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TMI Blog2003 (12) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... he observation of the CIT(A) that the addition may be considered in the assessment of O.P. Navani (individual). It is the assessee's contention that the profit or loss in respect of Om Niketan, Andheri has to be accounted for by it only and none else, that there was no 'on money' involved and if for any reason there has to be any addition for undisclosed investment, it would relate only to the asst. yr. 1981-82. It is contended that instead of fully accepting these claims of the assessee, the CIT(A) merely made an observation that there should be no addition in the hands of the assessee in this year and that the addition should be made in the hands of O.P. Navani (individual) in the relevant year. At the time of the hearing, it was pointed out on behalf of the assessee that against the decision of the CIT(A) deleting the addition of Rs. 47,68,599, the Department had filed an appeal to the Tribunal in ITA No. 4232/Bom/1993 and by order dt. 24th Feb., 2003, passed ex parte qua the assessee, the Tribunal has set aside the order of the CIT(A) on this point and restored the matter back to his file with a direction that the same shall be re-decided in accordance with law after giving pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent pursuant to the directions of the CIT(A). The learned representative for the assessee stated that the original evidence had been filed before the CIT(A) in the course of the appeal filed against the original assessment and the assessee did not have copies thereof so that they could be filed before the AO when the matter was taken up again. His contention, however, was that when the CIT(A) has recorded a clear finding in his order dt. 25th March, 1988 that the assessee has furnished all the evidence, the AO was not justified in disallowing the provision while giving effect to the decision of the CIT(A). The contention cannot be accepted. It was for the assessee to have preserved the evidence for being shown to the AO, especially when it was the assessee which courted and obtained such a direction from the CIT(A). However, the alternative plea to the effect that the disallowance cannot exceed the amount of Rs. 34,500, disallowed in the original assessment, has force. The power of the AO is derived from the order of the CIT(A). The order of the CIT(A) is confined to only Rs. 34,500 which was disallowed. Even the AO had allowed Rs. 32,000 originally as it was supported by evidence. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounting year. The second ground was that no evidence could be produced by the assessee to its auditors who had made an observation to that effect in the accounts. He, therefore, disallowed and added back the provision. The disallowance was confirmed by the CIT(A). Before us, it is admitted on behalf of the assessee that the relevant bills received from Bush India Ltd., from whom the assessee hired the machinery, were not produced before the Departmental authorities. It was also admitted that there was no agreement in writing with Bush India Ltd. However, it is pleaded that a broader view should be taken with regard to the allowance of the provision keeping in view the fact that the assessee has disclosed income from the Wonder World division, which would not have been possible without the working of the video machinery. In this connection, our attention was drawn to p. 11 of the assessment order for the asst. yr. 1986-87, wherein there is reference to Bush India Ltd. having produced its accounts to show that certain bills were raised on the assessee-company for machine hire charges. On this basis, it is contended that the provision should be allowed for the year under considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ground is dismissed as also the appeal. 11. Department's appeal: The only ground taken is that the CIT(A) erred in deleting the addition of Rs. 3,80,000 made on account of undisclosed sale receipts by the assessee in respect of flats sold. It is stated that the conduct of the assessee is not above board and therefore the CIT(A) ought to have upheld the addition. 12. During the year the assessee sold five flats the details of which have been given in p. 2 of the order of the CIT(A). The sale price ranged from Rs. 391.06 per sq. ft. to Rs. 443.21 per sq. ft. The AO took the comparative instances of certain sales made by other builders in the nearby locality. These details are also given in the same page of the order of the CIT(A). These sales show a sale price of Rs. 471 per sq. ft. to 526 per sq. ft. The AO took the highest sale instance of Rs. 526 per sq. ft. in respect of the sale made in December, 1984 and concluded that the assessee-company has suppressed the sale price in respect of the sale of the five flats. He applied the difference to the flats sold by the assessee and made an addition of Rs. 3,80,000. 13. On appeal, various contentions were taken before the CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount has been wrongly mentioned and that the real grievance is that the CIT(A) erred in confirming the disallowance of the machinery hire charges of Rs. 60,000 and electricity charges of Rs. 30,000. It is further clarified that both these amounts represent provisions made by the assessee in its accounts. 17. In respect of the machinery hire charges, the total provision made in the accounts is Rs. 1,20,000. Out of this the supplier of the machinery viz. Bush India Ltd. was able to confirm issue of bills to the extent of Rs. 60,000. For the balance of Rs.60,000 there was no evidence. Even in the seized material, no bills or other evidence could be found. Accordingly, the AO disallowed Rs. 60,000, which was confirmed by the CIT(A). 18. We have considered the matter. In the earlier two years, we have held that in the absence of any evidence, the provision cannot be allowed as a deduction. The same decision holds good for the year under appeal also, since the claim is the same. Therefore, in line with our earlier decision, we confirm the disallowance of Rs. 60,000. 19. As regards the electricity expenses of Rs. 30,000, the position is the same. The provision could not be suppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the year under appeal, the AO added the amount of Rs. 40 lakhs on protective basis. Though the addition was not made in the assessment order itself, an order was later passed under s. 154 adding the amount on protective basis. The assessee's appeal against the order under s. 154 was dismissed by the CIT(A) and no further appeal was taken to the Tribunal. As regards the merits of the addition, the CIT(A) held that the DC, Central Range-IV has confirmed that in the case of S.K. Trust, the property has been held to be belonging to it and the income on the sale of the property was treated as the income of the Trust to be taxed in the hands of the beneficiaries. The CIT(A) referred to the order passed by the DC on 31st Dec., 1992 in the case of S.K. Trust where this position has been confirmed. The CIT(A) further held that this order passed in the case of S.K. Trust also showed that the Trust was not a bogus entity and that it had actually purchased the ground floor of the building Om Niketan and subsequently sold it to Bombay Mercantile Bank. Thus, the AO has accepted that the sale of the property by the assessee to the Trust is genuine. He, therefore, held that a separate addition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it should relate back to the asst. yr. 1983-84, which is the year in which the agreement was finalised, and not for the asst. yr. 1987-88, because it is well known that 'on money' payments are made when the agreements were finalised. The second alternative plea was that in any event, the assessee having followed the project completion method, any addition for alleged 'on money' should be considered only in the year in which the profits from the project are brought to tax. 27. The CIT(A), following the view taken by him in other group cases, accepted the second alternative plea and restored the matter to the file of the AO to consider the 'on money' receipts in the year in which the profits from the project are brought to tax. While doing so, he also held that the "assessee will be free to raise all the arguments on merits of the addition before the AO in that year." 28. The assessee contended before us that the CIT(A) should have given a finding firstly that no 'on money' was involved in the transaction and secondly that even if 'on money' were to be considered that can be done only in the asst. yr. 1983-84 in view of the fact that the only transaction of sale took place in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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