,04,59,157/-. The list of such payments is enclosed as Annex-III to the Special Audit report. In this connection, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of 2012 and another decision of the Mumbai Bench of the Hon'ble ITAT in the case of DClT v. M/s. Chandabhoy jassobhoy, ITA No.20/Mum/2010, was relied upon. Under the circumstances, the disallowance to the extent it is on account of short deduction of tax alone, is liable to be deleted. The Assessing Officer is directed accordingly. 7.4. Before us, the ld. AR of the Assessee submits that an amendment has been made to section 40(a)(ia) by the Finance Act, 2012. By virtue of this amendment if the people to whom the Assessee has paid monies without deducting TDS, and if the people to whom the monies have been paid have offered the same in their incomes, then there is no scope for disallowance u/s 40(a)(ia). He further submits that this amendment has been deemed to be retrospective from the day the section was introduced. The Assessee relies on the judgement of the Allahabad High Court reported at 402 ITR 238 for the retrospective application of the said amendment. 7.5 Ld. DR, on the other hand, relied on the orders of revenue authorities. 7.6 Considered the rival submissions and perused the material on record. We notice that assessee has not deducted tax at sources f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne Mr.Lingaia Senapathi. 6. The Appellate Commissioner erred in sustaining the addition made u/s.69B by the AO, amounting to ₹ 72,75,000/- being amounts purportedly paid as on money to one Mr.Mohd Quader. 7. The Appellate Commissioner erred in sustaining the addition made u/s.69B by the AO, amounting to ₹ 72,50,000/- being amounts purportedly paid as on money to one Mr.Mirza Baig. 9. The Appellate Commissioner erred in sustaining the addition of ₹ 1,35,00,000/- which was added by the AO vide paragraph 7.1 of the assessment order as unexplained investment. 10. The Appellate Commissioner erred in sustaining an amount of ₹ 94 .50.000/ being addition made by the assessing officer as unexplained investment Vide paragraph 7.2 of the assessment order. 11. The Appellate Commissioner erred in giving a direction to the AO to assess an amount of Rs,45,00,000/- in the A.Y 2009-10 . 11. Any other grounds which the assessee may urge either before or at the time of hearing. 8. As regards ground No. 1, 2 3, relating to the disallowance of claim u/s 80IB of JP Arcadia of ₹ 1,93,43,017/- as well as JP Metropolis of ₹ 1,58,96,82 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and enlarged. The necessary occupancy certificate may be issued. 4.5.5 It is seen from the above that this letter does not furnish any information in respect of number of apartments constructed, size of the unit, extent of commercial establishments, if any, or size of the plot on which the project is situated. It is also interesting to note that this letter dated 30.03.2012 is seen to be received in the inward section of GHMC Town Planning Section on 13.03.2012. It is also significant that if such a letter was indeed furnished on 13.03.2012, or even 30.03.2012, there is no reason why the same could not have been furnished before the Assessing Officer in the 'course of the remand proceedings in Nov/Dec. 2013. 4.5.6 As already noted above, details of the size of the project, etc., is not on record. However, what is seen from the letter dated 30.03.2012 is that it refers to completion of Block No.C, and not the project as a whole. The requirement of Completion Certificate provided in the Explanation below 80IB(10)(a) cannot be read independent of the clause to which it is appended. Clause (a) refers to commencement of construction as approved by the Local Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpleted to our best satisfaction, the workmanship and all the materials (type and grade) have been used strictly in accordance worth general and detailed specifications. No provisions of the Building (Block) Bye-Laws, no requisitions made, conditions prescribed or orders issued there under have been transgressed in the course of the work. The building is fit for use for which it has been erected, re-erected or altered, constructed and enlarged. The necessary occupancy certificate may be issued. 4.5.9 It would be apparent from the above that even this project cannot be ascertained to have been completed in the manner, and to the extent, construction was approved by the relevant local authority, Details of the project in respect of which approval was claimed to have been received, is not available for consideration. Besides, the above letter refers to completion of Block No.5 of the project, and not the project itself. In addition to the unusual coincidence that both projects are claimed to have been complete on the same day - 23.02.2012, for reasons identical to those in the case of the project J.P. Arcadia discussed above, it has to be held that compliance with requiremen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee in the instant case is an individual and engaged in the activity of Promoters and Builders in the name and fashion of Harshad Constructions . During the impugned assessment year the assessee has constructed a housing project at Ashok Nagar, Handewadi Road, Hadapsar, Pune. The commencement certificate for this project was received by the assessee on 14-02-2007 which was subsequently revised on various dates. As per the original plan passed by the Municipal authorities, there are three buildings, viz., A, B and C. The assessee has submitted the completion certificate only for Buildings B and C but did not furnish the completion certification for Building A on the ground that the same was not constructed. Since the plan was sanctioned for Buildings A, B and C and the assessee has completed only Buildings B and C and Building A was never constructed, the AO rejected the ITA No.2004/PN/2014 claim of deduction of ₹ 3,05,70,196/- made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in Section 80IB(10) of the Act, the question of rejection in entirety of the project on account of any one of the blocks not complying with the conditions, does not arise. Even in the case of each one of the blocks, wherever there are flats which satisfied the conditions particularly of the nature stated under Section 80IB(10)(c) of the Act, we have already upheld the case of the assessee in T.C.Nos.1348 and 1349 of 2007 dated 10.10.2012 for grant of relief under Section 80IB(10) of the Act on a proportionate basis, by following the decision of the Bombay High Court reported in ITA No.2004/PN/2014 [2011] 333 ITR 289 (CIT Vs. Brahma Associates). Thus applying the decision of this Court in T.C.Nos.1348 and 1349 of 2007 dated 10.10.2012, we hold that the assessee is entitled to succeed both on the principle of proportionality as well as by reason of the construction on the meaning of the expression housing project as referring to construction of any building and the wordings in Section 80IB(10) of the Act. In the circumstances, we hold that the mere fact that one of the blocks have units exceeding builtup area of 1500 sq.ft, per se, would not result in nullifying the claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DCIT vs. Brigade Enterprises (P.) Ltd., (2008) 119 TTJ 269 (Bang) and the Pune Bench of the Tribunal in Runwal Multihousing Pvt. Ltd. vs. ACIT in ITA Nos.1015, 1016 and 1017/PN/2011 relating to assessment years 2003- 04 to 2005-06, order dated 21.11.2012. Following the same parity of reasoning, we hold that the assessee is entitled to pro-rata deduction in respect of residential units in the housing project No.7, which have complied with the conditions and were eligible for the deduction under section 80- IB(10) of the Act. However, the said deduction is allowable to the assessee only in respect of units construction of which has been completed upto 31st March, 2008. Accordingly, we direct the ITA No.2004/PN/2014 Assessing Officer to verify the claim of the assessee in this regard in assessment years 2006-07 and 2007-08 and if the assessee has fulfilled the aforesaid conditions under section 80-IB(10) of the Act, pro-rata deduction under the said section could be allowed to the assessee in relation to the buildings / flats completed in Sector No.7. Consequently, the ground of appeal raised by the assessee is partly allowed. 15. In view of the above discussion, we hold th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 6,37,75,000/- and ₹ 63,50,000/- was admitted as unexplained investment of the assessee company in F.Y.2006-07 relevant to for A.Y.2007-08. With regard to cash payments made to land owners in F.Y.2007-08 the Assessing Officer noted at para 4.16 on page 11 that the assessee admitted unaccounted payments of ₹ 27,94,106/- only. For the remaining payments of ₹ 9,20,76,294/- the Managing Director is seen to have stated that the lands are yet to be registered since payments are still being made, and that the following sources were available for making the payments in cash, Source Amount (Rs.) Withdrawals from bank 6,79,60,894 Agricultural income 1,15,00,000 Site advances - crusher 43,85,000 Dairy milk income 12,05,000 Miscellaneous expenses 42,87,400 Site advances-Lorries 27,38,000 Total 9,20,76,294 9.1 The Assessing Officer examined the explanation of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed as sources for the land payments. He further noticed that there was an arithmetic mistake in quantifying payment to land owners. This figure was, therefore, adopted at ₹ 9,83,70,400/- instead of ₹ 9,48,70,400/- in consultation with the Managing Director and A.R. of the assessee as discussed at para 4.29 of the assessment order. As a result of this increase in figure of cash paid to landowners, the unexplained investment in purchase of land now increased by ₹ 35 lakhs. The Assessing Officer added this amount to the unexplained amount of ₹ 6,11,57,900/- identified by him, and held that the aggregate amount of ₹ 6,46,57,900/-- is the unexplained investment to be added back u/s.69B. 9.4 Before the CIT(A), the assessee filed written submissions and after considering the same, the CIT(A) elaborately discussed the issue and directed the AO to delete the addition of ₹ 1,27,05,000/- (Rs. 1,15,00,000 + 12,05,000/- to the extent it has been brought to tax from other sources or assessed as returned, in the hands of the directors. He, therefore, restricted the addition to the extent of ₹ 5,19,52,900/- (Rs. 35,00,000 + 3,70,42,500 + 1,14,10,400 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - and ₹ 72,50,000/-, the Assessing Officer found that the assessee company had purchased Ac 1.31 Gt. of land in survey No.108 109 of Kothapet Village, from one Sri Lingala Senapati. As per the Registered deed No.119/08, dt.14.12.2007 available in the seized material from page 13 to 19 of AnnexureA/JES/PO-2/2 the sale consideration is recorded at ₹ 1,31,62,500/-. AO noted that the sale consideration was seen to be paid for from the ING Vysya Bank a/c of the assessee. He further noted that simultaneously, it is seen that page 42 to 44 of Annexure-A/JES/18 is an agreement for sale dated 07.02.2007 in respect of the same property between the same vendor and vendee as per which the consideration agreed upon was ₹ 2.10 Cr. in cash in addition to ₹ 2,62,50,000/- payable in the form of constructed area. The Assessing Officer noticed that out of ₹ 2.10 crores, ₹ 65,62,500/- was paid before 31.03.2007 and the balance ₹ 1,44,37,500/- was to be paid before 31.03.2008. When called upon to explain, the assessee stated that the purchase was not registered and instalments were not completely paid and, therefore, there can be no finding of unaccounted pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the registered document. It is also recorded in the Agreement for Sale that the transfer will be registered upon completion of a specified number of payments. Factually it is seen that the document has been registered at the end of the last instalment that was agreed. upon in the agreement of sale. This would, therefore, generate a necessary inference that the antecedent events agreed upon in the mutually signed document have indeed taken place. The assessee, however, contends that the said transactions have not taken place. He expects the Assessing Officer to produce evidence of payments made by him. In doing so, it is being urged that the signed document of a transaction that, admittedly took place, is correct only in part. It goes against the settled principles of interpretation that a seized document cannot be partly correct and partly incorrect: In view of the necessary inference generated by the seized material juxtaposed with the registered document, it is not enough for the assessee to merely deny that certain transactions in the document did not take place. It would indeed be a very unnatural event, if after agreeing to receive ₹ 2.10 crores for transfer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmoning of the Managing Director of the Assessee company. The MD was examined in detail and the MD confirmed that only an amount of ₹ 1,31,62,500/- has been paid to Mr. Lingala Senapati in full and final settlement. The AO of Mr. Lingala Senapati completed the assessment taking into account that only an amount of ₹ 1,31,62,500/- was the consideration which has passed. 11.2 Ld. AR, therefore submitted that once the Department has accepted in the case of the Vendors that the consideration was ₹ 1,31,62,500/-, then taking the consideration at ₹ 2.10 Crore and adding the difference of ₹ 78,37,500/- is not acceptable. It is therefore prayed that the addition made be deleted. 11.3 As regards the additions of ₹ 72,75,000/- and ₹ 72,50,000/-, the additions made on similar lines as that of Mr. Lingala Senapathi, but, the vendors in this case are Mr. M. Qadeer and Mr. Mirza Rafiullah Baig. He, therefore submitted that the additions in these cases also may be deleted. 11.4 Ld. DR, on the other hand, relied on the orders of revenue authorities. 11.5 Considered the rival submissions and perused the material on record. We notice that at the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn therein, this ground is allowed. 13. As regards the addition of ₹ 94,58,000/- towards unexplained investment, the AO observed that at paragraph 7 of the assessment order 2007-08, a sum of ₹ 49,50,000/- was added as unexplained investment on account of land payment made to T. Ram Reddy and others as per the seized document vide page Nos. 110 to 120 of annexure A/JES/PO2/2 and the balance sum of ₹ 94,50,000/- was treated as unexplained investment for the AY 2008-09, He accordingly made addition of ₹ 94,50,000/- as unexplained investment for AY 2008-09. 13.1 On appeal, the CIT(A) confirmed the said addition. 13.2 Considered the rival submissions and perused the material on record. At the time of hearing, no arguments were put-forth by the ld. AR of the assessee before us on this ground, hence, this ground is dismissed. 14. As regards ground No. 11 regarding the directions of CIT(A) in giving direction to AO to assess an amount of ₹ 45,00,000/- in AY 2009-10, the assessee has not pressed this ground before us, hence, this ground is dismissed as not pressed. 15. ITA No. 215 216/Hyd/2017 for AY 2007-08 2008-09 by the revenue 16. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dismiss the ground raised by the revenue. 19. As regards ground No. 4, relying on the findings of CIT(A), which were extracted vide para 7.3 while deciding the assessee s appeals (supra), which are inline with the precedents and we are inclined to accept the findings of ld. CIT(A). We dismiss this ground of appeal of the revenue. 20. Ground No. 5 is general in nature, hence, need no adjudication. ITA Nos. 1484 1485/Hyd/2010 for AY 2007-08 2008-09 by revenue. 21. In these appeals, the revenue has raised the following grounds of appeal, which are common in both the appeals: 1) The Commissioner of Income-tax (A) erred in allowing the appeal of the assessee with respect to the addition made u/s 69 of the Act despite the fact that the seized documents are belonging to the assessee company. 2) The Commissioner of Income-tax (A) ought to have appreciated the fact that the payment claimed to have been made by Janapriya Engineers Syndicate Ltd for the land purchased by the assessee company is not reflected in the accounts of Janapriya Engineers Syndicate Ltd., or in the accounts of assessee company. 3) Any other ground that may be urged at the time of heari ..... X X X X Extracts X X X X X X X X Extracts X X X X
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