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TMI Blog2022 (12) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... Rao with the Developer M/s. Namishree Infratech Project was Rs.1600/-. During the course of assessment proceedings; the assessee had furnished a confirmation letter from the developer M/s. Namishree Infratech Project vide letter dated 21.10.2019 that the estimated cost of construction was likely to be Rs.1600/- for the total project. AO had completely disregarded the same although he is also the Assessing Officer of the Developer. In the instant case, we find the addition was based solely on the basis of the statement of the Director of the assessee company at the time of search in the statement recorded u/s 132(4) but not backed by any other tangible or cogent evidence. Addition cannot be made solely on the basis of statement recorded u/s 132(4) without any corroborative evidence to substantiate the same especially when the assessee has retracted from his earlier statement by producing cogent evidence which has not been rebutted by the Assessing Officer in any manner - Appeal filed by the Revenue is dismissed. - ITA No. 56/Hyd/2021 - - - Dated:- 19-12-2022 - Shri R.K. Panda, Accountant Member AND Shri Laliet Kumar, Judicial Member For the Assessee : Shri P. Murali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rores on account of capital gains estimated by taking the approximate cost of construction of Rs. 2,500/- per sq. feet for total company share of 1,18,895 sq.feet as per JDA and total indexed cost of acquisition is around Rs.16.00 crores. The Assessing Officer reproduced the relevant extract of the statement which is as under: Q.No. 12. I am showing you the Development Agreement cum General Power entered by M/s PBR Projects Pvt Ltd now known as M/s. Mechineni Namishree Projects Pvt Ltd with M/s Infratech on 30/08 2013. Please state whether company have offered capital gains?. Ans: I have gone through the Development Agreement cum General Power of Attorney entered by M/s PBR Projects Pvt Ltd now known as M/s Mechineni Projects Pvt Ltd with M/s Namishree Infratech on 30/08/2013. It has not offered capital gains because there was a court case pending with High Court. Now, I have clarity and will offer capital gains. The company share as per JDA is 1,18,895 sq feet The approximate cost of construction is Rs 2,500 Hence the total consideration comes to Rs 29 72 crores The cost of indexed cost of acquisition is around 16 crores, I will pay the capital gains on Rs. 13.72 crores. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal gain FY 2014-15 Particulars Amount Residential Commercial Total Deemed sale consideration 10,18,82,000 15,96,87,000 26,15,69,000 (1,18,895 sq.ft.@ Rs.2,200 per sq.ft.) Cost of acquisition of land per sq. yard 15,792 15,792 Indexed Cost of acquisition. 22,919 22,919 Land forgone 1226.93 2136.74 3363.67 Cost of land forgone 2,81,20,008 4,89,71,994 7,70,91,952 Deemed Capital Gain 7,37,61,992 11,07,15,056 18,44,77,048 4. During the assessment proceedings the assessee filed the return of income u/s 153A for Rs. 7,78,99,957/- which devi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sq.ft. has adopted Rs. 2,200/- per sq. ft as construction cost. 4) The AO has made addition which is only based on the statement of the Director of the appellant company u/s 132(4), the same is not tenable in the absence of any corroborative evidence suggesting that the cost per rate was Rs.2200/- per sq.ft. 5) As held in catena of judicial decisions, addition based on a statement u/s 132(4) without substantiating with any incriminating material, do not stand to the test of addition. The case laws relied by the appellant are squarely applicable in its case and the addition of Rs.10,65,77,091/- on account of capital gains, is not warranted and the same is ordered to be deleted and the relevant grounds are allowed . 7. Aggrieved with such order of the learned CIT (A), the Revenue is in appeal before the Tribunal by raising the following grounds of appeal: 1. The learned CIT (A) erred both in law and facts of the case in allowing relief to the assessee. 2. The ld.CIT(Appeal) erred in deleting the addition of Rs.10,65,77,091/- made on account of difference in capital gains admitted in the return. 3. The ld.CIT(Appeal) erred in accepting the assessee's c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishala group on 21-11-2017 and warrant in the case of M/s. Mechineni Projects Pvt. Ltd., was executed. Sworn statement of Sri M. Satchidananda Rao dated 21-11- 2017: During the course of search, a sworn statement was recorded on 21-11-2017 and answer to question to number 12, Sri M.Satchidananda Rao submitted that the company has given its land admeasuring 7,000 square yards for development to M/s. Namishree Infratech to construct residential apartments and commercial space named as T- 19 on which the assessee had not paid any capital gain. As per supplementary agreement, the assessee company share comes to 1, 18,895 square feet of built-up area on which the company has not paid any capital gains. The assessee stated that approximate cost of construction is Rs.2,500/- and worked out the capital gain. Accordingly, admitted Rs. 13.72 crores on account of capital gains estimated by taking the approximate cost of construction of 2500 per sq feet for total company share of 1,18,895 sq feet as per JDA and total index cost of acquisition is around 16 crores. PO Operation dated 22-01-2018: During the course of PO operation on 22-01-2018, Sri M.Satchidananda Rao in h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. He also filed the following facts sheet: S.No Particulars Date 1 Original return filed for the financial year 2016-17 31.3.2017 2 Date of search 21.11.2017 3 Notice u/s 153A issued 30.05.2018 4 Date of filing return in response to notice 153A 01.11.2018 5 Date of statement recorded 22.11.2017 6 Date of further statement recorded 22.01.2018 10. We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. We find the assessee in the instant case has given its land admeasuring 7000 sq. yards situated at H.No.5-4-156, 157, Indira Nagar, Ginwala Compound, M G Road, Secunderabad for development to M/s. Namishree Infratech to cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfession during the course of search seizure and survey operation do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of search and seizures operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely . 11.1 We further find, the CBDT letter (F.No.286/98/2013- IT (In\NV.II) dated 18.12.2014 reads as under: Instances/complaints of undue influence/coercion have come to notice of the CBDT that some assessees were coerced to admit undisclosed income during Searches/Surveys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. F ..... X X X X Extracts X X X X X X X X Extracts X X X X
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