TMI Blog2014 (6) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be disallowed – Decided in favour of Assessee. Addition of unexplained credit u/s 68 of the Act - Held that:- Following Mr GOPAL LAL BHADRUKA, Versus DEPUTY COMMISSIONER OF INCOME TAX [2012 (6) TMI 657 - ANDHRA PRADESH HIGH COURT] - by virtue of section 158BI of the Act, various provisions of Chapter XIVB of the Act are made in applicable to the proceedings u/s. 153A/153C of the Act- while provisions of Chapter XIVB of the Act limit the enquiry by the AO to those materials found during the course of search and seizure operation, no such limitation is found in so far as section 153A/153C of the Act are concerned - there is no necessity of seized material to frame the assessment u/s. 153A of the Act as required for framing assessment u/s. 158BC r.w.s. 158BB of the Act - the assessee is required to explain the source while framing the assessment u/s 153A of the Act – thus, the matter is remitted back to the AO to explain the source of receipt – Decided partly in favour of Assessee. Addition of capital gain our of development agreement – Already offered for tax - Held that:- The HUF has declared the income arising out of transfer of property vide Joint Development Agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri And Smt. Asha Vijayaraghavan,JJ. For the Appellant : Sri S. Rama Rao For the Respondent : Sri P. Soma Sekhar Reddy ORDER Per Chandra Poojari, A.M. All the above appeals by different assessees are directed against different orders of the CIT(A)-I, Hyderabad for the respective assessment years. Since all the assessees belong to one group and the issues being identical, these appeals are clubbed together, heard together and are being disposed by this common consolidated order for the sake of convenience. ITA Nos. 769, 770, 771, 772 and 773/Hyd/2013 Sri Ch. Malla Reddy 2. Firstly, we take up appeals in ITA Nos. 769, 770, 771, 772 and 773/Hyd/2013 in respect of Sri Ch. Malla Reddy for A.Ys. 2003-04, 2004-05, 2005-06, 2008-09 and 2009-10, respectively. 3. The first common ground in these appeals is that the CIT(A) erred in holding that while completing assessment u/s. 153A addition can be made without reference to seized documents. 4. Facts of the case in brief, as narrated in ITA No. 769/Hyd/2013, are that a search and seizure operation was conducted in the residential premises of the assessee on 7.8.2008. Subsequently, a notice u/s. 153A was iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incriminating material found during the course of search and seizure action. In the present case returned filed for these assessment years pending on the date of search. Consequently, by virtue of the proviso to section 153A, the assessment for these assessment years stands abated on the date of initiation of search. Therefore, even if there is no incriminating material to indicate any undisclosed income or income escaped assessment during the original assessment completed u/s. 143(3), the AO is bound to make assessment u/s. 153A for all these assessment years. More so, this issue is covered against the assessee as per the judgement of jurisdictional High Court in the case of Gopal Lal Badruka (cited supra) and also by the order of the Tribunal Special Bench of Mumbai, in the case of All Cargo Global Logistics Pvt. Ltd. vs. DCIT reported in 137 ITD 287. Accordingly, this ground is dismissed. 8. The next ground in ITA No. 769/Hyd/2013 is with regard to disallowance of expenditure of ₹ 54,059. The assessee claimed expenditure of ₹ 54,059 out of commission income of ₹ 2,67,700 which was disallowed by the AO. The contention of the assessee's counsel is that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not properly explained, it is left to the AO to make addition to that extent. The contention of the AR is that this receipt of amount has already appeared in the return of income and it cannot be questioned in assessment u/s. 143(3) r.w.s. 153A of the Act. However, it was held in the case of Gopal Lal Badruka (cited supra) wherein held that by virtue of section 158BI of the Act, various provisions of Chapter XIVB of the Act are made in applicable to the proceedings u/s. 153A/153C of the Act. The effect of this is that while provisions of Chapter XIVB of the Act limit the enquiry by the AO to those materials found during the course of search and seizure operation, no such limitation is found in so far as section 153A/153C of the Act are concerned. Consequently, there is no necessity of seized material to frame the assessment u/s. 153A of the Act as required for framing assessment u/s. 158BC r.w.s. 158BB of the Act. Being so, the assessee is required to explain the source of ₹ 3,25,000 while framing the assessment u/s. 153A of the Act. Before the learned AR submitted that the assessee has material to suggest that the assessee has received this amount of ₹ 3,25,000 from sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4-05, the assessee had entered into a development agreement-cum-GPA with M/s. RVNPL as the Karta of HUF, possession of land was handed over to the developer and the constructed area was received by the HUF. He contended that since the property belonged to HUF and the assessee had filed the return of income admitting the capital gain on completion of construction in the case of HUF, in the first instance; the income could not have been assessed in the hands of individual. Without prejudice to the above, the AR submitted that capital gains in respect of this transaction also could not have been brought to tax in the A.Y. 2005-06. He claimed that in respect of this property, development work was indeed undertaken by the developer and construction was completed. However, since the property belonged to HUF and the HUF had admitted the same on completion of construction, the capital gains could not have been taxed in the A.Y. 2005-06. Without prejudice to the above contentions, it was submitted that the Assessing Officer adopted consideration in respect of 70000 square feet of constructed area at ₹ 3,42,00,000, being the market value for the entire constructed area, whereas he shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... velopment agreement with M/s. RVNPL. As per the AO and the case-laws referred in the assessment order pertains to the title of the transfer of land and the capital. The assessee is the owner of land admeasuring 10 guntas of land and the capital gains to be calculated and income is to be disclosed. As per the development agreement and GPA executed jointly be the appellants show only that the land was handed over to the developer for development activity and till the development is completed it cannot be treated as delivered. The delivery actually comes when the developer and land owners execute the sale deeds in the names of prospective purchasers. Till that time the assessee is the land owner and will become liable to offer any income or capital gains in the year and receives his share of developed land and executes the sale deeds as land owner along with the developer. In the assessee's case either the land was not developed nor any construction activity was completed nor was the share of the assessee delivered to him. 22. Further, he submitted that it was not the plea of the assessee before the lower authorities that the property is owned by the HUF. The fact of entering i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5-06, 24. The DR submitted, as regards the contention that the above Development Agreement gave the developers the limited right to seek necessary permission from authorities and to enter the property and construct buildings as per approved plans only, that as observed by the Cochin ITAT also in the above mentioned decision, it is a fact that the builder/developer cannot start any construction, unless physical possession of the land is handed over to him. Therefore, the DR submitted that there is no merit in the contention of the assessee that the Development Agreement amounted to only an empty permission to enter the property and carry construction. Obviously, the developers could have put in their efforts and money into the said project only in lieu of their rights in the said land, which had indeed been transferred to them by way of such Development Agreement itself. 25. The DR submitted, as regards the contention, that consideration for the transfer was neither received nor did it accrue on the date of entering into the Development Agreement, it is an established position of law that consideration for transfer can be even futuristic. Reliance in this regard is placed on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of built-up area between the land owners and the builder is in the ratio of 36:64, respectively. The time limit for delivering the built-up area to the land owners is 36 months from the date of obtaining necessary sanctions and permissions from HUDA and Serilingampally Municipality. It is also agreed between the parties that date of completion of first block in the proposed building shall be 15 months from the date of obtaining such permission. There is also penalty clause that if the developer failed to deliver the built-up area falling into the share of land owners within the stipulated period, then they shall be liable to pay a sum of ₹ 3 per sft per month for such delay period. There is also one more supplementary agreement entered between the parties on 18.6.2005 with reference to the allotment of certain flats. 28. The main plea of the assessee before us is that the property is a subject matter of transfer u/s. 2(47)(v) does not belong to the assessee and it belongs to the HUF. The assessee pleaded that the capital gain arising out of such transfer is offered to tax by the assessee in the hands of the HUF for A.Y. 2008-09. He drew our attention to the copy of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... final determination by the assessing authority in terms of sections 143 or 144 of the Act. The assessee, who, for instance, had paid tax on the basis of self- assessment under a wrong assumption that the entire income shown therein was liable to tax, is entitled to assert before the assessing authority when the case is taken up for assessment that either whole or part thereof was not liable to form part of the taxable income and that the tax paid on the basis of self-assessment was not liable to be paid, and the assessing authority, if it finds that either the whole income or part thereof was not liable to be included in the taxable income, is bound to give effect to the claim of the assessee and compute the total income of the assessee in accordance with law and not accept self-assessment regarding his total income. 32. The Hon ble Supreme Court in the case of CIT vs. Shelly Products (261 ITR 367) that : We find considerable force in the submission of the revenue and it must be upheld. We have earlier noticed the scheme of the Act. Section 4 of the Act creates the charge and provides inter alia for payment of tax in advance or deduction of tax at source. The Act provides f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer of capital asset vide development agreement dated 16.9.2004 it is not proper to tax the same in the hands of the assessee in any assessment year which amounts to double taxation. Accordingly, we are inclined to hold that the lower authorities are not justified in taxing the capital gain arising out of transfer of capital asset vide development agreement dated 16.9.2004. Accordingly, we delete the addition and other grounds on this issue are dismissed as infructuous. In the result, ITA No. 771/Hyd/2013 is partly allowed. 34. The next ground in ITA No. 772/Hyd/2013 (A.Y. 2008- 09) is with regard to finding of the CIT(A) that there was a transfer of property during the previous year under consideration within the meaning of s. 2(47)(v) of the Act and confirming action of the AO in taxing the capital gain for the assessment year under consideration. 35. As regards the addition of ₹ 1,73,74,047 towards undisclosed profit from development agreement in the assessment year 2008-09, facts are that during the course of search operation, a Development Agreement cum GPA had been found and seized from the premises of M/s. Malla Reddy Educational Society as page Nos. 16 to 51 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the parties and perused the material on record. As discussed in ITA No. 771/ Hyd/2013 for A.Y. 2005-06, we are inclined to hold that the capital gain cannot be computed in the hands of the present assessee as the property belongs to the HUF, as the HUF offered the said income in its hands and the same was assessed by the Department. Without prejudice, in the decision of co-ordinate Bench in the case of Mrs. K. Radhika Others vs. DCIT, 65 DTR 250 (Hyd) held as under: 46. A plain reading of the Section 53A of the transfer of Property Act shows that in order that a contract can be termed to be of the nature referred to in Section 53A of the Transfer of Property Act it is one of the necessary preconditions that transferee should have or is willing to perform his part of the contract. This aspect has been duly taken note of by the Hon'ble Bombay High when their Lordships observed as follows: That, in order to attract Section 53A, the following conditions need to be fulfilled. (a) There should be contract for consideration; (b) It should be in writing; (c) It should be signed by the transferor; (d) It should pertain to the transfer of immovable property; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree, on the facts of the present case, can be said to have 'performed or is willing to perform' its obligations under the agreement. 49. Even a cursory look at the admitted facts of the case would show that the transferee had neither performed nor was it willing to perform its obligation under the agreement in the assessment year under consideration. The agreement based on which capital gains are sought to be taxed in the present case is agreement dated 11.05.2005 but this agreement was not adhered to by the transferee. The transferee originally made a payment of Rs .10 lakhs on 11.5.2005 and another payment of ₹ 90 lakhs on the same day as refundable security deposit. However, out of this a sum of ₹ 50 lakhs was said to be refunded by the landlord to the developer on 5.3.2009. As such, the assessee has received only a meager amount as refundable security deposit which cannot be construed as receipt of part of sale consideration. Admittedly, there is no progress in the development agreement in the assessment year under consideration. The Municipal sanction for development was obtained not in this assessment year and it was obtained only on 17.09.2006 from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of receiving the sanction of the plan from HUDA and Municipality/Gram Panchayat with a further grace period of 3 months. But the fact remains that the transferee was not only failed to perform its obligations under the agreement, but also unwilling to perform its obligations in the assessment year under consideration. Even otherwise, the assessing authorities has not brought on record the actual position of the project even as on the date of assessment or he has not recorded the findings whether the developer started the construction work at any time during the assessment year under consideration or any development has taken place in the project in the relevant period. He went on to proceed on the sole issue with regard to handing over the possession of the property to the developer in part performance of the Development Agreement-cum-General power of Attorney. In our opinion, the handing over of the possession of the property is only one of the condition u/s 53A of the Transfer of Property Act but it is not the sole and isolated condition. It is necessary to go into whether or not the transferee was 'willing to perform' its obligation under these consent terms. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the revenue authorities to show that there was actual construction has been taken place at the impugned property in the assessment year under consideration and also there is no evidence to show that the right to receive the sale consideration was actually accrued to the assessee. Without accrual of the consideration to the assessee, the assessee is not expected to pay capital gains on the entire agreed sales consideration. When time is essence of the contract, and the time schedule is not adhered to, it cannot be said that such a contract confers any rights on the vendor/landlord to seek redressal under Section 53A of the Transfer of Property Act. This agreement cannot, therefore, be said to be in the nature of a contract referred to in Section 53A of the Transfer of Property Act. It cannot, therefore, be said that the provisions of Section 2(47)(v) will apply in the situation before us. Considering the facts and circumstances of the present case as discussed above, we are of the considered view that the assessee deserves to succeed on reason that the capital gains could not have been taxed in the in this assessment year in appeal before us. The other grounds raised by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 58,72,050 as per the registered document and the assessee failed to explain only ₹ 9,90,090 and the same was offered to tax. In spite of this, the AO further made addition of ₹ 29,78,040 only on the basis of loose sheet which cannot be a basis for addition as there is no corroborative material for making the addition and the addition is to be deleted. He also submitted that nonpressing of this ground before the lower authorities is an inadvertent mistake on the part of the assessee which shall be condoned and the issue may be adjudicated on merit. 43. The DR relied on the orders of the lower authorities. 44. We have heard both the parties and perused the material on record. In this case, the addition is made by the AO on the basis of loose sheet bearing No. A/CMR/Res/02. It suggests purchase of property admeasuring 1 acre 38 guntas situated at Gundlapochampally. The property was registered for a consideration of ₹ 58,72,050. There is no conclusive evidence for passing the consideration between the parties at ₹ 78,60,000, except loose sheets. Being so, the apparent consideration disclosed in the sale deed which was duly registered with the SRO is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other and grandmother had received gold jewellery from their parents and all such jewellery was available at the assessee's residence. It was contended that the Income-tax Authorities did not find any material showing purchase of jewellery during the year under consideration and hence addition could not have been made by disbelieving the assessee's claim. The AR argued that the jewellery was available with the assessee since long and the value thereof at the time of purchase was very less. He pointed out that the CBDT Circulars also stipulate that it is common to possess 500 grams among Indian woman whereas the assessee's being an affluent agricultural family, women would receive more than 1000 grams of gold at the time of marriage. 50. The DR stated that in the course of search, gold jewellery, totally weighing 4340 grams, was found in addition to RBC diamonds weighing 85 Ct. The same was valued at ₹ 67,83,100. The said jewellery was claimed as belonging to the assessee's wife, his mother and grandmother. It is the contention of the assessee that as per the Board Circular No. 1916 dated 11-5-1994, it is common to possess 500 grams of gold jewellery among I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reasonably explained. Accordingly, the proportionate addition of ₹ 44,38,710 is to be sustained. 52. We have heard both the parties and perused the material on record. The contention of the assessee's counsel is that the jewellery found at the residence of the assessee is not only belongs to the assessee but also belongs to the family members of the assessee and the same should be considered as per the CBDT circular 1916 dated 11.5.1994. We accede to the request of the assessee's counsel. In our opinion, it is appropriate to remit the issue to the file of the AO with a direction that if the assessee proves that all the family members to whom the said gold jewellery is belonging along with the assessee with documentary evidence that they are staying under a single roof where the search has taken place, then the corresponding deduction is to be given in terms of CBDT circular (cited supra). This ground is partly allowed for statistical purposes. 53. The next ground in ITA No. 773/Hyd/2013 is with regard to sustaining addition of ₹ 10 lakhs out of ₹ 11,21,200. 54. Facts of the issue are that the assessee could not explain cash to this extent found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gard to confirming addition of ₹ 27,00,000 made towards investment in loans holding that cheques issued by Sri M. Krishna Rao and Sri J. Narasimha Reddy represent the unaccounted for investment. 59. Brief facts of the case are that during the course of search two cheques were found and seized as page No. 4 and 5 of Annexure/CHMR/RES/ PO/01. The said cheques were issued by Shri M. Krishna Rao and Shri Jakkula Narasimha Reddy for ₹ 20 lakhs and ₹ 7 lakhs, respectively, but did not contain the name of the bearer. In his sworn statement dated 20.11.2008, the assessee claimed that the said cheques were given to him by the said persons as security for arranging loans. However, the loans could not be arranged but the cheques had remained with the assessee. This fact was confirmed by the said two parties also in their statements dated 22.9.2008 and 15.9.2008, wherein they denied having taken loan from the assessee. This stance was maintained by the assessee even in the course of assessment proceedings. However, the AO did not accept the same as he opined that it is a common practice to give duly signed blank cheques in lieu of loans borrowed as a form of security. He, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of conjectures and surmises. This is an assessment framed u/s. 153A r.w.s. 143(3) of the Act. There should be conclusive evidence to suggest that the assessee has carried on money lending business and in terms of money lending business the assessee has received these cheques. Unless and until there is corroborative evidence to suggest that the assessee has carried on the money lending business no addition can be made. Hence, we are not in a position to confirm the addition on the basis of evidence brought on record. Accordingly, this addition is deleted. In the result, ITA No. 773/ Hyd/2013 is partly allowed. ITA Nos. 804, 805, 806 and 807/Hyd/2013 Sri Ch. Mahender Reddy 63. The first common ground in all these appeals is with regard to CIT(A)'s holding that while completing the assessment u/s. 153A of the Act additions can be made without reference to the seized documents. Similar issue is already dealt with by us in the case of Sri Ch. Malla Reddy in ITA Nos. 769-773/Hyd/2013 and the ground taken by the assessee is dismissed. Following the same ratio, this ground in ITA Nos. 804, 805, 806 and 807/Hyd/2013 is dismissed. 64. The next ground in ITA No. 804/Hyd/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this ground is allowed in favour of the assessee. Being so, in conformity with our above findings in the case of Sri Ch. Malla Reddy in ITA No. 771/Hyd/2013, we are inclined to allow this ground. In the result, ITA No. 805/Hyd/2013 is partly allowed. 70. Now the next ground for our consideration in ITA No. 806/Hyd/2013 is that the CIT(A) erred in holding that there was transfer of property during the period under consideration within the meaning of s. 2(47)(v) of the Act thereby confirming the assessment of capital gains for the year under consideration, though there was no commencement of development activity even after a period of 5 years from the date of agreement. 71. Brief facts of the issue are that during the course of search operation, a Development Agreement cum GPA had been found and seized from the premises of M/s. Malla Reddy Educational Society as page Nos. 16 to 51 of Annexure A/MRG/PO/0l, which was a Development Agreement executed by the assessee, his family members and other relatives in favour of M/s. Aditya Construction Co. India Pvt. Ltd on 2-5-2007. Possession of the land had been handed over to the Developer for construction of residential units, The to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and contentions, however, the Assessing Officer opined that even though construction had not been completed till then, possession of the land had indeed been taken over by the developer for construction of buildings. He felt that the Clause-7 in the Agreement to the effect that the said agreement did not mean transfer of property as per Section 2(47) of the Act or Section 53A of the Transfer of Property Act, 1882, had been inserted with a view to avoid tax and mere such clause could not over write any law. He felt that even if the developer had changed his plans for construction or cancel the agreement, the assessee could have taken recourse to s. 264 of the Act to avail benefit, if any. 74. The CIT(A) observed that the assessee, his family members and other relatives had indeed entered into a Development Agreement cum GPA with M/s. Adithya Construction Company on 2-5-2007. The cost thereof was ₹ 37,64,46,000 and the sharing ratio between the land owners and the developer too had been specified at 50% each for the land owners and the developer. Besides, possession of the land has also been handed over to the developer for the construction of residential units. Under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve lost its legal sanctity. Clearly, there is no stipulation in the said agreement that the agreement itself will lapse or would become invalid if construction is not undertaken within a certain period of time. 76. As regards the contention regarding willingness of the developer to perform its part of contract, there is no evidence to the effect that no such willingness existed or there was any change or cancellation of the proposed development itself. In fact, in the course of appellate proceedings, the Representative of the assessee had been required to furnish any evidence regarding such cancellation, so as to establish that the developer was not willing to perform. However, despite being given sufficient opportunity, no evidence to this effect could be furnished. It is true that the conduct of the parties is indeed the determining factor in regard to such transactions. However, such conduct needs to be established by way of documentary evidence and cannot be inferred from the mere delay in execution of any agreement, which itself can be attributable to so many reasons, other than willingness itself. It is clear that in the absence of any evidence to the contrary, the willing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has failed to establish its claim with any correspondence, institution of any legal action etc, which does indicate that the agreement stays as it existed on the date of agreement itself and the present plea of unwillingness of the developer has been brought in only with a view to defer tax liabilities of that year. Therefore, I am of the view that since the unwillingness of the developer has not been established with any evidence in this case, the ratio laid down in the case of K. Radhika and others (supra), is not applicable here. 78. Accordingly, the CIT(A) held that since the assessee and others had entered into the above mentioned Development Agreement on 2-5-2007 and had also given possession of land for construction of residential units thereon, and further because there exists no evidence regarding the unwillingness of the developer to adhere to the said agreement, the capital gains arising from the impugned transfer has been rightly brought by the Assessing Officer to tax in the assessment year 2008-09 and decided the grounds raised in this regard against the assessee. 79. We have heard both the parties and perused the material on record. In our opinion, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the AO. In the result, ITA No. 807/Hyd/2013 is partly allowed for statistical purposes. ITA Nos. 803, 764 and 756/Hyd/2013 Sri Ch. Narasimha Reddy 84. Now, we take up the appeals in ITA Nos. 803, 764 and 765/Hyd/2013 pertaining to Sri Ch. Narasimha Reddy for A.Ys. 2007-8, 2008-09 and 2009-10, respectively. 85. The first issue in ITA No. 803/Hyd/2013 is with regard to sustaining addition of ₹ 3,48,900 under the head short term capital gains. 86. Brief facts of the issue are that in the A.Y. 2007-08, the AO noticed from the computation of income that the assessee had worked out capital gains at ₹ 2,24,000. The sale consideration had been admitted at ₹ 10 lakhs while the cost of acquisition was claimed to be ₹ 4,27,100. The assessee had further claimed development expenses and brokerages amounting to ₹ 3,48,900. Since no evidence for such development expenses and brokerage could be furnished, the AO calculated the short term capital gains as a difference between the sale consideration and cost which came to ₹ 5,72,900. The difference of ₹ 3,48,900 was, therefore, brought to tax. 87. Before the CIT(A) it was contended that n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ituated at Gundla Pochampally Village, Medchal Mandal. As per the tabulated details furnished by the AO in the assessment order, the individual share holding of the assessee in the above mentioned land is Ac. 0-21.5 Gts. 93. Since in terms of the above said Development Agreement cum GPA dated 2.5.2007, the land owners had handed over vacant and peaceful possession of the entire land to the developer, the AO opined that the said agreement, as per the provisions of s. 2(47)(v) constituted a transfer. 94. He noted that in several judicial pronouncements, it has been held that any transaction which allows the possession to be taken would constitute transfer within the meaning of s. 2(47) and that any transaction which involves a transfer of title in future or exchange of a property to be put up in future, would necessarily constitute a transfer , within the meaning of s. 2(47). For this proposition, he relied on the decision of this Tribunal in the case of Srnt. Shantha Vidya Sagar Annam vs. ITO (ITA No. 885/Hyd/2003, dated 9-6-2006). Besides, he also referred to their decision in the case of Dr. Maya Shenoy vs. ACIT in ITA No. 266/Hyd/2005 dated 24-10-2008, holding that the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 78,73,988 (21.5/817 x 29,92,11,571), which was brought to tax in the assessment year 2008-09. 97. Before the CIT(A), the AR of the assessee contended that in the previous year 2007-08, the assessee along with others, had entered into a development agreement-cum- GPA with M/s. Aditya Construction Company India Pvt. Ltd on 2-5-2007. As discussed in the assessment order, during the course of search operation, a Development Agreement cum GPA had been found and seized from the premises of M/s. Malla Reddy Educational Society as page Nos. 16 to 51 of Annexure A/MRG/PO/01 which was a Development Agreement executed by the assessee, his family members and other relatives in favour of M/s. Aditya Construction Co India Pvt. Ltd. on 2-5-2007. Possession of the land had been handed over to the Developer for construction of residential units. The total impugned land of Ac. 20.17 Gts. at Survey No. 98, 99 and 100, Gundla Pochampally village, Medchal Mandal was owned by 14 individuals, wherein the assessee had share to the extent of 2 acres. The entire piece of land had been given on development and the developers and land owners were entitled to 50% each of the constructed residential bungal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exist. He claimed that the point where the capital gains are deemed to accrue purely depends on the terms of the joint development agreement. It was also claimed that the provisions of s. 53A of the Transfer of Property Act have no application to a transfer by way of exchange and the transaction under consideration was not of sale also. Therefore, the said provisions could not apply till the construction is completed by the developer. 100. The CIT(A) held observed that the assessee, her family members and other relatives had indeed entered into a Development Agreement cum GPA with M/s. Adithya Construction Company on 2-5-2007. The cost thereof was ₹ 37,64,46,000 and the sharing ratio between the land owners and the developer too had been specified at 50% each for the land owners and the developer. Besides, possession of the land has also been handed over to the developer for the construction of residential units. Under the circumstances, it is clear that in the light of the decision of the Jurisdictional Tribunal in the case of Dr. Maya Shenoy vs. ACIT (supra), which has been consistently followed by the Tribunal in their subsequent decisions, there was indeed a transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such willingness existed or there was any change or cancellation of the proposed development itself. In fact, in the course of appellate proceedings, the AR of the assessee had been required to furnish any evidence regarding such cancellation, so as to establish that the developer was not willing to perform. However, despite being given sufficient opportunity, no evidence to this effect could be furnished. It is true that the conduct of the parties is indeed the determining factor in regard to such transactions. However, such conduct needs to be established by way of documentary evidence and cannot be infer red from the mere delay in execution of any agreement, which itself can be attributable to so many reasons, other than willingness itself. It is clear that in the absence of any evidence to the contrary, the willingness of the developer to perform in this case is required to be judged only from the available Development Agreement, which indeed shows absolute and unconditional willingness, which is not studded with any condition. He observed that the mere tact of not taking up construction alone cannot establish the developer's intent in not performing its part. Until and unl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the developer has not been established with any evidence in this case, the ratio laid down in the case of K. Radhika and others (supra), is not applicable here. In view of the foregoing discussion, the CIT(A) held that since the assessee and others had entered into the above mentioned Development Agreement on 2-5.2007 and had also given possession of land for construction of residential units, thereon and further because there exists no evidence regarding the unwillingness of the developer to adhere to the said agreement the capital gains arising from the impugned transfer has been rightly brought by the AO to tax in the A.Y. 2008-09. Against this, the assessee is in appeal before us. 106. We have heard both the parties and perused the material on record. As similar issue is considered in the case of Sri Ch. Malla Reddy for A.Y. 2005-06 in ITA No. 771/Hyd/2013 in earlier paras of this order, in conformity with the same, we are inclined to allow the ground taken by the assessee. ITA No. 764/Hyd/2013 is partly allowed. 107. In ITA No. 765/Hyd/2013, only one ground is raised for adjudication, with regard to sustaining addition of ₹ 8 lakhs representing cash seized from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 63,620 as against the actual amount of income admitted of ₹ 1,45,44,220 for A.Y. 2009-10 in response to notice u/s. 153A of the Act. 112. Facts of the case are that for A.Ys. 2007-08 and 2009- 10, the AO adopted the income as admitted at ₹ 2,61,040 and ₹ 63,220/- and added to the same as the undisclosed investment of ₹ 18,20,000 in the assessment year 2007-08, thereby computing the total income at ₹ 20,81,040. For the A.Y. 2009-10, he started the computation with the admitted income of ₹ 63,220 and added to the same the additions on account of unaccounted cash, jewellery and loans, determining the total income at ₹ 1,48,68,350. It is the contention of the assessee that during the course of search, in order to avoid protracted litigation and to purchase peace with the Department, the assessee had offered the advance to G. R. Education Society aggregating to ₹ 18,20,000 through a declaration under the provisions of 132(4) of the Act for the A.Y. 2007-08 and accordingly, requested the authorities not to levy any penalties. It is stated that in response to notice u/s. 153A, the assessee filed his return of income on 30.12.2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sri Ch. Mahender Reddy in ITA No. 804/Hyd/ 2013 Ors., in the earlier paras of this order. Taking a consistent view, this ground of the assessee is allowed. Thus, ITA No. 767/Hyd/2013 is partly allowed. 117. The next ground in ITA No. 768/Hyd/2013 is with regard to confirming valuation of jewellery at ₹ 46,04,130 as against ₹ 42,80,000 admitted by the assessee. 118. As regards the ground relating to adoption of value of unaccounted jewellery at ₹ 46,04,130 in the A.Y. 2009- 10 as against the value of such jewellery declared by the assessee at ₹ 42,80,000 in the course of search, the CIT(A) observed that the value of ₹ 46,04,130 has been adopted in view of the valuation made by the Registered Valuer. Therefore, finding no infirmity in the action of the AO, the CIT(A) confirmed the addition of ₹ 46,04,130 and decided this ground against the assessee. 119. We have heard both the parties and perused the material on record. The AO adopted the value of ₹ 46,04,130 on the basis of valuation made by the Registered Valuer. The assessee not brought anything contrary to this. Being so, we confirm the addition on this count. 120. The nex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yd/ 2013). 131. Facts of the case are that as regards the additions of ₹ 1,25,000 and ₹ 3,65,000 in the A.Ys. 2003-04 and 2005-06, as per the assessment orders, there were such credit in the fund flow statement furnished by the assessee towards sale of land. However, no profit had been shown in the original return on this account or even in the return filed in response to the notice u/s. 153C. Besides, no documentary evidence in this regard was furnished even in the course of assessment proceedings. In the absence of such evidence, the Assessing Officer treated the amount of ₹ 1,25,000 as unexplained credit. Likewise, in the A.Y. 2009-10, there was a credit of ₹ 22 lakhs towards sale of land, but no profit had been shown in the return. In this respect also, no documentary evidence could be furnished in the assessment proceedings. Accordingly, the amount of ₹ 22 lakhs was also treated as unexplained cash credit in the assessment year 2009-10. 132. Before the CIT(A) it was claimed that the amounts of ₹ 1,25,000 and ₹ 3,65,000 had been shown in the cash flow statements for the A.Ys. 2003-04 and 2005-06 as exempted income out of the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng evidence in this regard. Being so, this ground is rejected. ITA No. 819/Hyd/2013 is dismissed. 142. The next ground in ITA No. 820/Hyd/2013 is with regard to holding that there is a transfer of property u/s. 2(47)(v) of the Act and thereby confirming the assessment of capital gain. Similar issue came for consideration in the case of Sri Ch. Malla Reddy in ITA No. 772/Hyd/2013 in earlier paras of this order. Taking a consistent view, this ground is allowed. In the result, ITA No. 820/Hyd/2103 is partly allowed. ITA Nos. 814, 815 and 816/Hyd/2013 Shri M. Laxman Reddy 143. The first ground in ITA No. 814/Hyd/2013 is with regard to confirming the action of the AO in taxing the gain on sale of agricultural land at ₹ 75,125. 144. Facts of the case are that as regards the addition of ₹ 75,125 in the assessment year 2005-06, as per the assessment order, the assessee had shown sale of property at Gowdavali and Dundigal at ₹ 5,13,500 and ₹ 3,02,500, respectively. The profit of ₹ 75,125/- from such sale was claimed as exempt. However, no supporting documents could be submitted in respect of the exemption claimed. Accordingly, the Assessing Officer dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim that the lands acquired by the assessee at Gowdavalli village, Medchal Mandal, Ranqareddy district and Dundigal village, Qutbullapur Mandal, Rangareddy district, subsequently were also acquired for the purpose of agriculture itself. First of all, it can be seen that the lands stated above were acquired jointly with others. The assessee has not been able to furnish any evidence to the effect that any agriculture was actually done on the lands so acquired in the intervening period. The agricultural income shown by the assessee has also not been linked to the said land, nor it was explained as to what were the expenses, produce there from and further as to how the proceeds were shared with the coowner. Besides, it is also clear that the lands so acquired were sold off by the assessee within a very short period of time, while Ac. 5. Gts. 3 purchased on 3-2-2003 was sold off on 8-12-2004 itself, Ac. 10 Gts 0 purchased on 6-2-2004 was sold off on 18-10-2004. The sale of the said lands was made to Shri S. Arun Reddy and M/s. S.S. Educational Society. While from the very name, it is clear that M/s. S.S. Educational Society cannot be said to be intending to undertake any agricultu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f were made out family's savings while part was received by his family members on various functions] However, no evidence regarding investment in jewellery could be furnished at the time of search. During the course of assessment proceedings also, the assessee was required to substantiate his claim regarding source of such jewellery. However, he could not furnish the requisite information. Besides, the AO noticed that there was no amount spent for jewellery in the cash flow statement. Accordingly, the entire amount of ₹ 15,63,464/- was considered as invested out of undisclosed sources. 150. Before the CIT(A), the AR of the assessee contended that the aggregate value of jewellery found but not seized, was much below the entitlement of members of the family as laid down in Instruction No. 1916 of the Board dated 11-5-1994. Citing the decision of the Hon'ble Karnataka High Court in the case of Smt. Pati Devi vs. ITO (240 ITR 727), he contended that the said guidelines apply even to block assessment and the assessee is entitled to take benefit thereof. He also cited the decision of Mumbai Bench of ITAT in the case of Mrs. Sundari Umesh Thakur (ITA No. 5150/Mum/2009). 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grams of gold jewellery as explained on this account in the case of each of them. Besides, 100 grams of jewellery can also be considered as reasonably available and explained in the hands of the assessee himself. He observed that out of the total gold jewellery of 1256.20 grams found in the course of search to the extent of 1100 grams can be considered as reasonably explained. Accordingly, he directed the AO to consider the difference of 156.20 grams only as unexplained investment in gold jewellery. Accordingly, the CIT(A) sustained the proportionate addition of ₹ 1,94,406 and the ground raised in this regard is partly decided in favour of the assessee . 154. We have heard both the parties and perused the material on record. Similar issue came for our consideration in the case of Sri Ch. Malla Reddy in ITA No. 773/Hyd/2013. Accordingly, we direct the AO to give credit of jewellery to each member of assessee's family in terms of CBDT circular No. 1916 dated 11.5.1994. This ground is partly allowed. In the result, ITA No. 816/Hyd/2013 is partly allowed for statistical purposes. 155. To sum up Sl. No. ITA No. Result ..... X X X X Extracts X X X X X X X X Extracts X X X X
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