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TMI Blog2015 (12) TMI 1805X X X X Extracts X X X X X X X X Extracts X X X X ..... he entire transaction. 50% transaction was considered as undisclosed investment in the case of M/s Basera Realtors P.Ltd. and their Directors. AO passed the orders in the case of the company and later on, the orders in the case of the company have been set aside by the CIT u/s 263 and AO was directed to consider entire investments/passing of the consideration for purchase of the properties in the hands of M/s Basera Realtors P.Ltd.. M/s Basera Realtors P.Ltd. filed appeal before ITAT Chandigarh against the order under section 263 of the Act and their appeals have been dismissed. AO in pursuance to the order passed under section 263 again had taken the assessment proceedings in the case of M/s Basera Realtors P.Ltd., copy of the assessment order is filed at page 133 of the Paper Book in which again, same facts have been considered and Assessing Officer did not accept contention of the company that 50% of the shares belong to Shri Harinder Singh, assessee because M/s Basera Realtors P.Ltd. has not submitted any evidence of 50% shares of assessee for the purpose of making the addition. AO, therefore, made entire addition of undisclosed investment in the case of M/s Basera Realto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted at page 2 of the assessment order. The date of agreements are 30.01.2006 and 05.10.2005. The agreement dated 30.01.2006 is alleged to have been entered into between the sellers S/Shri Inderjit Singh, Jasbir Singh, sons of Shri Gurmeet Singh, Amarjot Singh S/o Shri Surinder Singh, Shri Manohar Singh S/o Shri Harnek Singh and the purchers are Shri Harinder Singh (assessee), Shri Suresh Khanna with half share each. The agreement dated 05.10.2005 is executed between the sellers Smt. Harjinder Kaur, Shri Balwinder Singh and Shri Bhupinder Singh with the purchasers Shri Sahibjit Singh S/o Shri Amarjit Singh and Shri Harinder Singh (assessee) in equal shares. The total consideration is also noted at page 2 of the assessment order. The Assessing Officer, therefore, observed that assessee was having half share of investments made in these properties which for assessment year 2006-07 worked out to ₹ 93,63,000/-. 6. As per Agreement to Sell executed on 05.10.2005, Smt. Harjinder Kaur, Shri Balwinder Singh and Shri Bhupinder Singh had agreed to sell their land measuring 4 Bighas 8 Biswas 16 Biswasi i.e. 13476 sq.yds. in village Jhande, Ludhiana to Shri Harinder Singh, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t time, on 01.03.2013, appeared before the Assessing Officer and his statement was recorded regarding the investments, if any made by him in the acquisition of lands individually or in partnership with others in financial year relevant to the assessment year under appeal. The relevant questions put to him and replies given by him have been reproduced at page 5-6 of the assessment order in which the assessee explained that he has not done any transaction of purchase and sale of immovable properties with M/s Basera Realtors P.Ltd. during the assessment year under appeal and has not done any transaction. He has denied to have purchased any property with the aforesaid parties. He has further explained that he came to know from his counsel who was attending the proceedings and after going through the copies of the same agreements, he explained that his name had been misused without his consent and knowledge. He has further explained that registry was not done in his name though his name is written in the agreement. This would show the intention of other party who was manipulating the agreements. He has explained that since M/s Basera Realtors P.Ltd. are in similar line of business of pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, according to the Assessing Officer, the assessee failed to attend proceedings on the date so fixed. The counsel for assessee turned up at 6.20 PM on 18.03.2013. Thereafter, no request was made to cross-examine the sellers. 9. The Assessing Officer also noted that in post search enquiries by DCIT, Central Circle-I, Ludhiana, the Directors of M/s Basera Realtors P.Ltd. came forward and disclosed that investments in acquisition of land as discussed above, had been made by the assessee and their company in equal shares of 1/2 and also disclosed total profit derived by them on sale of residential plots craved out of the said land. The Assessing Officer, therefore, noted that since 50% profit has been disclosed by the company, therefore, balance 50% profit belongs to the assessee. 10. The assessee challenged the re-opening of the assessment before Assessing Officer and stated that Assessing Officer has not applied mind and there was no information available on record if income chargeable to tax has escaped assessment. The Assessing Officer, however, did not accept contention of the assessee that assessee's signatures on agreements have been fabricated. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-opening of the assessment. 14. On merits, ld. counsel for the assessee referred to PB-2 which is Agreement dated 05.10.2005, PB-18 which is copy of the agreement dated 30.01.2006. The ld. counsel for the assessee submitted that agreement dated 30.01.2006 has not been signed by the assessee. It contained signature of Shri Rupinder Deep for Shri Harinder Singh. He has, therefore, submitted that admittedly, agreement dated 30.01.2006 is not signed by the assessee. During the course of arguments, ld. DR was directed to verify this fact from the agreement in question and ld. DR, after going through agreement in question also confirmed this fact that the agreement dated 30.01.2006 is signed by Shri Rupinder Deep for Shri Harinder Singh. The ld. counsel for the assessee, further submitted that no document was found from the possession of the assessee to prove that assessee made any investment in purchase of the properties. These agreements were recovered from the Directors of M/s Basera Realtors P.Ltd. The statement of the assessee was recorded by Assessing Officer on 01.03.2013, copy of which is placed on record in which the assessee denied to have made any investment in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he theory of 50% investment in property made by assessee and 50% by M/s Basera Realtors P. Ltd. However, the assessment order in the case of M/s Basera Realtors P.Ltd. has been set aside by CIT Central, Ludhiana under section 263 of the Income Tax Act vide order dated 21.02.2012 and Assessing Officer was directed to consider the entire investments in the case of company. 14(i) The Assessing Officer in the set aside proceedings under section 143(3)/263 of the Act vide order dated 25.03.2013 assessed the entire investment in the hands of M/s Basera Realtors P.Ltd., copy of the assessment order in this case is filed at page 133 of the Paper Book. He has further submitted that M/s Basera Realtors P.Ltd. preferred appeals before ITAT, Chandigarh against the order passed under section 263 of the Act in all these assessment years and their appeals have been dismissed vide order dated 30.01.2014. Copy of the order of the Tribunal filed at page 189 of the Paper Book. The ld. counsel for the assessee, therefore, submitted that since department has assessed the entire investments in the hands of M/s Basera Realtors P.Ltd., therefore, disputed addition in the hands of the assessee sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, addition was rightly made in the hands of the assessee because assessee failed to cross-examine both these sellers before Assessing Officer. The ld. DR further submitted that even though proceedings under section 263 have been conducted in the case of M/s Basera Realtors P.Ltd. by the department but assessee has 50% share in the entire transaction which is considered by Assessing Officer in their regular assessments. Therefore, addition have been correctly made in the hands of assessee. 16. We have considered the rival submissions and perused the material on record. The entire case is revolving around the two agreements in question dated 05.10.2005 and 30.01.2006. These agreements were recovered during the course of search in the cases of Directors of M/s Basera Realtors P.Ltd. No document was found from the possession of the assessee to prove that assessee made investments in these properties under reference. The copies of both the agreements are filed in Paper Book. The agreement dated 05.10.2005 is stated to have been entered into between Smt. Harjinder Kaur Shri Balwinder Singh and Shri Bhupinder Singh, sellers and Shri Sahibjit Singh, one of the Director of M/s Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent material on record to justify his explanation that his signatures have been forged by some person. Since, assessee was not aware of the fact as to who has forged the signature of the assessee on this agreement, non action by assessee against the forgery would not be relevant criteria in income tax proceedings to reject the explanation of the assessee. 16(i) It may also be noted here that the agreement dated 05.10.2005 has been executed by the seller Smt. Harjinder Kaur, Shri Balwinder Singh and Shri Bhupinder Singh but Assessing Officer has not examined any of the sellers in order to prove the genuine signatures of the assessee on this agreement. Even another co-purchaser as per agreement, Shri Sahibjit Singh was also not examined by Assessing Officer in this regard. The witnesses to the agreement have also not been examined by Assessing Officer in order to prove that assessee genuinely entered into agreement in question. These facts clearly show that there were no basis for the Assessing Officer to hold that assessee has genuinely entered into the agreement dated 05.10.2005. 16(ii) As regards agreement dated 30.01.2006 is concerned, admittedly the same is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deed of 50% as alleged by Revenue Department should be executed in the name of the assessee as well. The assessee also filed copies of the jamabandi of the property in question which shows that after the sale of properties in question, mutation have been made in the name of purchasers and the name of the assessee did not contain in any the jamabandi. This fact would also strengthen the case of the assessee that assessee was not party to any of the agreement in question and did not make any investment. 18. Further, the case of Assessing Officer had been that assessee made investments in these properties having half shares of investment i.e. 50% of the entire transaction. 50% transaction was considered as undisclosed investment in the case of M/s Basera Realtors P.Ltd. and their Directors. The Assessing Officer passed the orders in the case of the company and later on, the orders in the case of the company have been set aside by the CIT under section 263 of the Act and Assessing Officer was directed to consider entire investments/passing of the consideration for purchase of the properties in the hands of M/s Basera Realtors P.Ltd.. M/s Basera Realtors P.Ltd. filed appeal be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30.01.2006 are in issue for the purpose of making the addition against the assessee. Therefore, following the reasons for decision in assessment year 2006-07, we delete the addition of ₹ 1,28,36,000/- on account of unexplained investment in purchase of lands. This ground of appeal of the assessee is accordingly allowed. 24. The Assessing Officer also noted that DCIT, Circle-I, Ludhiana informed that the company in the name of M/s Basera Realtors P.Ltd. purchased the land alongwith Shri Harinder Singh, assessee under reference. The plots were developed and converted into residential colony. Both of them have earned net profit of ₹ 596.79 lacs on sale of residential plots and therefore, 50% of the profit belongs to the assessee i.e. ₹ 2,98,39,000/-. It was also intimated that the share of the profit of the company has been declared in their return of income. The Assessing Officer, therefore, on the basis of such information observed that assessee has also earned 50% of such profit at ₹ 2,98,39,000/- and accordingly made the addition. Ld. Representatives of both the parties submitted that the issue is depending upon findings given on the investments ..... X X X X Extracts X X X X X X X X Extracts X X X X
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