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TMI Blog2016 (5) TMI 1609X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee's investment, which was capital asset as per definition u/s 2(14) and on which, no capital gain was leviable. (iv) That notwithstanding the above grounds of appeal, it is submitted that confirmation of addition by the CIT(A) is excessive as the assessee's share in the land is less as assessed by the AO/CIT(A)." Whereas the following grounds of appeal has been taken by the Revenue. "(i). The ld. CIT(A),I, Ludhiana, has erred in facts and law by admitting additional evidence under rule 46A of the Act I.T. Rules 1962, which was not produced during the course of assessment proceedings even when the case does not fall under rule 46A(1)(a),(b),(c) or (d) of the I.T. Rules 1962. (ii) That the ld. CIT(A)-I, Ludhiana has erred in law and on facts in deleting the addition of Rs.2,23,67,907/- made on account of nongenuine loans taken by the assessee by admitting the additional evidence under rule 46A of the I. T. Rules 1962 i.e. partnership deed during the appellate proceedings. The CIT(A) has not appreciated the fact that in spite of reasonable opportunity offered to explain and to produce the evidence of loan. (iii) That the ld. CIT(A)-I, Ludhiana has erred in law and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me may not be admitted as enough opportunity had been afforded to the assessee during the assessment proceedings. I have examined the facts of the case and it is seen that the assessee had moved an application for admission of his case for different assessment years before the Hon'ble Settlement Commission and the same were duly admitted except for the year under consideration and the proceedings for assessment were therefore taken up afresh on 18.01.2012 leading to the assessment order dated 03.02.2012. It is apparent that limited time was available with the AO, so much so that, the AO has not even cross verified the information submitted by the assessee in respect of the unsecured loans and has also not sought any additional evidence from the assessee to prove its case. The Assessing Officer has merely taken the information provided by the assessee and concluded adversely without seeking any further evidence from the assessee. It is clear that the evidence now sought to be filed by the assessee has not been created afresh and has been part of the Income Tax assessment records of the individuals/entities concerned. It is also clear that the same could not be filed during the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Assessment Year 2010-11. The Assessing Officer's objection with reference to admission of additional evidence has already been dealt with by the under signed at para no.7 of the order. In the circumstances the amount of Rs.1,06,00,000/- being account for in the assessment year 2010-11 and disclosed accordingly can not be treated as income of Assessment Year 2009-10. The addition made therefore is directed to be deleted. Disallowance u/s 40A(3), Rs.9,29,650/- 16. I have considered the basis of additions made by the Assessing Officer and the arguments of the AR on the issue and the comments of the Assessing Officer in the remand report. It is apparent that the claim of amount paid in cash being covered by Rule 6DD has been made by the assessee in the Audit report as well as during the assessment proceedings. The Assessing Officer on receipt of the explanation did not seek any further explanation to support the case of exception and proceeded to make the impugned disallowance. The filing of additional evidence in the form of affidavits by concerned persons during the appellate proceedings makes it clear that the same had not been asked for earlier. The Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land and Mansa Land in to capital asset and thereafter they sold the land at Abohar for sum of Rs.80,00,000/- (Eighty lacs), the capital gain on the said land was exempt as certified by the partners, the land is beyond 2 Kms from the municipal limit of Abohar and agricultural activities were carried on. The same has been purchased by the firm in the year 2005 for Rs.35,41,391/- and the difference amount of Rs.44,58,609/- has been transferred to partners amount capital account on the same day." Here it is important to appreciate that the land in question had been purchased by the appellant firm in the year 2005 for Rs.35,41,391/- and admittedly had been treated as stock in trade for three years continuously and the same was claimed to be converted into the category of investments vide an internal resolution in the Financial Year 2008-09. The sequence of events in this regard can be appreciated more clearly if the following dates are sequentially appraised. i) Return filed on dated 15.06.2011. ii) Due date in October, 2009. iii) Audit done on 31.03.2011. iv) Date of search - 03.09.2009 v) Notice u/s 142(1) issued on 01.10.2010. 21. It is apparent that the seizure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had obtained remand report from him and therefore, after going thorough the remand report he had rightly deleted the additions. As regards the argument of learned DR that sufficient opportunities were provided to the assessee, the learned AR submitted that assessee along with its other group cases had approached the Hon'ble Settlement Commission, New Delhi in November & December, 2011, and therefore was hopeful for settlement and therefore, could not file the documents. It was submitted that the petition for Asst. Year 2009-10 was rejected due to non maintainability of application and in the meanwhile Assessing Officer had passed the order during the extended time on 3.2.2012 and therefore, no reasonable opportunity was available to assessee to file the necessary documents and, therefore, learned CIT(A) has rightly admitted additional evidences after confronting the same to the Assessing Officer. Without prejudice, it was argued that assessee had already filed details of unsecured loans along with their PAN number and Assessing Officer without requiring assessee to provide further information framed the assessment and therefore, learned CIT(A) was justified admitting the additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... group companies including Mr. Sham Lal was placed. In view of the above, it was submitted that the Assessing Officer may be directed to make correct assessment of income from the sale of property at Abhor. 9. The learned DR, on the other hand, relied upon the orders of authorities below. 10. We have heard the rival parties and have gone through the material placed on record. We find that the above cases were originally heard on 8.01.2016, however, at the time of dictation it was observed that assessee had raised a new issue for determination of correct income of the assessee which it had not taken before the authorities below therefore, the cases were re-fixed for clarification and finally the cases were heard on 17.05.2016. The learned AR, in reply to the clarifications submitted that the Assessing Officer had wrongly calculated the addition as the share of assessee was admittedly 1825.49 marlas being 43% of 4245.33 marlas, and this fact was verifiable from (PB-843) which is copy of seized documents and which shows that the land belonging to assessee was only 1825.49 marla and the sale consideration of which as noted in the seized document was only Rs.34,22,7,938/- whereas the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... z., M/s J.V Trading Co. (50% share), Saraswari Builders (43% share), and Shri Lachman Dass (7% share). This land was sold @Rs.18.750 per marla in the A.Y 2009-10. Further details of this business venture have been provided at para 12.34 of the SOF, wherein the cost of land and preoperative expenses (being land development expenses) is also reflected. Shri Sham Lal is a 30% partner of M/s J.V. trading Co. Shri Sham Lal, in his SOF, has claimed that the said land is more than 3 kms away from the municipal limits of Abohar and agricultural activity is being conducted thereon. It has been contended as per section 2(14), the land is not a capital asset, and no capital gains arise from the sale of the land; as such there is no generation of the taxable income." From the above facts it is apparent that assessee's share was definitely 43% of the total land and the gross receipts from sale of such land @ Rs.18,750 per marla comes out of at Rs.34,22,7,938/- and therefore, the Assessing Officer should not have taken the value of sale consideration at Rs.4,65,09,900/-. The contention of learned AR that Assessing Officer has included the share of Mr. Sham Lal also seems to be correct because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) should have restricted the same to Rs.30,68,6,547/- (being correct sale value Rs.34227938/- purchase cost Rs.3541391/-). Therefore, we allow ground No.(iv) of assessee's appeal and direct the Assessing Officer to restrict the addition confirmed by learned CIT(A) at Rs.42,95,9,509/-to Rs.30,68,6,547/- only. 14. As regards the contention of the assessee on the other grounds of appeal that the asset should have been treated as capital asset, we do not find any force in the grounds of appeal as Mr. Sham Lal and his group companies has already admitted before the settlement commission that the same may be treated as business income, therefore, ground Nos. (i) to (iii) are dismissed. 15. In view of the above, the appeal of assessee is partly allowed. 16. As regards the appeal of Revenue, we find that the learned CIT(A) has rightly admitted additional evidences which were necessary for arriving at the justice, therefore, the contentions of learned DR that learned CIT(A) should not have accepted do not carry any force. The learned CIT(A) has passed a reasoned and speaking order and has passed the order after obtaining remand report from he Assessing Officer therefore, we do not fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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