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2015 (10) TMI 2430 - ITAT MUMBAI

2015 (10) TMI 2430 - ITAT MUMBAI - TMI - Addition on net profit on account of money receipts - sale of bogus tenancy flat - CIT(A) deleted the addition - Held that:- There is uncontroverted finding in the impugned order that the assessee sold the flats at the market rates and there was no proof that on money was received by the assessee on sale of flats/from tenants, thus, no presumption can be drawn, in the absence of any material, that any under hand money transacted between the assessee and t .....

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annot be sustained. Even otherwise, presumption cannot take the shape of evidence, however it strong may be. It is also noted that even the ld. Assessing Officer vide his remand report dated 11/01/2011 categorically stated that the impugned five parties were actually given possession of the property in lieu of the surrender of the tenancy rights. Even in the remand report, it has been concluded the by Assessing Officer that the noting on the seized paper and the agreement does not tally and rath .....

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dition - Held that:- Because the addition was made merely on the basis of certain statements and without corroborating the same with the material whereas, as mentioned earlier, as per the MHADA the actual tenants were 101, whereas, as per the assessee, they were only 97, thus, there is no question of bogus tenancy, more specifically when alternate accommodation was provided to, claimed, 97 persons in lieu of surrender of their tenancy rights. So far as, seizure of incriminating material from the .....

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uently, we affirm the conclusion drawn by the ld. Commissioner of Income Tax (Appeals). - Decided against revenue - ITA NOs.3222, 3224 to 3226/Mum/2011 - Dated:- 28-9-2015 - Shri Joginder Singh, Judicial Member, and Shri Rajesh Kumar, Accountant Member For The Assessee : Shri Vijay Mehta For The Revenue : Shri N.P. Singh CIT-DR ORDER Per Joginder Singh (Judicial Member) This bunch of appeals which pertains to different assessee, wherein, the Revenue is aggrieved by the different orders dated 31/ .....

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heard, Shri N.P. Singh, ld. CIT-DR, and Shri Vijay Mehta, ld. counsel for the assessee, both contended that appeal for A.Y. 2006-07 (ITA No.3229/Mum/ 2011) may be taken first, by further submitting that issues in the impugned appeals are identical, therefore, we tend to dispose off this appeal first. 2.1. The crux of argument advanced by Shri N.P.Singh, ld. CIT-DR, is that the assessee is a builder/developer and search and seizure operation was carried out at different places at Rohan Group on 1 .....

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other cases also, on the basis of which, addition was made. Our attention was invited to page 39 of the paper book. It was asserted that while granting relief the ld. Commissioner of Income Tax (Appeals) disregarded the statements recorded from aforementioned two persons. Our attention was invited to pages 45, 46 of the paper book, wherein, the assessee offered 23 crores and page 5 of the paper book containing the statement. It was also submitted that the statement tendered by Ms. Joshi was com .....

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were issued to the concerned parties and they were cross examined by the Assessing Officer and even in the remand report sent to the ld. Commissioner of Income Tax (Appeals), the Assessing Officer himself stated that these party did not give any on money to anybody, thus, no inference can be drawn that any under hand money was given to the assessee. Our attention was drawn to pag 7 (para-9) of the assessment order. It was also pleaded that in my regular books of account cannot be discarded by f .....

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nment agency (MAHADA) will not conceal the number of tenants and there is only possibility that old tenants might have given tenancy rights to other persons. A strong plea was raised that even without getting consent from at least 70% of the tenants, no construction can be made and thus, the assessee requested the occupant to get new rights for vacating the buildings. Agreement was claimed to be entered with five parties by way of registered documents, thus, the assessee neither created any bogu .....

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the impugned order. Reliance was placed upon the decision of the Tribunal (ITA No.4735/Mum/2008) which was affirmed by Hon ble jurisdictional High Court in ITA No.1196 of 2011 (R.R. Chaturvedi). So far as the statement of Shri Harish Mehta is concerned it was explained that there were different partners/persons in the different group, thus, no addition can be made on the statement of any person unless and until it is corroborated with effects. It was also pleaded that the statement of Ms. Choula .....

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of the assessing officer in the remand report that the area mentioned in the seized documents and the actual area given to the persons concerned differs. 29. Further, in my view, no addition on account of receipt of on money can be made due to the fact that AO in. his remand report has clearly stated that the area mentioned in the seized document & the actual area given to the persons concerned, differs. He confirmed that the actual area given to the persons concerned is as mentioned in thei .....

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have also stated that they have not paid any money to the appellant. 30. It is also observed that as per the noting in the seized paper, Flats no 2501 and Flat No.2505 is allotted two parties. However, it is perused that the building Siddhesh Apartment was constructed only upto 24 floors. On the basis of the above, it is seen that the noting made in the seized material proved to be incorrect, and thus, does not represent the factual position. It is observed that the entire addition in the presen .....

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is no material or evidence on record. More so, the tenants are certified by MHADA, a government agency, the same cannot be disapproved by me unless there is any contrary evidence. Therefore, as no other evidence were found indication that the appellant had received an on more in respect of free sale flats tenants certified by MHADA., the addition on account of receipt of on money cannot be made. 32. Considering the aforementioned facts, and, on examination, it is observed that no material has be .....

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tion in the assessment was made on the basis of the loose paper seized from the residence of Chaula Joshi, which is perused to be rough noting. It is observed that the area mentioned in the noting on the seized paper does not tally with the actual area allotted to those parties as per the agreement and the response letters to notice u/ s. 131. In fact, the AO has concluded in the remand report that the noting on the seized paper and the agreement does not tally and factually the parties have rec .....

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considered the submissions of the appellant and the contentions of the AO. It is observed that the AO has erred in counting the no. of tenants. It is seen that the total no of tenants in the said 3 buildings are 101 out of which the total no. of tenants to whom permanent alternate accommodation was provided was 97. It is further noted that the same reconciles with the no. of tenants as per the list certified by MHADA 46. It is evident that the name of M/s Mehta Trading Company is mentioned in th .....

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has been made by the AO on the basis of incorrect facts. Thus, in principle sale of bogus tenancies cannot be have said to be made on the said contention of the A.O. 47. More so, it is evident that the entire addition made by the Assessing Officer on the ground under consideration is the seized material found in the residence of Chaula Joshi. As already discussed in para 20-23 and 26-29 above, it is observed that the noting on the said loose papers are incorrect and does not represent the factu .....

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ial available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, the facts, in brief, are that the assessee company is engaged in the business of redevelopment of cessed buildings by following project completion method. During the relevant period, the assessee company had three projects in hand i.e. Riddhi Siddhi apartment, Siddesh Villa, Siddesh Apartment, which were nearing completion. On 10/08/2006, a search and seizure operation was carried out, .....

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ofit on sale of bogus tenancy of shop in riddhi apartment an dflat in Siddhesh Villa). 2.4. On appeal, before the ld. Commissioner of Income Tax (Appeals), it was claimed by the assessee that project completion method of accounting is followed by the assessee and the profit from the project is offered for taxation in the year of substantial completion of the project, therefore, it was claimed before the ld. Commissioner of Income Tax (Appeals) that the profit from Siddhesh apartment was offered .....

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Income Tax (Appeals) it was claimed by the assessee that the copy of seized material, on the basis of which additions were made, and the statement of Ms. Chaula Joshi were not provided to the assessee and further the assessee also requested to cross examine various parties which were refused by the Assessing Officer. It is pertinent to mention here that search action was also carried out and the residence of Ms. Chaula Joshi who was working as marketing/sales executives with the assessee, which .....

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of 40%. The ld. Assessing Officer issued show cause notice to the assessee as to why the amount of 40% of the sale receipts should not be treated as suppressed sales/added to the total income. The assessee denied having received any cash from the impugned five parties. However, the Assessing Officer made addition on presumptive basis as GP of 20% as receipt from on money, thus, on this account the income was computed at ₹ 1,40,39,039/-. Before the ld. Commissioner of Income Tax (Appeals), .....

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of more number of tenants. 2.5. We further note that certain additional evidences were filed before the ld. Commissioner of Income Tax (Appeals), with respect to alleged five parties, therefore, the additional evidence was remanded back to the file of the ld. Assessing Officer with a direction to cheque the actual area allotted to this five parties. The Assessing Officer carried out verification and vide remand report dated 11/01/2011 did not raise any objection to the admission of additional e .....

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respective agreements and one Mr. Kamlesh Baheti, in response to notice issued u/s 131 of the Act specifically tendered that he received flat in lieu of surrender and he sub tenanted the property to four other parties and he neither received nor paid any money and all the five parties received flats on surrender of their tenancy/property and the specifically tendered that they did not pay any money to the assessee. There is uncontroverted finding in para 30 of the impugned order with respect to .....

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he tenants were certified by MHADA, which rather contains more tenants, therefore, the allegation of creation of bogus tenancy is not substantiated. Neither before the Assessing Officer nor before the ld. Commissioner of Income Tax (Appeals) and even before this Tribunal no material was produced at any stage that the assessee received on money/under hand money, thus, merely, on the basis of statement of one or two person, the addition made on presumptive basis cannot be sustained. Even otherwise .....

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s per the agreement, thus, the totality of facts, clearly indicates that the addition was merely made on presumptive basis, which cannot stand on its legs, therefore, the addition of ₹ 1,40,39,036 was rightly deleted, consequently, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals). 3. Now, we shall take ground no 2 & 3 with respect to deleting the addition of ₹ 66,03,316/- and ₹ 5,44,32,840/-made on account of sale consideration of .....

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ended the conclusion arrived at in the impugned order. On ground no.3, identical argument was advanced by ld. CIT-DR, whereas, the ld. counsel for the assessee strongly defended the conclusion arrived at in the impugned order. 3.1. We have considered the rival submissions and perused the material available on record. We note that broadly the addition was made by the Assessing Officer on the plea of creation of bogus tenancy rights. The assessee developed the projects Siddhesh Apartment by clubbi .....

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guise of bogus tenancies. However, we note that the Assessing Officer has not identified which are the bogus 22 tenants and who are the bogus tenants to whom the area was sold by applying the ready recknor rate in arriving at the unaccounted sales. The Assessing Officer made addition of ₹ 5,44,32,840/- and made further addition of ₹ 66,03,316/- on account of sale of bogus tenancy with respect to shop number 1A allotted to one Leela Hansrajani. We have perused the record and found un .....

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of the Assessing Officer (dated 10/01/2011) received in the office of the ld. First Appellate Authority on 18/01/2011 along with the statement of five parties, which were tendered, pursuant to notices issued to them u/s 131 of the Act. The relevant extract of the remand report is as under:- In this connection, it is confirmed that the area mentioned in the seized document & the actual area given to the persons concerned, differs. It is also confirmed that the actual area given to the persons .....

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1 1450 1705 1802 1803 567.04 404.40 551.32 1522.76 2. Ramanlal Jain 2401 1450 1805 567.04 3. Mahendra Jain 2101 906 1003 436.69 4. Rasilaben Ajani 2001 906 Not flat Sold/Alloted 5. Sanjay Agrawal 2501 1450 2005 567.04 6. Rajiv Agarwal 2505 906 1505 566.83 23. Along with the remand report the Assessing Officer has also attached the response of the five parties to the notice u/s 131 of the Act. Relevant extract of the response of Mr. Kamlesh Baheti is as under:- Q. 5 Nature of transaction with Roh .....

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gainst it. Q6. Whether any extra money was paid/received for surrender of tenancy- I simply received flat in lieu of the occupied property. No money was either taken or given for such surrender or vacancy of property by me. 24. Further, the other four parties viz. Mahendra Jain, Rajeev Agarwal, Sanjay Agarwal, Ramanlal Jain have submitted their reply in Hindi. The English translation of the relevant extract of the reply of Mr. Rajeev Agarwal (one of the above) is as under: I have been allotted F .....

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sessee, whereas, the Department is filing appeal against the impugned orders without bringing any positive material on record. How the Revenue is aggrieved is not known? However, without going into much deliberation, it is not disputed that MHADA made a detailed survey/certification process including verification of relevant documents, on-site verification, measurement and being the monitoring body of the government actually certified the units at 101 against the claim of 97 made by the assessee .....

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, as mentioned earlier, as per the MHADA the actual tenants were 101, whereas, as per the assessee, they were only 97, thus, there is no question of bogus tenancy, more specifically when alternate accommodation was provided to, claimed, 97 persons in lieu of surrender of their tenancy rights. So far as, seizure of incriminating material from the residence of Ms. Chola Joshi is concerned, we have already deliberated upon the same in preceding para of this order. It is also worth mentioning that w .....

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5/Mum/2011, 3226/Mum/2011, 3228/Mum/2011 and 3230/Mum/2011, wherein, identical grounds have been raised. Before coming to any conclusion we are reproducing hereunder the appeal wise factual finding recorded by the ld. Commissioner of Income Tax (Appeals) for ready reference and analysis:- 15. I have carefully considered the submissions of the appellant and the order of the AO. It is evident from the assessment order, that the AO has referred and relied upon the findings for the AY 2006-07. It is .....

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on by the AO had arisen for consideration before me in the appellants own case for AY 2006-07 vide order dated 31/01/2011 the same was decided in favour of the appellant for the following reasons given in para nos. 45 - 47 of the said order:- a. The AO erred in counting the no. of tenants. The total no of tenants in the 3 buildings were 101 out of which the total no. of tenants to whom permanent alternate accommodation was provided was 97. b. The four parties are the sub-tenants of M/s. Mehta Tr .....

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. It is also observed that the appellant has provided this party with permanent alternate accommodation as per the provisions of rule 33(7) of the BMC rules. On perusal of the various material evidences available on record like the agreement copies, electricity bills, telephone bills, etc, it is observed that the property against which Flat of Siddhi Apartment was allotted was possessed by Mrs. Jayaben Kanober. In my view, no presumptions can be made as there is no Material or evidence on record .....

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entioned facts and in absence of anything material on record to prove otherwise, the addition on sale of flats to bogus tenancies by the appellant cannot be sustained. In the result the appeal is allowed in favour of the appellant. Xxxxxxxxxxx 22. I have carefully considered the submissions of the appellant and the assessment order. It is observed that various tribunals have accepted the project completion method as an appropriate method of computing income. The tribunals have also accepted the .....

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i. Asia Resorts Limited (96 TTJ 909) 23. On perusal of the decisions cited above, it is observed that it has been held that the method of accounting which has been consistently followed by the Company and which is in accordance with the Accounting Standards issued by CBDT and lCAl, the same cannot be questioned, unless there is a finding by the Revenue that the method adopted by the taxpayer results in distortion of profits. Therefore, I am of the opinion that since the appellant has consistentl .....

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aised for the assessment year 2006-07. It is also observed that the entire addition made by the AO on the ground under consideration is the seized material found in the residence of Chaula Joshi and the contentions raised in assessment year 2006-07. More so, the AO has not got any evidence with respect to sale of bogus tenancies for the current year. 17. It is observed that all the contentions and the findings relied upon by the AO had arisen for consideration before me in the appellants own cas .....

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to these parties in lieu of the sub-tenancies. c. The entire addition made by the AO on the ground under consideration is the seized material found in the residence of Chaula Joshi. The notings on the said loose papers are incorrect and does not represent the factual position and thus held to be rough notings. d. The addition in respect of sale of bogus tenancies has been made by the AO on the basis of incorrect facts. 18. It is also observed that the appellant has provided this party with perma .....

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etc, the tenancy of the said party since long back is established. These bills are issued by government companies and authorities i.e. Mahanagar Telephone Nigam Ltd. The same cannot be disapproved unless there is any contrary evidence. Therefore, as no other evidence were found indicating that the appellant had received any on money, the addition on account of receipt of on money cannot be made. 19. Considering the aforementioned facts and in absence of anything material on record to prove other .....

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t was completed in the following decisions: ix. In Champion Construction Company 5 ITD 495 (1983) x. M/s Unique Enterprises Vs ITO [201O-TIOL-737-ITATMum xi. In Prestige Estate Projects (P) Ltd Vs DCIT (2010) 33 DTR 514 xii. CIT v Bilahari Investment (P) Limited (299 ITR 1) xiii. DCIT v OTIS Elevator Co. India Ltd. (284 ITR 173) xiv. CITy Ashokbhai Chimanbhai (56 ITR 42) xv. T. K. International Ltd. V ACIT (275 ITR 101) xvi. Asia Resorts Limited (96 TTJ 909) 24. On perusal of the decisions cited .....

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have been considered on the same basis. Accordingly, the said ground of appeal stands allowed in favour of the appellant. ITA No.3225-2011 15. I have carefully considered the submissions of the appellant and the order of the AO. It is evident from the assessment order, that the AO has referred and relied upon the findings for the AY 2006-07. It is seen that the AO has not raised any additional contention apart from those raised for the assessment year 2006-07. It is also observed that the entire .....

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our of the appellant for the following reasons given in para nos. 45 - 47 of the said order:- a. The AO erred in counting the no. of tenants. The total no of tenants in the 3 buildings were 101 out of which the total no. of tenants to whom permanent alternate accommodation was provided was 97. b. The four parties are the sub-tenants of M/s. Mehta Trading Company and the appellant provided permanent alternate accommodation to these parties in lieu of the sub-tenancies. c. The entire addition made .....

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C rules. On perusal of the various material evidences available on record like the agreement copies, electricity bills, telephone bills, etc, it is observed that the property against which Flat of Siddhi Apartment was allotted was possessed by Mrs. Jayaben Kanober. In my view, no presumptions can be made as there is no Material or evidence on record. More so, on perusal of the electricity bills, declaration by the school, etc, the tenancy of the said party since long back is established. These b .....

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nnot be sustained. In the result the appeal is allowed in favour of the appellant. XXXXXXXX 22. I have carefully considered the submissions of the appellant and the assessment order. It is observed that various tribunals have accepted the project completion method as an appropriate method of computing income. The tribunals have also accepted the treatment by the assessee to offer income to tax in the year when the project was completed in the following decisions: i. In Champion Construction Comp .....

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ch has been consistently followed by the Company and which is in accordance with the Accounting Standards issued by CBDT and lCAl, the same cannot be questioned, unless there is a finding by the Revenue that the method adopted by the taxpayer results in distortion of profits. Therefore, I am of the opinion that since the appellant has consistently followed project completion method the income of the appellant ought to have been considered on the same basis. Accordingly, the said ground of appeal .....

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he fact that AO in. his remand report has clearly stated that the area mentioned in the seized document & the actual area given to the persons concerned, differs. He confirmed that the actual area given to the persons concerned is as mentioned in their respective agreements. Its is also observed that Mr. Kamlesh Baheti, one of the five parties, in response to notice issued u/ s. 131 stated to have received flat in lieu of surrender of property. He admitted, to have sub tenanted the property .....

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artment was constructed only upto 24 floors. On the basis of the above, it is seen that the noting made in the seized material proved to be incorrect, and thus, does not represent the factual position. It is observed that the entire addition in the present proceedings has been made by the AO based only on the said seized material, which is, now proved to be, incorrect and erroneous. 31. It is also seen that the flats are sold by the appellant at market rates. It is further observed that there is .....

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pellant had received an on more in respect of free sale flats tenants certified by MHADA., the addition on account of receipt of on money cannot be made. 32. Considering the aforementioned facts, and, on examination, it is observed that no material has been found indicating that the appellant has received on money. On going through the agreements filed by the appellant, the response of the five parties to notice u/ s. 131 issued by the AO, and the comments made by the AO in the remand report dat .....

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al area allotted to those parties as per the agreement and the response letters to notice u/ s. 131. In fact, the AO has concluded in the remand report that the noting on the seized paper and the agreement does not tally and factually the parties have received area as per the agreement only. Thus, the agreements, comments in the remand report, the statements recorded in the remand proceedings, corroborates with the submissions made by the appellant. Therefore, as there is nothing material on rec .....

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ich the total no. of tenants to whom permanent alternate accommodation was provided was 97. It is further noted that the same reconciles with the no. of tenants as per the list certified by MHADA. 46. It is evident that the name of M/s Mehta Trading Company is mentioned in the MHADA certified list and the same is not disputed by the AO as well. Further the four parties are the sub-tenants of M/s. Mehta Trading Company. Accordingly, the appellant provided permanent alternate accommodation to thes .....

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by the Assessing Officer on the ground under consideration is the seized material found in the residence of Chaula Joshi. As already discussed in para 20-23 and 26-29 above, it is observed that the noting on the said loose papers are incorrect and does not represent the factual position and thus held to be rough noting. Therefore, as there is nothing material on record to prove otherwise, the addition on sale of flats to bogus tenancies by the appellant cannot be sustained. In the result, the ap .....

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eration is the seized material found in the residence of Chaula Joshi and the contentions-raised in assessment year 2006-07. 11. It is observed that all the contentions and the findings relied upon by the AO had arisen for consideration before me in the appellants own case for AY 2006-07 and vide order dated 31/01/2011, the same was decided in favour of the appellant for the following reasons given in para nos.27, 28, 29 and 30 of the said order:- 1. The notings on the said loose paper incorrect .....

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rused that the building Siddhesh Apartment was constructed only upto 24 floors. . 4. The comments of the AO in the remand report clearly mentioning the fact that the area mentioned in the seized documents and the actual area given to the persons concerned differs. 12. Considering the aforementioned facts and as there is nothing material on record in the year under consideration to prove otherwise, the addition on account of receipt of on money by the AO cannot be sustained. In the result the gro .....

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aforesaid paras, various judicial pronouncement has already been considered in the impugned orders, therefore, in the absence of any contrary facts/judicial pronouncements, more specifically on behalf of the Revenue, on the reasoning contained in preceding para of this orders, we find no merit in the appeals of the Revenue, therefore, the appeals of the Revenue are dismissed. 5. Now, we shall take up the cross objections (C.O. 103 to 109/Mum/2012) (Arising out of ITA No.3222, 3324 to 3226, 3228 .....

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by submitting that the cross objections of the assessee may be dismissed as it is and delay may not be condoned. 5.1. On condonation of delay, We have considered the rival submissions and perused the material available on record. Now, question arises whether there was sufficient and good reason explained by the assessee for condoning the delay. If the reasons were found to be sufficient and bonafide, the delay deserves to be condoned. Before, we evaluate, the sufficiency of reasons, it would be .....

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of the assessee or the Revenue in filing the appeals. In matters concerning the filing of appeals, in exercise of the statutory right, a refusal to condoned the delay can result in a meritorious matter being thrown out at the threshold, which may lead to miscarriage of justice. The judiciary is respected not on account of its power to legalize in justice on technical grounds but because it is capable of removing injustice and is expected to do so. 5.2. The Hon ble Apex Court in a celebrated deci .....

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proach is to be adopted. If sufficient cause is found to exist, which is bona-fide one, and not due to negligence of the assessee, the delay needs to condoned in such cases. The expression sufficient cause is adequately elastic to enable the courts to apply law in a meaningful manner, which subserves the end of justice- that being the life purpose of the existence of the institution of the courts. When substantial justice and technical consideration are pitted against each other, the cause of su .....

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e the courts to do substantial justice to parties by disposing of matters on de merits. The expression sufficient cause employed by the legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice that being the lifepurpose of the existence of the institution of courts. It is common knowledge that this court has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to h .....

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truction. Considering the entire gamut of facts, explanation of the assessee and in the absence of any contrary material, we deem it fit and proper to hold that assessee had a bona fide and sufficient reason for the delay in filing the cross objections, therefore, respectfully, following the observation made by Hon ble Apex Court (Supra), the delay is condoned. 5.4. Now, we shall deal with the cross objections filed by the assessee. In Assessment years 2001-02, 2004-05, 2005-06, 2006-07 and 2007 .....

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2002-03), ₹ 34,94,488/-(A.Y.2003-04), ₹ 2,47,75,912 (A.Y. 2004-05), ₹ 1,56,84,696/- (A.Y. 2005-06), and ₹ 66,03,316/-(A.Y. 2006-07) is concerned, this ground is broadly in support of the order of the ld. Commissioner of Income Tax (Appeals) with respect to granting relief to the assessee. Since, we have dismissed the appeal of the Revenue, therefore, the impugned grounds in the cross objections, is consequential in nature, therefore, dismissed as in-fructuous. 6. Now, we .....

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6.1. On appeal, before the ld. First Appellate Authority, the additions were deleted against which the Revenue is in appeal before this Tribunal. 6.2. We have considered the rival submissions and perused the material available on record. Before coming to any conclusion, we are reproducing hereunder the relevant portion from the conclusion drawn by the ld. First Appellate Authority for ready reference and analysis:- 18. I have considered the submissions of the appellant and also those made in cas .....

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the area mentioned in the seized document & the actual area given to the persons concerned, differs. He confirmed that the actual area given to the persons concerned is as mentioned in their respective agreements. In the said case, it was also observed that Mr. Kamlesh Baheti, one of the five parties, in response to notice issued u/s. 131 stated to have received flat in lieu of surrender of property. He admitted to have sub tenanted the property to four other parties and specifically stated .....

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On the basis of the above it is seen that the noting made in the seized material proved to be incorrect and thus, does not represent the factual position. It is observed that the entire addition in the present proceedings has been made by the AO based only on the said seized material, which is, now proved to be, incorrect and erroneous. 21. It is also seen that the flats are sold by the appellant at market rates. It is further observed that there is no material or evidence on record to prove tha .....

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sale flats j tenants certified by MHADA., the addition on account of receipt of on money cannot be made. 22. Considering the aforementioned facts, and, on examination, in case of M/s. Meridian Constructions Pvt. Ltd., it is observed that no material has been found indicating that the appellant has actually received on money. On going through the agreements filed by the appellant, the response of the five parties to notice u/s. 131 issued by the AO, and the comments made by the AO in the remand r .....

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self has mentioned in the order that Chaulla Joshi s statement was recorded. In this statement recorded on the date of the search, she denied any cash component in the sale of flats. She also mentioned that the rates quoted by her to the prospective customers were negotiable by them with the directors of the company who also would fix the final price. It is observed that the area mentioned in the noting on the seized paper does not tally with the actual area allotted to those parties as per the .....

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nt of receipt of on money by the AO cannot be sustained. 23. In the present case, the only distinctive factor is the fact relating to receipt of on money from Pastidevi K. Mehta as noted in the seized material. In the seized material it is noted that an amount of Rs. 8,70,250/ - was received in cash from the said Pastidevi K. Mehta who has been allotted Permanent Alternate Accommodation in the appellant s project. At the same time it is noted that the area of the flat mentioned in the seized mat .....

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evidence indicating receipt of cash/on money from any other flat purchaser whatsoever has been found or seized. Further, part of the noting in the said seized paper is also factually incorrect. Thus, respectfully following the ratio laid down by Hon ble Courts and considering the facts and circumstances of the present case, I had confirmed the addition on account of Net Profit @20% on the amount of ₹ 8,70,250/- received in cash from Pastidevi K. Mehta of ₹ 1,74,050/ - . Therefore,si .....

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appellant. Just on the basis of one rough noting regarding receipt of cash, the same cannot be extrapolated to the entire year and the other assessment years involved. There is a need to show receipt of cash for making such addition. Therefore, the addition made on account of 40% sales not recorded in the books and taking 20% as net profit is deleted. 25. In the result, the appeal filed by the appellant is allowed. 6.2. If the observation made in the assessment order, leading to addition made to .....

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