9911796707
TMI Blog2020 (1) TMI 545X X X X Extracts X X X X X X X X Extracts X X X X ..... of the dispute, we are of the view that in this year, no asset came into existence in the name of the assessee, which requires to be shown in the books of accounts. The ld.AO has simply assumed certain facts, and assumed existence of unexplained asset which requires to be added under section 69 of the Act. After considering elaborate finding of the ld.CIT(A) on this issue, we do not find any hesitation in concurring with finding of the ld.CIT(A). Therefore, we do not find any merit in this appeal. - Decided against revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order itself. The appellant was approached by Shri Dilipbhai Purshotambhai Suthar who was very well known the directors and promoters of appellant to develop a land located at Khoraj jointly with the appellant and had shown interest maximum upto invest upto ₹ 30,00,000/- (Rupees Thirty Lacs only) provided profits earned in the property jointly developed are shared between him and the appellant in the ratio of 10:90 and with a rider that he will not bear any loss occurred in the project. In the event of non implementation of joint venture project, he was entitled to get compensation equivalent to 100% of amount invested by him as damages on and above the amount actually invested by him. The owner of land located at Khoraj which was proposed to be jointly developed was not completely known to the appellant's but was better known to Shri Dilipbhai Purshotambhai Suthar only and therefore, the appellant agreed to enter into land deal but with an understanding that initial investment of ₹ 30 lacs as agreed would be made by him and balance would be made by appellant by making required payments to the parties concerned for the purpose of acquiring the land and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase deed was executed on 07/12/2011 in favour of the appellant by Shri Shivabhai Popatbhai Gohil wherein M/s Shubham Granite Ltd acted as confirming party. Copy of purchase deed so executed is appearing at Pages 9 to 25 of Paper Book. 3. Though it was stated in the purchase deed that land is clear in all respect and vacant but when appellant visited land it was noticed that the land is in possession of maldharies and though it is non agricultural land in revenue records but it is used for agricultural operations by Maldharies. The appellant under these circumstances had no option but to not to permit Shri Shivabhai Popatbhai Gohil and M/s Shubham Granite Ltd to encash the cheques to issued till the land is handed over vacant and with clear possession to the appellant and Shri Dilipbhai Purshotambhai Suthar. The cheques so issued were therefore, not allowed to be encashed and became time barred as both the persons were not able to hand over vacant and clear possession of land. Copies of Form No. 7 & 12 extracts from the revenue records indicating that land under reference was used for agricultural operations upto financial year 13-14 are appearing at Page 26 to 27 of Paper Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment failing which Tvisha was entitle to interest @ 36% p.a. till the amount is actually realised. Copy of settlement agreement dated 18/05/2013 is appearing at Pages 35 to 38 of Paper Book. 6. Thereafter, appellant sold part of the land to Shri Sagar Mukeshbhai Sheth on 22/07/2013 for a consideration of ₹ 1,91,00,0007- (Rupees One Crore Ninety One Lacs only) without informing or taking into confidence any of the parties involved in the land deal except Shri Dilipbhai Purshotambhai Suthar as there were no disputes to share the income with him as per agreement entered into with him. Copy of sale deed is appearing at Pages 39 to 66 of paper book. 7. Thereafter, appellant together with other group company M/s Shaan Leisure Ltd entered into joint development agreement with Pacifica (Ahmedabad Project) Developers P Ltd on 18/12/2014 to develop the balance area of land. The appellant was to get 6.07% of the sales revenue of the developed property. As part of joint development agreement, appellant was paid an amount of ₹ 75,00,000/-(Rupees Seventy Five Lacs only) vide cheque no. 725531 dated 19/12/2014. Copy of joint development agreement dated 18/12/2014 is appearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cquired in joint venture with Shri Dilipbhai Purshotambhai Suthar at Khoraj. Copies of relevant documents are appearing at Page 127 to 130 of Paper book. 9. The original land owner Shri Shivabhai Popatbhai Gohil came to know about disposal of land by the appellant through joint development agreement in the month January, 2015 and therefore, approached the appellant to pay balance amount of ₹ 35,00,OOO/- originally agreed. The appellant though kept on promising him to make said payment but when no such payment was made Shri Shivabhai Popatbhai Gohil filed a suit for recovery of his dues or in alternate to cancel the sale deed executed by him in favour of the appellant. With the intervention of the Court a settlement was arrived at between both the parties on 16/02/2015 whereby appellant was required to make payment of ₹ 40 lacs on and above the amount of ₹ 5 lacs already paid at the time of purchase of land and reflected in the purchase deed. Accordingly, Shri Shivabhai Popatbhai as per mutual understanding arrived at in the Court has withdrawn the case filed against the appellant. Copy of suit filed against the appellant and terms of settlement are appearing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the confirming party. On the basis of the sale deed, the name in the revenue records in extract of 7I 12 were also changed and the land was entered into appellant's name. Thus the AO was of the view that the appellant company had become the owner of the said property. 2.5 Before the AO, the appellant claimed that it has entered into a joint venture agreement with Shri Dilip Suthar for making part investment by him and in support the copy of the JV agreement dtd. 15.4.2011 was also submitted to the AO. As per the para-F-2 of the said agreement Shri Dilip Suthar was required to make payment of an amount of ₹ 5 lakhs to original land owner namely; Shri Shivabhai Gohel. The AO has objected that as per the sale deed dtd. 7.12.2011 this cash payment was made on 30.3.2011 to the original land owner. So the joint venture agreement was the arrangement and post-facto documentary evidences created to hide the truth that the appellant company had already become the owner of the property in question which was not at all recorded in its books of account. As per the JV agreement the stamp duty expenditures were also to be borne by Shri Dilip Suthar. In respect of the sources of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... executed by the plaintiff in favour of the defendant. The plaintiff states that vide registered sale deed dated 07/12/2011 bearing registration No. 13973, the plaintiff demised the suit property to the defendant for total consideration of ₹ 3,22,00,000/-. The plaintiff states that it was agreed that the defendant will pay ₹ 40,00,000/- towards consideration to the plaintiff and ₹ 2,82,00,000/- to the confirming party. The plaintiff states that the plaintiff had received only ₹ 5,00,000/- from the defendant. Despite repeated reminders the defendant had not paid ₹ 35,00,000/- to the plaintiff till date. 5. The plaintiff states that the defendant had taken the possession of the suit property in pursuance of the registered sale deed bearing registration No. 13973. The plaintiff repeatedly demanded ₹ 35,00,000/- from the defendant but on one or other pretext the defendant did not pay the said amount of ₹ 35,00,000/- to the plaintiff. 9. The plaintiff states that thus the plaintiff is still owner of the suit property. The defendant has no right, claim or interest in the suit property in any manner whatsoever as the defendant has not paid the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of settlement dtd. 16.2.2015 duly notarized according to which the appellant had to pay ₹ 40 lakhs over and above ₹ 5 lakhs already paid at the time of execution of sale deed without any further payment in this regard. The relevant clauses of the agreement for settlement dated 16/02/2015 are reproduced as under for ready reference. "WHEREAS as per the terms and conditions of the said Sale Deed, the cost of the land was fixed at ₹ 3.22 crores and the Second Party has paid the First Party an amount of ₹ 5 Lakhs. In addition to the same, the Second Party also issued Cheque of ₹ 35 Lakhs to the First Party and issued Cheques for ₹ 2.82 crores to the Confirming Party of the said Sale Deed being one M/s Shubham Granites Ltd. WHEREAS as a result of the breach of the terms and conditions of the Sale deed as stated hereinabove, the Second Party did not allow the Cheques which were paid to the First Party and the Confirming Party to be en- cashed. WHEREAS owing to the above stated disputes and misunderstandings which had arisen between the parties, the First Party has has filed Regular Civil Suit No. 16 of 2015 against the second Party befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst each other stand settled and resolved fully and finally and that the parties shall cooperate with each other fully and in true spirit for complying with this Agreement. It is agreed that upon execution of this agreement the first party shall forthwith withdraw the above referred civil suit. It is agreed that the original above referred sale deed will remain valid." 2.7 On filing of this agreement of settlement, the Hon'ble 5th Additional Senior Civil Judge, Gandhinagar vide its order dtd. 21.2.2015 has disposed off the suit as per the withdrawn application filed by both the parties as per the agreement of settlement. The extract of the withdrawal application of the suit filed by both the parties dated 21/02/2015 is reproduced as under:- BEFORE THE HON'BLE SENIOR CIVIL JUDGE COURT AT GANDHINAGAR Regular Civil Suit No. 16 of 2015 Shivabhai Popatbhai Gohil …….Plaintiff Versus. Gopal Space Organizers P.Ltd. ….. Defendant The plaintiff and the defendant hereinabove most respectfully submit as under: That the plaintiff and the defendant in the above referred matter being Regular Civil Suit No. 16 of 2015 have arrived at a settlement and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evelopment of balance land with M/s. Pacifica (Ahmedabad Project) Developers Pvt. Ltd. So AO doubted the transaction and the agreement to settlement to be an afterthought. 2.10 Having considered the facts of the case and submissions it has been noticed that although the registered sale deed has been executed on 7.12.2011 in favour of the appellant by Shri Gohil as original land owner and confirming party namely M/s. Shubham Granites Pvt. Ltd. but actually no ownership over the land was transferred in favour of appellant due to non payment of the full consideration which was in consequence to failure in providing the possession of the vacant land to the appellant. According to this sale deed, ₹ 5 lakhs were paid to Shri Gohil and remaining amount of ₹ 35 lakhs by way of the cheques. Further to the confirming party cheques of ₹ 2.82 crores were also issued. Thus, the payment actually made in the year under consideration was only to the tune of ₹ 5 lakhs in cash and that too was claimed to have been paid by Shri Dilip Suthar as per the JV Agreement dtd. 15.4.2011. Thus, in the year under consideration it is obvious that on the date when the sale deed was exec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk account or any other payments in lieu of such payments have been made to Shri Gohil or the confirming party. Even nothing has been brought on record to show that in view of the sale deed the possession over the land was given by the appellant. Even in the case of Mls.Shubham Granites Pvt. Ltd. also in the scrutiny assessment u/s. 143(3) necessary details by the AO of the aforesaid party has been called for from the appellant and in compliance thereto the similar details have been provided by the appellant vide its letter dtd. 15.11.2014 in response to the notice issued uls.133(6) of the I.T. Act to the said AO i.e. ITO, Ward-1 (1 ), Baroda. The balance payment of the sale deed dated 07I 121201 1 was obviously not made due to absence of the handing over of the possession of the vacant land to the appellant due to land occupied by Maldharies and subsequent disputes arose which got settled only after passage of almost four years vide the agreement of settlement dtd. 16.2.2015 filed in the Court of Law and the said petition filed by the original land owner was disposed off by the Court on 21.2.2015. Thus, as per the records, in the year under consideration the initial payment and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uram Premchand Vs. CIT 49 ITR 569. The Hon'ble Delhi High Court in the case of CIT Vs. Kamdhenu Steel & Alloys Ltd. 206 Taxman 254 has held that to make the assessee responsible there has to be proper evidence. It is equally important that an innocent person cannot be fastened with liability without cogent evidences. Thus the AO's stand of treating the entire sale consideration as paid by the appellant out of its undisclosed income is found not correct and hence the addition made by the AO is deleted. The ground of appeal is allowed." 6. With the assistance of the ld.representatives, we have gone through the record carefully. Sole issue for adjudication is, whether the AO was able to lay his hand on the evidence exhibiting the fact that the assessee has made investment which are not recorded in the books of accounts, and failed to explain the source of such investment. Therefore, addition on account of unexplained investment under section 69 is required to be made. Before adverting to the facts, we would like to note of section 69, which reads as under: "69. Where in the financial year immediately preceding the assessment year the assessee has made investments whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities. It is pertinent to observe that purchase agreement was subject to fulfillment of certain conditions viz. the assessee has pleaded that one Shri Dilipbhai Purshotambhai Suthar was very well known to the promoters and directors of the assesseecompany. He approached the assessee to develop a land located at Khoraj jointly and shown his interest of investing maximum upto ₹ 30 lakhs. He also laid down a condition that profit earned in the property jointly developed would be shared between him and the assessee in the ratio of 10:90, and with a rider that he would not bear any loss occurred in the project. Thus, according to him, if in the event of nonimplementation of joint venture project, he would be entitled to get compensation equivalent to 100% of amount invested by him as damages. He knew owner of the land i.e. Shivabhai Popatbhai Gohil. An agreement was entered into. It was found that the land was under encroachment and sum of ₹ 2.82 crores was required to be paid to M/s.Shubham Granite Ltd (now known as Blazone Marbles Ltd.) to get encroachment on the land cleared, and to make the land clear in all respects. In this exercise a sum of ₹ 5.00 lakhs was pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
