9911796707
TMI Blog2022 (4) TMI 1177X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has filed return of income on 30.10.2001 declaring income of Rs..16,03,415/- under normal provisions and Rs..43,03,130/- under section 115JA of Income-tax Act, 1961 (in short "Act") along with financial statement and tax audit report in the form No. 3CA and 3CD. It is processed u/s. 143(1) of the Act and subsequently selected for scrutiny and statutory notice u/s. 143(2) and 143(1) of the Act were issued and served on the assessee. The assessee is in appeal before us raising following grounds in its appeal: - "GROUNDS OF APPEAL 1. The ground or grounds of appeal are without prejudice to one another. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the view taken by the AO in assessing surplus of Rs. 43,44,700/- realised on surrender of rights to acquire the flats as "Short term capital gains" as against "Long term capital gains" shown by the Appellant. 2. The Ld. CIT(A) failed to appreciate that the flats were surrendered after a period of 36 months and as such surplus realised on such surrender ought to be taxed as "Long term capital gains" allowing the benefits of indexation and rate of income tax. 3. In reaching to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as justified in treating the capital gains as short-term capital gains and dismissed the appeal of the assessee. Against this order of the Ld.CIT(A) the assessee is in appeal before us. 7. At the time of hearing, Ld. AR of the assessee submitted as below:- "4. The Assessing Officer erred in holding that the Flat Nos 601 and 602 were booked in the name of Mrs Manju Ramsinghani and Mrs Sonia S Chhabria by relying upon part of the seized material Contained in the file marked as Annexure A-1 seized on 13.07.2001 (hereinafter referred to as "file"). The appellants submit that - 4.1. Flat Nos. 601 & 602 in Ronak Residency, Khar were booked in the name of the appellants by the agreement dated 10th July, 1997. The payments for the said flats were made by the appellants and, by LKP Merchant Financing Limited and Mrs Sonia Chhabria on behalf of the appellants. The payments for the said flats to the tune of Rs. 1,10,00 000 were made prior to the execution of the agreement. The payment schedule is given below - Date of payment Cheque no Amount (Rs) Total amount (Rs) 19.07.1997 057992 10,00,000 19.04.1997 057993 10,00,000 19.04.1997 057990 5,00,000 &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreements were made by the appellants and by other parties on their behalf, the contention booking of the flats in the name of Mrs. Manju and Mrs. Sonia cannot be held to be correct. Only an amount of Rs. 10,00,000 was paid by Mrs Sonia that too on behalf of the appellants whereas amount Rs..80,00,000 was directly paid by the appellants.to the developers as evidenced form their 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 Rs. 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 fla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t,'-'company is not appearing on the said page no 169. The appellants submit that the name of Mrs Manju is stated against Flat No 601 and 602 on the said page. The appearance of name of Mrs. Manju is in lieu of the name of the appellants was very common and, as explained above her name and the name of Mrs Sonia appear in all the correspondences 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreements for purchase of the flats were executed on 10th July, 1997. This clearly shows that the developers had issued the receipts acknowledging that the said payments have been received from the appellant-company. However, as per their practice, the developers have written the names of Mrs 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 Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u. which were subsequently recovered. The appellants submit that the monies were advanced by Mrs Sonia to the tune of Rs. 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 Rs. 80,00,000 to the developers. However the project was getting delayed due to some reasons. Hence, the appellants requested the developers to return t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were directly made by the third parties to the developers (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 Rs. 30,00,000 paid by LKP Merchant Financing Limited and Rs. 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the builder 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 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 placed on record. In this appeal, revenue is in appeal as the Ld CIT(A) del ..... X X X X Extracts X X X X X X X X Extracts X X X X
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