Contact us   Feedback   Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (1) TMI 175 - ITAT HYDERABAD

2016 (1) TMI 175 - ITAT HYDERABAD - TMI - Estimation of income at 8% - Held that:- A.O. could not reject the books of account and estimate the income at 8%, without there being any basis in doing so. In view of the above, we agree with assessees grounds on the issue and delete the estimation of income as made out by the A.O. It is also seen that in A.Y. 2005-06 assessee declared income at more than 8%. As assessee’s business income varies on year to year basis and the assessee is disclosing the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ent is to bring to tax the amounts received by the assessees on the basis of receipt in respective assessment years, ignoring that if it is a capital gain transaction on transfer of property, the capital gains occurs when the transfer is complete or deemed to be complete. If the terms of agreement have been fulfilled by the developer/ builder, the capital gain is to be brought to tax in the year in which the agreement was concluded i.e., in this case in the year 2007-08. In case the terms of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ies herein have received certain amounts in different assessment years, they cannot be brought to tax on receipt basis without understanding the nature of payments. In view of this, without giving any findings on the respective contentions, we are of the opinion that these issues are to be examined in detail to arrive at proper conclusions. Therefore, in the interest of both parties, we restore the issue to the file of A.O. to re-examine

The contention that agreement has not been fulf .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

/H/2013, 760/H/2013, 761/H/2013, 762/H/2013, 1016/H/2013, 1017/H/2013 - Dated:- 13-11-2015 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER For The Assessee : Mr. S. Rama Rao For The Revenue : Mr. M. Sitaram ORDER PER BENCH : These seven appeals are by the above two assessees against the common order of the Ld. CIT(A) dated 28.02.2013 in respective assessee s cases. Both these Assessees have raised various grounds for the A.Ys. 2004-05 to 2009-10 inter alia, con .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

k placed on record running into 196 pages containing various agreements and documents as placed before the authorities. 3. Briefly stated, assessees herein are individuals and have jointly entered into an agreement of sale/ purchase on 28.12.1997 with Mr. C. Kishanram Gouli of Secunderabad for purchase of schedule property in Sy.No.1 and 2 admeasuring ac.56.04 gts at Lothkunta (v), Malkajgiri (M), Ranga Reddy District at ₹ 10 lakhs per acre. Out of the total consideration of ₹ 5.61 c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d. As per the terms of agreement, SSCPL being third party would pay ₹ 4 crores to the first party i.e., land owners and both parties i.e., land owners being first party and consenting parties being second party the register 57% of the land to the third party. Balance of ₹ 1 crore was to be paid at the time of obtaining sanction from concerned authorities. There were other terms of agreement also which would indicate that constructed area would be devolving on third party/second party .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

A.O. in the assessment orders. 4. The search material indicated that the assessee Mr. BL Shankarlal Yadav has received an amount of ₹ 1,01,00,800 in financial year relevant to A.Y. 2007-08 and ₹ 56,97,391 in financial year relevant to A.Y. 2009- 10 and these amounts were brought to tax by the A.O. as the commission in the transaction. Mr. M. Suveer Reddy, being an electrical contractor as well, also received an amount of ₹ 50 lakhs in financial year relevant to A.Y. 2007-08 an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

consideration. The first issue is with reference to the estimation of income at 8% on the turnover in respective assessment years in the case of Mr. M. Suveer Reddy for which assessee contends that there is no incriminating material and the returns originally filed in respective years have been accepted and became final. The other issue is with reference to the so-called amounts received from SSCPL by Mr. BL Shankarlal Yadav and Mr. M. Suveer Reddy which were brought to tax in the year of receip .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o incriminating material in the search conducted in the premises of SSCPL and so assessee s incomes which were originally disclosed on the basis of books of account could not be rejected in the absence of any incriminating material. Ld. Counsel relied on the decision of Hon ble Delhi High Court in the case of CIT vs. Kabul Chawla dated 28th August, 2015 in support of his contention that additions cannot be made arbitrarily and without any relevance or nexus with the seized material. 5.1 Ld. D.R. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

-05 to 2007-08 on his electric contract business is concerned, there were no search and seizure operations in assessee s premises and 153C proceedings were initiated only on the basis of certain incriminating material available in the business premises of SSCPL. Even though jurisdictional High Court in the case of Gopal Lal Bhadruka (supra) has examined the jurisdiction of the A.O. in completing the assessments under section 153A, what is relevant is that A.O. could take into consideration mater .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e the incomes already got concluded, once the notice period for scrutiny was over and assessee s returns were accepted. In this case, there is no other material other than the return filed by the assessee in time, in various assessment years. Therefore, even applying the principles laid down by the Hon ble jurisdictional High Court in the case of Gopal Lal Bhadruka (supra), A.O. could not re-visit the incomes already got concluded in the original return. The principles governing the jurisdiction .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AY s will have to be computed by the AOs as a fresh exercise. iii. The A.O. will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 6.1. Considering the principles laid down by the Hon ble Delhi High Court, we are of the view that the A.O. could not reject the books of account and estimate the income at 8%, wi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

view of this, keeping the above facts in mind and principles of law, we cannot approve the rejection of books of account and estimation of income in the impugned assessment years. Assessee grounds are allowed. II. ADDITIONS ON THE BASIS OF RECEIPTS FROM M/s. SSCPL: 7. As briefly stated above, assessees have entered into a purchase agreement with Mr. Kishanram Gouli on 28.12.1997 and paid an advance of ₹ 20 lakhs out of the total consideration payable at ₹ 5.61 crores. However, subse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t and ₹ 1 crore would be paid at the time of obtaining sanction. We are not here to examine the terms of agreement and how it is to be considered for the purpose of assessment either in the hands of the owners or in the hands of the developer. It is the A.O s contention that assessee do not have any rights on the property and the amounts received being consenting parties from SSCPL is to be brought to tax on the basis of the receipt in respective years as commission in the transaction. Ass .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is development agreement has not been fully implemented as the relevant sanctions from the concerned authorities have not been obtained and virtually there is no development on the property, after payment of initial amounts. It was submitted that the amounts received are to be considered as part of capital gains as and when complete transfer takes place. It was the submission that Revenue did not analyse the nature of transaction and wrongly brought the amount to tax in the year of receipt as co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Bench, whether the amounts received is part of the consideration as agreed in the agreement or over and above the amounts payable as per the agreement, Ld. D.R. stated that these amounts are over and above the agreed amounts. The Bench also enquired whether there exist any evidence that agreements are not completed or fulfilled, as the transfer would be complete upon entering the agreement and fulfilling conditions therein as held by the jurisdictional High Court in the case of Potla Nagesw .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d into an agreement for purchase of property way back in 1997 and paid advance of ₹ 20 lakhs. Mr. BL Shankarlal Yadav is not maintaining proper books of account whereas, Mr. M. Suveer Reddy is maintaining books of account, as he is in the business as electrical contractor. However, it was fairly admitted that this advance of ₹ 20 lakhs paid in 1997 as per the agreement of sale was not reflected in the business- balance sheet of assessee, Mr. M. Suveer Reddy. It is one of the contenti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

transfer of rights over the property, having a lien for purchase of property from the owner(s). The entire payment made by SSCPL was neither examined nor brought on record by the A.O. in order to examine this aspect. It is also surprising to note that Revenue has not considered whether the transaction is to be considered as one involved capital gain or involving business transaction. Assessees herein have entered into an agreement for purchase of property may be for the purpose of investment or .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tion was taken on the owners for bringing the capital gain to tax and whether amounts received by assessees are part of transfer of property being transfer of rights, there is no clarity from either parties. What A.O. has done in the assessment is to bring to tax the amounts received by the assessees on the basis of receipt in respective assessment years, ignoring that if it is a capital gain transaction on transfer of property, the capital gains occurs when the transfer is complete or deemed to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

point that assessees herein have paid an amount of ₹ 20 lakhs at the time of agreement as initial payment which will be a deduction, along with subsequent expenditure if any, so as to arrive at the correct income. Just because the parties herein have received certain amounts in different assessment years, they cannot be brought to tax on receipt basis without understanding the nature of payments. In view of this, without giving any findings on the respective contentions, we are of the opin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version