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2015 (3) TMI 640 - ITAT AHMEDABAD

2015 (3) TMI 640 - ITAT AHMEDABAD - TMI - Validity of notice issued u/s. 158BD - non recording of satisfaction with respect to the undisclosed income belonging to the Assessee - Held that:- While framing the assessment order u/s. 158BC vide order dated 30th January, 2001 in the case of Janak Kansara, A.O at para 10 on page 14 has noted that the transactions pertains to J.B. Construction that is the Assessee, cash of ₹ 3,93,689 was made to Ambica Timber Mart and Ambica Timber Depot and S .....

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be given to the Assessee at any time. Considering the aforesaid facts and in the light of the decision of Hon’ble Apex Court in the case of Calcutta Knitwears (2014 (4) TMI 33 - SUPREME COURT), we are of the view that in the present case the A.O had recorded the satisfaction as required under the Act and therefore the assessment framed was valid and thus this ground is dismissed. - Decided against assessee.

Additions in respect of payments made to M/s. Raj Granites and Decent Sales C .....

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settlements of unaccounted cash loan - CIT(A) deleted the addition - Held that:- CIT(A) while deleting the addition has noted that the amount has been already been taxed in the hands of Gopalbhai Patel in the block assessment and thus the source of money stands proved. Before us, no material has been brought on record by Revenue to controvert the findings of CIT(A) - Decided against revenue.

Addition on account of on money received on flat booking - CIT(A) deleted the addition - Held .....

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in respect of flats allotted - CIT(A) deleted the addition - Held that:- CIT(A) while deleting the addition has given a finding that the properties were not owned by the family member of Kansara Group and further the construction expense pertains to the Society and not of the Assessee. He accordingly deleted the addition. Before us, no material has been brought on record by Revenue to controvert the findings of CIT(A) - Decided against revenue.

Addition on account of unexplained cas .....

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3-2015 - Shri G.C.Gupta And Shri Anil Chaturvedi JJ. For Appellant :Smt. Urvashi Shodhan, A.R. For the Respondent : Shri T.P. Krishnakumar CIT/D.R ORDER PER SHRI ANIL CHATURVEDI,A.M. 1. These two appeals, one filed by the Assessee and the other filed by the Revenue are against the order of CIT(A)-I, Ahmedabad dated 04.03.2003 for the block period 1/04/1988 to 8/12/1998. 2. The facts as culled out from the material on record are as under. 3. Assessee is a partnership firm stated to be part of Kan .....

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isclosed undisclosed income of ₹ 41,102/-. Assessment was thereafter framed u/s. 158BD of the Act vide order dated 31.10.2002 and the total undisclosed income was determined at ₹ 1,12,69,955/-. Aggrieved by the order of A.O., Assessee carried the matter before CIT(A) and thereafter before Hon ble Tribunal. Hon ble Tribunal vide order dated 12.10.2012 passed in IT(SS)A No. 169 & 222/AHD/2003 allowed the appeal of the Assessee and remitted the matter back to the file of CIT(A) and .....

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s in accordance with law and on merits inclusive of additional ground of validity of notice issued u/s. 158BD of the Act. Thus the present appeals are now before us in 2nd ground. The grounds raised by the Assessee reads as under:- 1. The learned Commissioner of Income Tax (Appeals) : I, Ahmedabad (hereinafter referred to as the CIT(A)) has grossly erred in law and on facts in confirming the addition of ₹ 2,51,519/- being cash received by M/s. Raj Granites in total disregard of the facts t .....

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t in passing on the extra cash received from the members of the society, who are the real owners of the property, to the final recipient M/s. Raj Granites as stated by Mr. Bharat J. Shah partner of the Appellant firm in his statement on oath. (iv)the alleged amount passed on to M/s. Raj Granite and taxed in their hands is neither the expenditure nor the investment of the Appellant firm. 2. Without prejudice to what is stated in the aforesaid Ground of Appeal NO. 1, the learned CIT(A) ought to ha .....

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t that: (i) M/s. Ambica Timber Mart and M/s. Ambica Timber Depot both the firms, the final recipient of the cash, have been taxed in respect of the said amount and they have accepted the finding of the department and the said firms have not preferred even the first appeal. (ii) The Appellant firm is the developer of the property for a fixed remuneration at 10% of the cost of the project and is neither the owner of the land nor the superstructure built thereon. (iii) the appellant firm acted as a .....

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ture of the Appellant firm nor its investment as no asset has been created in the hands of the Appellant firm. 4. Without prejudice to what is stated in the aforesaid Ground of Appeal No. 3, the learned CIT(A) ought to have restricted the addition to ₹ 9,498/- being 1.0% supervision charges, of the alleged cash payment of ₹ 94,979/-, to which the Appellant firm is entitled to by virtue of the agreement between the society and the Appellant firm as developer. 5. The Appellant firm req .....

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f the Appellant firm. 6. The Appellant firm craves leave to add to, alter, amend, modify, substitute, change any of the grounds as and when occasion may arise. 4. The Assessee subsequently also raised additional grounds vide letter dated 12.04.2011 and the additional grounds reads as under:- Appellant craves leave to raise this additional ground of appeal before the Hon'ble ITAT. This is a legal ground and therefore as per the decision of Hon'ble Supreme Court in the case of National The .....

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ppeal. 5. On the other hand, the grounds raised by Revenue reads as under:- 1. The CIT(A) has erred in law and on facts in deleting addition of ₹ 27,50,000/- made on account of settlement of unaccounted cash loan received from Shri Gopal R Patel by allotment of flats to his family members which transaction resulted in understatement of sale proceeds of the flats. 2. The CIT (A) has erred in law and on facts in deleting addition of Rs,38,12,100/- made on account of 'on money' receip .....

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in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the Assessing Officer. 6. It is, therefore, prayed that the order of the CIT (A) be set aside and that of the AO be restored to the above extent. We first take up Assessee s appeal in IT(SS)A No. 169/AHD/2003. 6. Before us, with respect to additional ground whereby Assessee has challenged the validity of assessment, ld. A.R. submitted that notice u/s 158BD of the Act was issued to the Assessee on 18.10.2000 .....

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he required information. On the basis of the aforesaid reply she submitted that no satisfaction as required under the Act was recorded. She further submitted that for making assessment u/s 158BD, the condition precedent are (i) satisfaction must be recorded by the A.O that any undisclosed income belongings to any person other than the person with respect to whom search was made u/s 132 of the Act and (ii) the books of accounts or other documents or assets seized or requisitioned had been handed .....

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f the other person under no circumstances can be equated with satisfaction specified as per the Act. She further placed reliance on the decision in the case of Manish Maheshwari vs. ACIT 289 ITR (SC). She also placed reliance on the decision in the case of Padmini M. Nair vs. Union of India (2013) 33 taxman. Com. 84 (Guj). for the proposition that where a noting was made in the block assessment order of Assessee s husband on whom search was conducted and notice was issued to wife u/s. 158BD prio .....

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k Kansara for the block period 1.04.1998 to 8.12.1998 u/s. 158BC vide order dated 30.01.2001, A.O at para 10 on page 14 has clearly noted that since the transactions pertains to J.B. Construction, the same should therefore be considered in the assessment proceedings of J.B. construction but considering the fact that Shri Janak Kansara was involved in the deal and the transaction and the Assessee is not explaining these transactions satisfactorily and addition of ₹ 15,59,882/- is made to th .....

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ssessment proceedings. It does not mean that after completion of the assessment, the Assessing Officer cannot prepare the satisfaction note to the effect that their exists Income Tax belonging to any person other than the searched persons in respect of whom the search was made u/s. 132 or requisition of books of accounts were made u/s. 132A of the Act. The ld. D.R. further pointed that Hon ble Apex Court has further held that the legislature has not imposed any embargo on the Assessing Officer i .....

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on note could be prepared at either of the following stages (a) at the time of or along with the initiation of proceedings against the searched person u/s. 158BC of the Act (b) along with assessment proceedings u/s. 158BC of the Act and (c) immediately after the assessment proceedings are completed u/s/ 158BC of the Act of the searched person. The ld. D.R. relying on the aforesaid decision of Apex Court submitted that the A.O had complied with the jurisdictional requirement He further placed on .....

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the Department and can be given at any time to the Assessee if he wants the same. The ld. D.R. thus submitted that in the present case since the satisfaction was recorded while framing the assessment in case of Janak Kansara and since the A.O of the Assessee and Janak Kansara are same, the recording of satisfaction while framing the assessment of Janak Kansara, the same can be said to be incompliance of the requirement of the Section. 8. We have heard the rival submissions and perused the materi .....

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art and Ambica Timber Depot and ₹ 17,647/- was made Decent Sales Corporation. Before us, ld. A.R. has relied on the reply received under RTI Act about the non availability of satisfaction note to which we find that subsequently DCIT Circle-9 vide letter dated 10.05.2012 address to CIT has stated that the query of the Assessee was misunderstood by him to be with respect to the satisfaction note prepared by the investigation wing. In the letter it is further submitted that the reasons record .....

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the AO. 9. During the course of search, it was noticed that cash payment of ₹ 2,51,519/- was made to Raj Granite and Marble Industries for purchase of Marble cash of ₹ 3,93,689 was made to Ambica Timber Mart and Ambica Timber Depot and ₹ 17,647 was made Decent Sales Corporation over and above the regular payment made by cheque. A.O also noted that the partner of the Assessee firm in his statement has admitted to have made the payments partly by cheque and partly in cash and the .....

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not accounted in the regular books of accounts and therefore made the addition of the same. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A). CIT(A) confirmed the action of A.O by holding as under:- I have carefully considered the submissions made by the ld. Authorized representative and I have also gone through the assessment order. The main argument of the appellant is that entire payments were to be made by the society and hence it was not liable to be added in its han .....

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h payments represent unexplained expenditure. As the appellant is only a supervisor, this expenditure is not expenditure of its own and is not allowable as revenue expenditure. Rather the appellant is further entitled to receive supervision charges worked out on the basis of this amount. Hence confirmation of this amount in the hands of recipients also does not absolve the appellant as this amount has been taxed in their hands as income, while in the hands of appellant, it is taxable as expendit .....

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ales Corporation are confirmed. In respect of payment made to M/s. Ambica Timber, the A.O will work out the addition as directed above. 10.Aggrieved by the order of CIT(A), Assessee is now in appeal before us. 11.Before us, ld. A.R. reiterated the submissions made before A.O and CIT(A). On the other hand ld. D.R. supported the order of lower authorities. 12.We have heard the rival submissions and perused the material on record. We find that ld. CIT(A) while deciding the issue has concluded that .....

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und is with respect to deletion of addition of ₹ 27,50,000/- on account of settlements of unaccounted cash loan. 14.During the course of assessment proceedings, on the basis of documents seized, A.O noticed that 5 flats were allotted to the family of Shri Gopalbhai Patel. He also noticed that during the course of simultaneous search on 8.12.1998 at the residents of Gopalbhai Patel and documents were seized and his statement was recorded in which he admitted that of the 5 flats, the 4 flats .....

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make in appellants hands. I find that this amount has already been taxed in the hands of Shri Gopal R. Patel in block assessment. Thus source of money stands proved. Thus there would be no question of taxing the amount in appellant s hand and the addition is deleted. 15.Aggrieved by the order of CIT(A), Revenue is now in appeal before us. 16.Before us, ld. D.R. supported the order of A.O. On the other hand ld. A.R. reiterated the submissions made before ld. CIT(A) and submitted that the addition .....

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controvert the findings of CIT(A) and thus this ground of Revenue is dismissed. Ground no. 2 is with respect to deletion of addition of ₹ 38,12,100/- on account of on money received on flat booking. 18.On the basis of material seized during the course of search, A.O noticed that Shri Rajesh Thakkar and his family have been allotted 5 flats in Revati Scheme. It was also noticed that Assesse was accepting on money in the booking of various flats. On the basis of document seized, it was noti .....

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yment was made by these persons for investment in their respective properties and as such even if it is presumed that money was received appellant would be liable to tax on only profit part of it and not the entire receipts. Finally the ld. Authorized representative pointed jout that the same amount was also added in the hands of Janak K. Kansara, and these amounts have been accepted in that case as being received by him. Hence the amount should not be added again in appellant s hand. I have car .....

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ggrieved by the order of CIT(A), Revenue is now in appeal before us. 20.Before us, ld. D.R. supported the order of A.O. On the other hand ld. A.R. reiterated supported that the addition has also been confirmed and therefore no addition was required in the hands of Assessee and supported the order of CIT(A). 21.We have heard the rival submissions and perused the material on record. We find that CIT(A) while deleting the addition has noted that the addition of the same amounts have been made in th .....

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the basis of loose papers found and seized, A.O noted that 15 flats listed under para 5 of the assessment order were allotted to near relatives of Shri Janak Kansara and Shri Bharatbhai Shah, the two main promoters. A.O noted that Assessee has not been able to establish that market rate have been recovered and construction receipt account was credited in the same way as in other flats. He accordingly worked out the average cost of construction at ₹ 2,500 per Sq. yard and on the basis of t .....

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family members of Kansara Group. Secondly, appellant is only supervising and developing the scheme on behalf of the society. Hence none of the alleged construction expenses are claimed by the appellant as it is only entitled to supervision charges at a fixed rate. Construction expenses pertain to the society and not the appellant. Hence the addition is deleted. 23.Aggrieved by the order of CIT(A), Revenue is now in appeal before us. 24.Before us, ld. D.R. supported the order of A.O. On the othe .....

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(A) and thus this ground of Revenue is dismissed. Ground no. 4 is with respect to deletion of addition of ₹ 3,40,000/- on account of unexplained cash credit. 26.A.O noticed that cash credit in the name of Smt. Varshaben Kansara of ₹ 3,40,000/- was appearing in the books of the Assessee. In the absence of any satisfactory documentary evidence to prove the genuineness of deposits, A.O considered the cash credit as unexplained and added to the income. Aggrieved by the order of A.O, Asse .....

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