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TMI Blog2022 (4) TMI 1177X X X X Extracts X X X X X X X X Extracts X X X X ..... have acted in a representative capacity. We observe that atleast Mrs Sonia made certain payment, whereas Mrs Manju has not contributed in this transaction except her name was recorded by the builder, this does not give ownership right to Mrs Manju. In our considered view, the same Assessing Officer would not have accepted the genuineness of the ownership in case Mrs Manju claim without making any payment or contributing to anything in this transaction. There is ample evidence to show that the assessee has entered into agreement for the purchase of flats and made the substantial payment, therefore, we are in agreement with the claim made by the assessee that the compensation received by the assessee is long term considering the fact that the agreement was entered by the assessee in the year 1997. Accordingly, the ground raised by the assessee is allowed. - ITA NO. 1102/MUM/2006 And ITA NO. 4950/MUM/2007 And ITA NO. 7307/MUM/2008 - - - Dated:- 22-4-2022 - Shri S. Rifaur Rahman, Hon'ble Accountant Member And Shri Pavan Kumar Gadale, Hon'ble Judicial Member For the Assessee : Shri Rajiv Khandelwal For the Department : Shri C.T. Mathews ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional ground is reproduced below: - 1. The CIT(A) ought to have deleted the addition of ₹ 43,44,700 made on account of alleged Short Term Capital Gains made by the AO on protective basis 2. The CIT(A) erred in confirming the above addition of ₹ 43,44,700 3. The CIT(A) erred in and acted illegally and without jurisdiction in converting the protective addition of ₹ 43,44,700 made by AO into a substantive addition. 5. The relevant facts of the above grounds of appeal are, the assessee acquired two flats namely, Flat Nos 601 .and 602 in Ronak Residency, Khar by the agreements dated 10th July, 1997 for a total consideration of ₹.1,40,00,000 (₹.70,00,000 for each flat). Since the construction of the flats could not be completed due to the financial difficulties faced by the developers, the bookings for the said flats were cancelled by the agreements dated 30th August, 2000, under which the right to purchase the said two flats were surrendered to the new developers, Mr Kanti Govani and Mr.Ramesh Govani (hereinafter called as Govanis ). On cancellation of the above two flats, the assessee received a total consideration of ₹.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10,00,000 23.04.1997 057995 10,00,000 07.05.1997 057998 10,00,000 06.06.1997 057996 10,00,000 10.06.1997 057997 10,00,000 80,00,000 Date of payment Cheque no Amount (Rs) Total amount (Rs) Paid by LKP Merchant Financier on behalf of the appellants 26.05.1997 573375 1000000 05.06.1997 573376 1000000 05.07.1997 278975 1000000 30,00,000 Paid by Sonia Chhabria behalf of the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r books of account. 4.5. The appellants further, submit that the Assessing Officer has made unsustainable presumption on the basis of conjectures and surmises that the agreements for purchase of flats in the name of the appellants were executed after December, 1997 by executing a post dated agreement on ₹ 20 stamp paper. This is far from the truth as the stamp papers used for executing the agreements were issued by the Stamp Office on 15th May, 1997 and were actually executed on 10th July, 1997. Further, the payments for the same were made in the year 1997 as evidenced from the above table, Therefore; the observation of the Assessing Officer is invented and de hors the records. 5. The Assessing Officer erred in interpreting the contents of page nos 54 and 169 of the file to the effect that the said flats were originally booked in the names of Mrs Manju Ramsinghani and Mrs Sonia Chhahria. The appellants submit that - 5.1. The developers of Ronak Residency, Prem Santosh Properties Pvt Ltd started facing severe financial crisis and due to such and other reasons, the project of Ronak Residency could not be carried out and be completed in time. As such, the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondences papers written by the developers during the course of meeting for negotiations in the representative capacity of the appellant-company. 5.6. The appellants further, submit page no 165 of the file (dated 12.0 1.98) contains the minutes of the meetings held on 11.0 1.98 between the owners of the land (Mr. Pasari's), developers (Mr. Chawla's) and the purchasers (other parties). As per this page, the anomaly in the distribution of the flats is corrected and the final proposal was approved in the meeting. The appellants would like to draw the attention to the fact that as per this page (minutes of the meetings), Flat Nos 601 and 602 are stated to have been allotted to Mr Vashu Ramsinghani, whose name is again written as a representative of the appellants. If the Assessing Officer's contention that the flats were originally booked in the name of Mrs Manju Ramsinghani and Mrs Sonia Chhabria were held to be correct, the names to be mentioned would have either been Mrs Manju or Mrs Sonia or both but not Mr Vashu Ramsinghani. 5.7. The very fact that the name of Mr Vashu is noted against the allotment of the Flat Nos 601 and 602, clearly establishes the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Manju and Mrs Sonia as representatives of the company. In this context, the appellants submit that neither Mrs Manju nor Mrs Sonia have recorded these payments as payment for purchase of the flats in their books of account. 6.4. The appellants further submit that since they are a closely held company and the the directors are family members, there were no disputes that could have arisen in the future. The directors remained under a bona fide belief that the names of Mrs Manju and Mrs Sonia were used in the representative capacity of the appellants and hence, they did not pay much attention to the names appearing in the receipts issued by the developers. 6.5. The Assessing Officer, by relying on page nos 43, 44 and 55 of the file, erred in considering that the payments for the said flats were made by Mrs Manju, which was subsequently returned. The cheque no 376931 dated 16.05.1997 of ₹ 10,00,000 and cheque no 376933 dated 23.05.1997 of ₹ 10,00,000 are issued from the accounts of Mrs. Sonia Chhabria. Mrs Manju is the authorised signatory to that account. As such, the reliance placed by the Assessing Officer that payments were made by Mrs Manju is factually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the tune of ₹ 20,00,000 as a temporary friendly loans to the developers, which were received back during the year. As such, the appellants submit that the reliance placed upon this page be regarded as untenable inasmuch as it only recorded the transactions of the friendly loan advanced and at the bottom of the page, a summary of the payments made for the flats purchased by the appellants. 7. The Assessing Officer further, observed that the payments for the said flats were never made by the appellants and that the balance in the account of Premraj Developers Pvt. Ltd., sister concern of Prem Santosh Properties Pvt. Ltd., was adjusted towards the payment to be made. The appellants submit that - 7.1. The appellants had booked some offices and car parkings at the Chawla Complex, Belapur which was to be constructed and developed by Premraj Developers Pvt. Ltd. For the bookings of these offices, the appellants advanced a sum of ₹ 80,00,000 to the developers. However the project was getting delayed due to some reasons. Hence, the appellants requested the developers to return the money advanced and cancel the booking made at Belapur. Accordingly, the developer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evelopers (M/s. LKP Merchant Financing Limited and Mrs. Sonia) to the developers - Prem Santosh Properties Pvt. Ltd., inadvertently, the said sums were not accounted in the books or accounts in the year of payment. However, LKP Merchant Financing Limited properly accounted for the said payments in the books of account for the year ended 31 March, 1998 as having being made on behalf of the appellants. During the financial year ended 31st March, 2000, the appellants noticed this error and rectified it by passing the entries for the sum of ₹ 30,00,000 paid by LKP Merchant Financing Limited and ₹ 10,00,000 paid by Mrs Sonia Chhabria on their behalf. It was just an inadvertent error and the appellants rectified the same voluntarily by passing the necessary journal entries in the books of account for the year ended 3 l March, 2000, much prior to the date of search. 9. The appellants further submit that the Flat Nos. 601 and 602 at Ronak Residency, Khar were purchased by the agreements dated 10th July, 1997. The payments for the said flats were made. Even though some of the correspondences were made by the developer in the individual name of the directors of the compani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a representation for the assessee or it may be booked by these people on behalf of the assessee since all these individuals are related parties. Merely because the builder recognize this transaction on the representation basis, the ownership will not devolve on the individuals who are not party to the agreement. We observe that the agreement entered by the assessee even before the search took place. What is relevant is the existence of agreement and relevant payments made by the assessee, we observe that the substantial payments were made by assessee. It clearly indicate that the actual beneficiary is the assessee and the persons have acted in a representative capacity. We observe that atleast Mrs Sonia made certain payment, whereas Mrs Manju has not contributed in this transaction except her name was recorded by the builder, this does not give ownership right to Mrs Manju. 10. In our considered view, the same Assessing Officer would not have accepted the genuineness of the ownership in case Mrs Manju claim without making any payment or contributing to anything in this transaction. There is ample evidence to show that the assessee has entered into agreement for the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the block assessments itself is quashed by the ITAT, the appeal against the rectification becomes infructuous. 13. On the other hand, Ld. DR did not made any counter arguments. Therefore, we are inclined to treat the appeal filed by the assessee is infructuous. Accordingly, this appeal is dismissed as such. ITA.No. 7307/MUM/2008 (A.Y. 2001-02) - Revenue Appeal 14. Penalty order consequential to the assessee appeal in ITA.No. 1102/Mum/2006 (A.Y. 2001-02) above order. 15. Revenue has raised following grounds in its appeal: - 1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the penalty levied u/s.271(1)(c) amounting to ₹ 13,49,320/- without appreciating the facts that quantum addition to total income after the evidence relating to the non-allotment of flats was unearthed during a search seizure. 2. The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. 16. Considered the rival submissions and material pl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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