TMI Blog2017 (12) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in all the aforesaid appeals are more or less similar so are the questions of law raised. We deal with the appeals together on the question of law. We heard the learned Senior Counsel, Government of India (Taxes) as also the learned Counsel appearing for the respondents/assessees. 2. There are two assesses involved here, both engaged in the business of real estate; purchase of landed property, development and sale. M/s.Damac Holdings Pvt. Ltd. is concerned with ITA Nos. 263 of 2014 and 22 and 51 of 2015. ITA No.263/2014 is with respect to the assessment year 2007-08 and ITA Nos.22 and 51 of 2015 for the assessment year 2008-09. ITA No.114/2015 is with respect to M/s.Right Hand Developers India (P) Ltd. for the assessment year 2008-09. 3. Assessments were initiated on the basis of the search conducted in the residence of the Directors of both the Companies under Section 132 of the Income Tax Act, 1961 (hereinafter referred to as the Act , for short) on 26.3.2008. There were objections raised with respect to the search and seizure and the subsequent proceedings, which were negatived by the first appellate authority and the Tribunal, against which there is no appeal filed. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tent of ₹ 2,42,68,680/- and disallowed ₹ 3,69,52,580/-. The addition made on total income for the disallowance by the Assessing Officer was deleted to the extent of the cheques issued by the assessee reflected in the Bank accounts, for the purpose of developing the property. The assessee has filed appeal before the Tribunal against the disallowance sustained by the first appellate authority and the Department against the disallowance set aside by the first appellate authority. The questions of law raised in both the appeals are as to whether the presumption under Section 132(4A) ought to have been confined to the seized materials and even with respect to the seized materials, whether the Tribunal was justified in not having put the assessee to proof under Section 37 of the Act. 7. Both the assesses were incorporated in the year 2006. The transactions itself took place during the years 2007-08 and 2008-09 with respect to M/s.Damac Holdings Pvt. Ltd., and 2008- 09 with respect to M/s. Right Hand Developers India (P) Ltd. In fact, the subject transactions, which were assessed by the Income Tax Authorities took place in the previous year of the assessment year 2008-09. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether it has to be confined to the documents seized, it is the submission of the learned counsel for the assessees that there were books of accounts available in the computers which were never looked into by the Department. It is also claimed that the assessees were following the mercantile system of accounting and many payments were made in the subsequent years by cheque, which the assessee would be able to substantiate before the Assessing Officer. In fact, documents seized would reveal such liability of the assessees, which had been satisfied in the subsequent years, but however accrued in the subject assessment year itself. 10. We have gone through the assessment orders, the orders of the first appellate authority and the Tribunal. The question of law raised is only with respect to the amounts that has to be allowed as expenditure. We see from the assessment orders that the Assessing Officer has proceeded on a mere presumption in computing the amounts, which the assessee would have expended for developing the property. The Assessing Officer worked out the total expenditure as ₹ 2,40,91,920/- and apportioned it to the total area arriving at the cost expended per cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not supported by the documents seized in the course of search is two fold; first that there were books of accounts available in the computer even at the time of seizure which were never verified by the Department, and second, that the assesses have followed the mercantile system of accounting. The assesses claim that they have shown the liability accrued with respect to the development of the plots; which as of now could be substantiated by subsequent payments made in the subsequent years. We are not convinced that such a prayer can be allowed at this stage. First of all, it is to be noticed that the assesses never produced any books of accounts before the lower authorities. The Assessing Officer, even when a remand report was called for by the first appellate authority, has categorically stated that the assesses did not maintain any books of accounts. The further submission that subsequent payments were made on liabilities accrued in the assessment year cannot also be countenanced. The purchase of the property and the sale were carried within the course of 4-6 months. The entire expenditure said to have been made is for the development of the plots by filling up the same, buildin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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