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2015 (7) TMI 167

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..... tional Society to the assessee and that the transaction could not be completed and under those circumstances the finding of the first appellate authority have to be upheld. - Decided against revenue. - I.T.A. No. 2732/Del/2010,C.O. No. 227/Del/2010 - - - Dated:- 29-6-2015 - Shri I. C. Sudhir and Shri J. S. Reddy, JJ. For the Petitioner : Shri Vivek Wadekar, CIT. DR. For the Respondent : Shri. V. P. Gupta, Adv. ORDER PER J. S. REDDY, AM: These appeals are filed by the revenue and Cross-objection filed by the assessee directed against the order of CIT (Appeals)-I, New Delhi, dated 31.03.2010 for the AY 2006-07. 2. The facts in brief, the assessee is individual. A search and seizure operation was carried out at Room No. 101, Hotel Sara International, Hyderguda, Hyderabad on 17/03/2006. The AO passed order u/s 153C r.w.s. 143(3) of the Income Tax Act, 1961 on 30.12.2008 determined the total income at ₹ 11,85,86,805/- by making the following additions; a) ₹ 5,34,20,400/- on the grounds that the payment is made by the assessee for taking over G.B. Educational Society based on an MOU dated 27.6.2005. b) An addition of ₹ 1,28,53,800/- .....

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..... e assessee as evidenced by impounded documents. 7. The assessee has filed Cross-objection on the following grounds: 1) That the respondent filed the Return of Income on 27.09.2007 declaring an income of ₹ 3,22,12,605/-. 2) That the Ld. Asstt. Commissioner of Income Tax, Central Circle- 20, New Delhi passed an Asstt. Order u/s 143(3) computing an income of ₹ 11,85,86, 805/- on 30.12.2008. 3) That the assessing authority made the following addition as per Asstt. Order:- 1) Payment to G.B. Educational Society (Item 13) Rs.53420400/- 2) Payment to G.B. Educational Society (Item 14) Rs.12853800/- 3) Unsecured loan to G.B. Educational Society (Item 15) Rs.12000000/- 4) Receipt of cash from Sh. Bhupinder Singh (Item 16) Rs.5000000/- 5) Payment to S. Raja Singh Others (Item 17) Rs.2500000 6) Sale of 4 Flats (Item 18) Rs.600000 4) That the respondent went into an appeal before CIT (Appeals-1) against the Asstt. .....

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..... ody and was authorized to operate bank account with Punjab National Bank. He further referred to Para 5.6 of the ld. CIT(A) s order and disputed the same. On grounds No. 3 4 he submitted that this is linked with the decisions that would be taken by the Bench on the first ground and hence no separate arguments were advanced. 11. The ld. counsel for the assessee Shri V.P.Gupta, Advocate on the other hand submitted that the transactions had not materialized and in the MOU did not get acted upon. He filed written submissions and relied on the orders of the first appellate authority. He vehemently contended that the addition is a hypothetical addition for the reason that, no transactions has taken place. 12. In reply the ld. DR referred to statement of president of GB Educational Society, Mr. Satish Chander Goel, dated 18.12.2008 which is at pages 115 to 126 assessee s paper book and specifically to question nos. 13, 16 and 21 and argue that once a part payment is made it is a case of the transaction having been gone through. 13. On a careful consideration of the facts and circumstances of the case and a perusal of the papers on record and the orders of the authorities below, .....

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..... cash and the balance will be paid as and when required by party of the first part. The balance of ₹ 2.841 crores shall be paid by the party of the second part directly to Greater Noida Authority as and when dues. However, if any, Government Authority does not allow the smooth transfer of Society to the party of the second part, the whole amount will be refunded by party of the first part along with interest @ 2% per month to the party of the second part. 19. As per the memorandum of M/s GB Educational Society, the Society cannot be taken over unless and until majority of the members are inducted from another group. As per these clauses, at least 12 members should be inducted by the assessee s group, which has not taken place. When the same members of the society continue, it cannot be said that there was a takeover of GBES. 20. Regarding authorization to operate corporation bank account, this is limited authorization and is not conclusive proof that the transfer has taken place. As per clause 2 of MOU dated 27.06.2005, the amount invested by the assessee upto 31st March, 2006 would be ₹ 1,49,69,980/-, out of which the AO is already held that the source to the .....

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..... o take over GBES along with land did not materialize. The assessee has received back all the payments made towards membership and also loan to GBES are returned by cheque and recorded in the books of the assessee. Therefore, the contention of the assessee having received cash also in the books on cancellation cannot be rejected. I have scrutinized the loan confirmation letters from the various parties to GBES. These confirmations are self explanatory giving complete particulars of payment and also of the parties. I have no reason to believe that these unsecured loans are fictitious. Assessee even though if had taken over GBES, the loans if existed on the date of taking over would have become the loans of the society under the new management. Under no circumstances the assessee can be brought to tax on account of these unsecured loans. The AO has grossly erred in making this addition. For the detailed reasons stated in Paras Supra, the following additions are deleted from the assessment order passed for the assessment year 2006-07 which was subsequently rectified by the AO in the order u/s 154 passed on 11/02/2010. 23. The above factual findings could not be controverted with .....

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