9911796707
TMI Blog2018 (7) TMI 2036X X X X Extracts X X X X X X X X Extracts X X X X ..... ordingly, direct the AO to accept the revised return filed on 20.08.2009. Since we have directed the Assessing Officer to consider the revised return and decide the claim of expenses afresh, the income shown in the revised return of income, if accepted, shall be the starting point for computing the assessed income. We will now consider each addition mentioned hereinabove. For the sake of clarity, the ld. CIT(A) has deleted the additions made on account of rejection of books of account amounting to ₹ 6.40 crores, in reconciling cash in hand ₹ 10 crores, inadmissible compensation ₹ 7.31 crores and has given partial relief in respect of compensation paid to customers amounting to ₹ 63.47 lakhs. CIT(A) has confirmed the addition of ₹ 2.79 crores being unexplained investment for purchase of property from Verma family.The Revenue is in appeal against the deletion of the additions and the assessee is in appeal against the confirmation of additions. Rejection of books of account - HELD THAT:- Assessing Officer had no ground for rejecting the books of account or to estimate the g.p. rate. CIT(A) observed that the addition made by the Assessing Officer i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there is no basis for assuming that the assessee has paid ₹ 17,500/- per sq ft. to Verma family as the transaction was finally settled through arbitration and the impugned area of 2797 sq ft which formed basis for making addition was, in fact, settled at 5594 sq. ft by the Arbitration Award. Considering the facts in totality, we do not find any basis for making the impugned addition. We accordingly direct the Assessing Officer to delete the addition of ₹ 2,79,70,000/-. This ground in assessee s appeal is allowed. Compensation paid to customers - HELD THAT:- It is not in dispute that the assessee has been showing the amount received from its customers as advance. It is also not in dispute that the advance was refunded back to the customers on non allotment of the plots. As decided in own case [ 2013 (6) TMI 622 - ITAT DELHI] no error in the directions given by the ld. CIT(A). The Assessing Officer can revisit this issue afresh in the light of directions given by the first appellate authority. This ground is partly allowed. Upfront fee disallowance - HELD THAT:- We have already held that revised return filed by the assessee is a valid return and have direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s revised return of income, the assessee claimed deduction of expenses which had been directly debited in the balance sheet but were not claimed in the return of income filed on 30.04.2009. This means that certain deductions which were not claimed in the original return of income, under misconception of law, were claimed in the revised return of income. 5. The AO was of the opinion that since the assessee did not comply with the notice u/s 142(1) of the Act and since return filed by the assessee on 30.04.2009 was not within the time prescribed for filing of return pursuant to notice u/s 142(1) of the Act, the AO did not accept the revised return and treated the same as non-est. While doing so, the AO further opined that no notice u/s 142(1) of the Act was issued on 18.02.2009 since the same is not placed on record. However, the AO considered the return filed on 30.04.2009 but treated as not filed in compliance to notice u/s 142(1) of the Act as the date of compliance expired on 27.02.2009 and the return was filed on 30.04.2009. 6. We find contradiction in the findings of the AO in so far as return of income is concerned. If the return filed on 30.04. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ginal return u/s 40(a)(i) of the Act. In other words, in the original return of income, the assessee company inadvertently considered a disallowance u/s 40a(ia) of the Act of ₹ 14,00,99,718/- (page 68 of the Paper Book); whereas in the revised return of income, the same was revised to ₹ 10,83,82,593/- (page 212 of Paper Book), since it was noticed that, sum of ₹ 3,17,17,125/- had not been claimed as an expenditure in the profit and, loss account and as such, there could be no disallowance made. ii) 2,24,72,632/- Expenditure incurred as upfront fee paid to M/s WDC Venture for subscription of debenture not claimed in the original return of income, as the same was capitalized by debiting to securities premium account. ii) 2,24,72,632/- Expenditure incurred as upfront fee paid to M/s WDC Venture for subscription of debenture not claimed in the original return of income, as the same was capitalized by debiting to securities premium account. iii) 2,69,66,400/- Expenditure on placement fee paid to M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income is still considered at ₹ 31 crores, then the assessee should get the benefit of set off of ₹ 2.70 crores from the other additions based upon the impounded documents. 11. The AO rubbished the claim of the assessee by observing that the assessee was required to file details of transactions and reconcile the same with the books of account. No specific reply was given and it was simply submitted that the same is offered as undisclosed income. The Assessing Officer finally concluded by holding it, therefore, appears that this amount is either unquestioned in impounded document or embedded somewhere in the transaction claimed as recorded. The total offer amount was taken at ₹ 31 crores and benefit of set off was denied. 12. We have carefully considered the aforementioned issue in the light of facts emanating from the records. There is no dispute that the amount of transaction of ₹ 20.50 crores was found in the case of M/s Browz Technologies Pvt Ltd and ₹ 8.80 crores in the case of Wonder Developer Pvt. Ltd. These amounts summed up to ₹ 29.30 crores as against ₹ 28.30 crores on account of unexplained cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 (para-10, page-20) 6,40,21,407 Total Assessed income ₹ 119,91,1,39,848 15. Since we have directed the Assessing Officer to consider the revised return and decide the claim of expenses afresh, the income shown in the revised return of income, if accepted, shall be the starting point for computing the assessed income. We will now consider each addition mentioned hereinabove. For the sake of clarity, the ld. CIT(A) has deleted the additions made on account of rejection of books of account amounting to ₹ 6.40 crores, in reconciling cash in hand ₹ 10 crores, inadmissible compensation ₹ 7.31 crores and has given partial relief in respect of compensation paid to customers amounting to ₹ 63.47 lakhs. The ld. CIT(A) has confirmed the addition of ₹ 2.79 crores being unexplained investment for purchase of property from Verma family. 16. The Revenue is in appeal against the deletion of the additions and the assessee is in appeal against the confirmation of additions. We will address each issue one by one. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of account are incomplete in as much as out of 9 projects, trial balance of only two of the projects were found, which too are part of the year only and also does not contain any figure of turnover or other indirect expenses to merely record indirect receipts. 21. After considering the facts and submissions, the ld. CIT(A) specifically asked the Assessing Officer to present in person. The ld. CIT(A) observed that this opportunity was purposefully given so that the details filed by the assessee be examined in presence of both the parties. But the Assessing Officer did not attend the proceedings. 22. After considering the submissions and documents submitted at the behest of the first appellate authority, the first appellate authority was convinced that the Assessing Officer had no ground for rejecting the books of account or to estimate the g.p. rate. The ld. CIT(A) observed that the addition made by the Assessing Officer is neither based on any direct evidence nor any indirect or circumstantial evidence. The amount of ₹ 6,40,21,407/- was deleted. 23. Before us, the ld. DR strongly supported the findings of the Assessing Officer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was strongly contended that there is nothing on these notings to suggest that the assessee has actually received ₹ 10 crores and that such amount was in the nature of income in the hands of the assessee company. Explanation of the assessee did not find any favour with the Assessing Officer who was of the opinion that the assessee has not given any proper reply and it is clear that the source of ₹ 10 crores is not explained. Addition of ₹ 10 crores was accordingly made. 28. Before the first appellate authority, the assessee once again contended that the Assessing Officer has made addition only on the ground that the source of cash of ₹ 10 crores is not explained. It was brought to the notice of the ld. CIT(A) that the details at page 5 of Annexure A-2 belongs to M/s Kolina Developers Pvt. Ltd which is separate company and, therefore, no addition on this amount could have been made in the hands of the assessee company. On the directions of the ld. CIT(A), the assessee produced copies of bank account alongwith copies of statement of return of income and balance sheet of M/s Kolina Developers Pvt. Ltd. The ld. CIT(A) forwarded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company. Therefore, the same cannot be made basis for making addition. 34. Before us, the ld. DR strongly supported the findings of the Assessing Officer. 35. Per contra, the ld. counsel for the assessee reiterated what has been stated before the lower authorities. 36. It is true that notings were found in the impounded documents wherein it has been stated that some of the payments were made in respect of 51 plots. It is equally true that there is no evidence on record which could suggest that the assessee has actually bought back 51 plots and has paid compensation nor there is evidence to show that the assessee has actually done any transactions in respect of those 51 plots. It appears that the addition has been made only on the basis of notings found in the impounded sheet without there being any corroborative evidence on record. It is a settled proposition of law that additions cannot be made only on the basis of assumptions, surmises and conjectures. We, therefore, confirm the findings of the ld. CIT(A). Addition of ₹ 7,31,50,595/- stands deleted. This ground is also dismissed. 37. Next addition is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts are not dumb documents as claimed by the assessee in as much as the cheque transactions mentioned therein are actually entries in the books of account of the assessee. The ld. DR further stated that the documents must be considered as a whole and since part of the transactions are recorded in the books of account, the same cannot be considered as dumb document. 42. We have given thoughtful consideration to the orders of the authorities below. It is true that 2797 sq. ft of area was agreed to be sold to members of Verma family. It is equally true that the transactions could not reach to its conclusion and the assessee offered to buy back the said property @ 7500/- per sq ft. There is also no dispute that the assessee had tendered money to the members of Verma family. We find that the cheque amount was encashed by Verma family. But, at the same time, we find that the said amount was returned back to the assessee by Verma family. There is no dispute that the matter/dispute was ultimately settled by Arbitration Award by which members of Verma family were allotted 5594 sq ft. Ironically, though the Assessing Officer made additions on the basis of notings in the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 727914 31.12.07 Indus ind Bank 1520 2797 400 500.00 5594 43. Copies of Arbitration Award are placed in the paper book exhibited at pages 161 to 208 of the paper book. In our considered opinion, if the factual matrix is understood in its true perspective, in the light of Arbitration Award, we find that there is no basis for assuming that the assessee has paid ₹ 17,500/- per sq ft. to Verma family as the transaction was finally settled through arbitration and the impugned area of 2797 sq ft which formed basis for making addition was, in fact, settled at 5594 sq. ft by the Arbitration Award. Considering the facts in totality, we do not find any basis for making the impugned addition. We accordingly direct the Assessing Officer to delete the addition of ₹ 2,79,70,000/-. This ground in assessee s appeal is allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 48. The ld. counsel for the assessee reiterated what has been stated before the lower authorities. 49. The ld. DR vehemently stated that there is no evidence that the assessee has not allotted the plots and has actually refunded the advance amount with compensation. 50. We have given thoughtful consideration to the orders of the authorities below qua the issue. It is not in dispute that the assessee has been showing the amount received from its customers as advance. It is also not in dispute that the advance was refunded back to the customers on non allotment of the plots. We find that an identical issue arose in assessment year 2001-02 and the Tribunal vide order dated 21.6.2013 in ITA No. 2832/DEL/2012 held as under: 18. Thus, the transaction entered into' by the assessee, shown as payment of compensation and claimed as a revenue expenditure, cannot be said to be a mere camouflage or subterfuge designed by the assessee. The assessee had received advance amounts against the booking of plots. These amounts kept lying with the assessee for over a decade. However, the deals could not finalise and the plots remai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od which did not include the amount paid as compensation which was not treated by the appellant company as the capital cost as it represented the expenses incurred on account of commercial expediency. Thus on facts I find the submissions made by appellant and recorded in para 9 10 above are true and correct. I further find that the appellant itself has shown the income from sale of aforesaid land and had shown the income without including the aforesaid sum as cost of the land sold and thus it has shown the income and therefore there is also no loss of revenue. E) On the basis of above and for the reasons under mentioned I hold the compensation paid as revenue expenditure:- (i) The space surrendered by various proposed buyers was never sold or possession handed over to them and as such the question of repurchasing the same is totally a misconception and as against the facts on record. (ii) The showing of the amounts received by the payees from the appellant as capital or revenue account is not relevant factor for deciding the issue as the same transaction can have different effect on the various persons keeping in view the na ..... X X X X Extracts X X X X X X X X Extracts X X X X
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