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Income Tax Officer -22 (3) (4) , Mumbai Versus Shri Surendra Ludhani, C/o M/s Ravi and Dev. CAs

2015 (11) TMI 732 - ITAT MUMBAI

Reopening of assessment - Unaccounted sale of property - CIT(A) deleted the addition - Held that:- CIT(A) has analyzed the facts concerning to the issue in a proper perspective and taken conscious decision that the addition made by the AO of ₹ 80 lakhs is not sustainable in law. Even though the assessee has submitted that the above said amount of ₹ 80.00 lakhs was not accounted for, yet we notice that what is really taxable under the Act is the capital gain arising on sale of shares .....

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ppellant : Shri Sujit Bangar For the Respondent : Respondent : Shri Devendra A Mehta ORDER Per B. R. Baskaran The revenue has filed this appeal challenging the order dated 31.12.2013 passed by Ld CIT(A)-31, Mumbai and it relates to the assessment year 2007-08. 2. The Revenue is aggrieved by the decision of the ld.CIT(A) in deleting the addition of ₹ 80 lakhs made by the AO. 3. We heard the parties and perused the record. Revenue carried out the search and seizure operation in the cases of .....

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he AO, the assessee did not furnish any reply with regard to the various quarries raised by the AO. Hence, the AO assessed the sum of ₹ 80 lakhs as income of the assessee. 4. In the appellate proceedings, the assessee filed various details before the ld.CIT(A) and hence, the ld.CIT(A) called for the remand report from the AO. 5. It was noticed that the assessee and his wife are the directors in a company named as M/s Mourya Realty Pvt.Ltd. The said company held a piece of land in its name. .....

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cash aggregating to ₹ 4,72,78,000/-. The amount of ₹ 80 lakhs under consideration was also received in lieu of a post dated cheque issued for a sum of ₹ 82.06 lakhs. Since the assessee had received a sum of ₹ 4,72,78,000/- as against the agreed amount of ₹ 3,99,21,000/-, the assessee returned back the excess amount of ₹ 73,57,000/-. During the course of remand proceedings, the AO examined the repayment of ₹ 73.57 lakhs and noticed that a sum of ₹ .....

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lakhs was returned by the assessee. The ld. CIT(A) further noticed that the assessee in fact transferred the shares of M/s Mourya Realty Pvt Ltd to M/s Delhiwala Real Estate Pvt Ltd and the said transfer would automatically transfer the land also. The ld. CIT(A) also noticed that the assessee and his wife has duly declared capital gain arising on transfer of shares. The ld. CIT(A) further noticed that the transfer of shares has taken place in the month of May, 2007 and hence, the capital gains .....

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er these set of facts, the ld. CIT(A) held the the addition of ₹ 80 lakhs made by the AO cannot be sustained. 7. For the sake of convenience, we extract below the relevant observation made by the ld. CIT(A) on this issue: 5.2.1 The facts as they emerge from the impugned assessment order, remand report and submissions of the appellant during these proceedings reveal that the appellant and his wife were directors of the company M/s Mourya Realty Pvt. Ltd. that was incorporated on 22.03.2006. .....

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out by the Department on M/s Delhiwala Real Estate Pvt. Ltd., indicated that the said company had paid an amount of ₹ 80,00,000/- to the appellant in cash. The statement of the appellant was consequently recorded on 03.12.2007 wherein he admitted to having received this amount in cash in lieu of the post dated cheques issued to him by M/s Delhiwala Real Estate Pvt Ltd. In view of the fact that there was no response to the notices issued by the A.O. during assessment proceedings, the additi .....

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appellant as well as the post dated cheques handed over to the appellant by purchaser. The said clause also states that in lieu of the cheques issued for ₹ 1,00,00,000/- and ₹ 82,00,000/-, M/s Delhiwala Real Estate Pvt. Ltd. May subsequently make the payment by cash and take back the cheques issued for that amount. This is also reiterated in the answer given by the appellant to question no.7 of the statement recorded u/s 131. Also, in answer to question 11 of the said statement, wher .....

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M/s Delhiwala Real Estate Pvt. Ltd., the said consideration was to be received as follows: Cheque No. Date Amount 028601 13-12-2006 5000000 028602 05-01-2007 5000000 028603 16-01-2007 10000000 028604 Not Deposited 8206000 028605 Not deposited 11715000 TOTAL 39921000 However, as noted by the AO, in actual fact, the appellant received a total amount of ₹ 4,72,78,000/- (through cheques and by cash) as follows: Cheque No. Date Amount 028601 13-12-2006 5000000 028602 05-01-2007 5000000 028603 1 .....

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the A.O. verified the repayment of this excess amount from the concerned banks i.e. State Bank of Bikaner & Jaipurand State Bank of India, Udaipur Branch and found the details of repayment to be correct. Thus it is clear that an amount of ₹ 50,00,000/-, was returned by the appellant to the purchaser. However, the A.O. noted that in the absence of confirmation from M/s Delhiwala Real Estate Pvt. Ltd., the apellant's assertion that ₹ 23,57,000/- has been paid back in cash was n .....

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ny holding the land was transferred. To say that the land was transferred is not correct inasmuch as the conveyance deed was not registered and the agreement was drawn up in order to determine a mutually agreeable value for the land which was the primary asset of the company. This practice though undesirable, suits both the parties as it saves stamp duty for the purchaser and this in turn leads to the seller obtaining a higher consideration. Therefore, though an agreement was entered to sell the .....

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.e. shares of the company. In the instant case, the A.O. has not doubted the cost of acquisition of the land transferred-by the appellant nor the full value of consideration received as sale consideration of the said land. Neither has anything been brought on record to cast doubt on the expenses claimed in connection with this transfer. The capital gain ensuing from the transfer is to be computed only on the basis of the cost of land, the sale price thereof is to be computed only on the basis of .....

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ing to ₹ 1,58,60,000/-(Rs.1,26,88,000/- for 2,00,000 shares held by Shri Surendra Ludhani and ₹ 31,72,000/- for 50,000/- shares held by Smt. Suman Ludhani) for the said transaction. This amount was greater by ₹ 5,07,583/- than the breakup value of shares viz ₹ 1,53,52,417/-. On comparison, the capital gain on sale of land works out to ₹ 1,34,69,788/- as against capital gains of ₹ 1,33,60,000/- on sale of shares of M/s Mourya Realty Pvt.Ltd. Thus the capital ga .....

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ain with reference to the date of agreement for sale of land between the appellant and M/s Delhiwala Real Estate Pvt Ltd and therefore the addition was made in AY 2007-08. As observed earlier, the actual modus operandi for the transaction is through the sale of shares and not the sale of land. As such, the date material to the determination of the year in which capital gain arises is the date of transfer of shares and not the date of the agreement through which the value of land was set out. As .....

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the AO has confirmed that capital gain on the sale of shares to the tune of ₹ 1,06,64,000/- and ₹ 24,22,000/- has been reflected in the returns filed by the appellant and his wife respectively for AY 2009-10. 5.2.7 In the remand report, the AO has stated that repayment of ₹ 23,57,000/- could not be confirmed. In this regard it must be noted that the receipt of cash of ₹ 82,06,000/- by the appellant from M/s Delhiwala Real Estate Pvt.Ltd is not disputed by the AO. The said .....

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