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2016 (1) TMI 490 - ITAT AHMEDABAD

2016 (1) TMI 490 - ITAT AHMEDABAD - TMI - Excess consideration received treated as “on money” - Held that:- In the present case, the materials based on which the additions have been made namely the data obtained from external sources does not seem to have been confronted to Assessee. It is pertinent to observe that for adjudicating any controversy, the adjudicator is required to follow either deductive reasoning method or inductive reasoning method. In the first principle the adjudicator will dr .....

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t material. In view of these facts, we are of the view that the matter needs to be readjudicated by ld. CIT(A) by following the principles of natural justice. Needless to state that ld. CIT(A) shall grant adequate opportunity of hearing to the Assessee. The Assessee shall also be free to place any submissions or details in its support to present its case. - Decided in favour of assessee for statistical purposes. - I.T. A. No. 1502/AHD/2015 - Dated:- 3-11-2015 - SHRI RAJPAL YADAV, J.M. & SHRI .....

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e various premises of the Assessee and its related concern on 19.05.2011. During the course of survey at the site office of Ratnakar IV, several documents were impounded and inventorised as Annexure BF-17. Among other things, a sheet of paper inventorised as page 130 of Annexure BF-17 was impounded which had mention of the rate of ₹ 4,300 per sq. ft. and it gave descriptions of 3 bedroom, 4 bedroom and pent house in terms of their area. Another sheet of paper inventorised as page 129 of An .....

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eceived by way of cash i.e. on money . Further, on the basis of enquiries conducted from the Office of the Sub-Registrar, Ahmedabad, AO noticed that it was revealed that some of the flats at Ratnakar III project were sold at the rate of around ₹ 1400 per sq. ft as against the rate of ₹ 4,300 per sq feet mentioned at page 130 of the Annexure BF17 that was recovered from the Site Office of Ratnakar IV of the Assessee. A.O also noted that Ratnakar III & IV projects of the Assessee w .....

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e ₹ 4304 per sq ft, which was also almost equal to the amount mentioned at page 130 of the impounded paper. Ao was further of the view that when any sheet of paper or any document is recovered from the premises of an assessee at the time of survey, then there is a presumption that it belongs to the assessee and whatever is written pertains to the assessee and even the handwriting on the document is presumed to be of the assessee and the burden of disproving all the assumptions of being of .....

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ble to the A.O. AO accordingly concluded that Assessee had received on money in relation to the sale of all its flat in Ratnakar III & IV. AO thereafter considering the prevailing market rates as per publicly available information on the websites and on the basis of impounded paper adopted the rate of ₹ 4300 per sq feet and used it for calculating the actual consideration received by the assessee by multiplying it with the area of each flat. Based on the details furnished by the Assess .....

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Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who upheld the order of A.O by holding as under:- 2.2 I have carefully considered the contentions of the appellant as well as the observation of the A.O. I have also gone through the laws relied upon by the appellant. After careful consideration of the facts of the case, as brought out by the assessing officer and the submissions relied upon by the appellant co-related with the various case laws, I am not inclined to .....

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sing officer has not solely relied on the impounded documents, but has also investigated further to verify the rates of properties available in the real estate market, it cannot be ignored. In the assessment order the assessing officer has explained the key findings of the survey report in which a sheet of paper inventoried at Annexure BF - 17 was impounded. As per the said page on page number 130 of the said page gave description of the threebedroom, and penthouse in terms of the area. Another .....

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ue whereas, the cash amount received by it had not been reflected by the appellant in its books of accounts. On page 3 of the assessment order the assessing officer vide para-3.1 has worked out the flat area sale price and the price per sq.ft. which is not more than ₹ 1,400/- per sq.ft. which is extremely low taking into consideration the current market rate going on ,at the time of sale of these properties. The assessing officer wide para-three at page 4 of the assessment order, has co-re .....

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junction with other sheet of paper impounded from the same premises and inventoried, as page number 129 of Annexure BF 17 the things are clearly co- relatable. Page 129 of BF - 17 gives reference to the detail of transactions in respect of flat number C/ 1104 of ratnakar-111 project the sheet carries the names, PAN, and of buyers of flat total consideration and cheque payments. Area of the flat is 2610 square feet. The rate mentioned on page number 130 is ₹ 4300/- per square feet. The AO h .....

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ed all the sale of Ratnakar III and Ratnakar IV by taking the actual rate of ₹ 4,300/- per square feet and apportioning the resulting consideration as per the ratio of allocation of A.Y 2010-2111 and 2011 - 2012. With the result the assessing officer has worked out details of the total on money consideration received by the appellant during the assessment year concerned. The assessing officer has also worked out in detail ,vide page number 9,10 and 11, 12 in which the assessing officer has .....

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cheque amount in the consideration, hence gives the fair idea of the current market rate going on for any particular area of any city of India including Ahmedabad. This analysis also reflects very strongly that the rate of flat ranging between ₹ 950 -Rs. 2000 per square feet in the Ratnakar III and ₹ 1,500/- ₹ 2.600/- per square feet in Ratnakar IV were grossly understated by the appellant. The assessing officer has also analyzed the "RBl Monthly bulletin" of all ban .....

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gical extensive examples. I am completely in agreement with the contention and the reasoning of the assessing officer to arrive at the conclusion and basis of on money received by the appellant during that year. The assessing officer has also categorically stated that the appellant has completely failed to rebut the logical conclusion of arriving the basis of the flat rate pertaining to the relevant assessment year at that particular time of the year 2010-11. In my considered opinion the appella .....

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nce, to contradict, that it's payment scheme is different from what has emerged from the impounded documents. It is clear that the appellant has failed to give logical reason for reflecting the rate of flat at very low price which does not match at all with the current market price going, on at that time even taking the very conservative view. In my considered opinion the appellant has failed completely to give any logical reason of booking sale of flats which were located, in the most prime .....

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ining to real estate was not at all sluggish. Apart from the fact that the case of the appellant could not negate the rate of ₹ 4,300/- per square feet adopted by it after analyzing and bringing the logical basis of it, with the evidence of any other housing project situated in satellite area or around satellite area. The case laws relied upon by the appellant have been considered but the same are on a different facts. The appellant has not solely relied upon the report of the direct inves .....

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port also cannot be brushed aside as it is based on facts and evidence available at the time of survey proceedings. The assessing officer has given stepwise reasoning based with concrete facts to arrive at the figure of ₹ 4,300/- per square feet and the appellant has completely failed to negate this working of the assessing officer with the clinching and cogent evidence. It is pertinent to mention a similar case namely the M/s Sambhav Infrastructure Private Limited in assessment year 2012 .....

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f the Act was conducted at various premises of the assessee company on 24/10/2011. During the course of survey proceedings at 501,502, Safal Prelude Prahladnagar, Ahmedabad contain papers inventorised as Annexure A-l, A-2, A-3 and A- 4 were impounded. Unaccounted cash receipts of ₹ 20,01,00,000/- in respect of Stavan Alteza, Stavan Paradise and Stavan Arise schemes of the assessee company are reflected in these papers. In the statement dated 24lh October, 2011, Shri Mihir P. Desai, directo .....

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ement of managing director of M/s. Sambhav Infrastructure Private Ltd. and the statement of site engineer at Stavan Arise. Shri Kunal Soni and Shri Jayendra Keshavlal Patel, Site Supervisor at Stavan Paradise, shows that there is definitely a strong element of on money being the received by the owners which is regular practice. In the statement Shri Kunal Soni has also accepted the practice of consideration of sale of flat been received in the ratio of 60% cash and 40% in cheque. As per the stat .....

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ew of the facts as emerged from the of M/s. Sambhav Infrastructure Private Limited it is proven beyond doubt that the practice of accepting on money is rampant in of real estate, which cannot be denied at all in contrast to the contention of the appellant that it has not at all practice seeming on money and the piece of document found that the prices of the appellant not show the appellant's at all. The Acceptance of the managing director in the case of M/s Sambhav Infrastructure Private Lim .....

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g assessment year. Accordingly this ground of appeal is dismissed. With regard to the appellant's additional contention of treating the on money its bifurcation cannot be accepted as it has not come out with any detail as to how much revenue it has recorded on account of flat sale and on money recognized by it in its books of account. Since appellant's ground regarding addition of on money is dismissed by me the appellant's additional contention raised as above does not survive. 4. A .....

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ly relying on the survey report. Ld. CIT (A) ought to have considered submissions of the appellant and deleted addition made on the basis of dumb document without bringing any corroborative evidence on record. It be so held now. 2. Ld. CIT (A) erred in law and on facts in confirming finding of the AO in respect of market rate adopted from website namely 99acres.com and magicbrics.com ignoring fact that above website are not authenticated by government authority and cannot be the basis for making .....

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ppellant demonstrated other fact like size of flat, type of flat in appellant's projects are not similar to that of appellant. It be so held now. 4. Ld. CIT(A) erred in law and on facts in confirming addition made by AO on assumption that the appellant would have charged on money by applying unrealistic and uncorroborated rate of ₹ 4300 per sq.ft. 5. Ld. CIT(A) has failed to appreciate that comparison made by learned A.O. on the nexus between the two pages is factually incorrect in vie .....

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erred in law and on facts in making irrelevant observations at para 2.2 regarding general practice of on money so as to uphold the erroneous addition made by the AO and wrongly agreed to the contention and reasoning of the AO to make conclusion and basis of alleged on money without any iota of evidence. It be so held now. 8. Without prejudice to above the Ld. CIT (A) erred in not properly considering the alternative plea of the appellant that even in a case of on money actually proved to be rece .....

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oceedings and appellate proceedings and ought not to confirm the addition in respect of on money receipt. It be so held now. 10. Levy of interest u/s 234A, 234B&234Cof the act is not justified. 11. Initiation of penalty proceedings u/s 271 (l)(c) is unjustified 5. Before us, at the outset, ld. A.R. submitted that though various grounds have been raised, but the first ground is only effective ground for adjudication. 6. Before us, ld. A.R. reiterated the submissions made before A.O and ld. CI .....

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the paper belong to it, the paper to be not in the hand-writing of any of the Directors or the Employees of the Assessee, no reference in the document about the Assessee or its Directors nor any reference to the Scheme Ratnakar III and further the document did not bore any date and therefore it is not known as to which period it pertained to. He further submitted that the details contained in the impounded document could not be linked to Ratnakar III Scheme of the Assessee because in the the imp .....

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ng the course of Survey no other material was found which could substantiate or prove that Assessee has received any amount in excess of what is declared in the books of accounts and further A.O had made no independent inquiry and had merely relied upon the report of the Survey team. He further submitted that as far as payment of on money was concerned, AO had also not examined any of the member to whom the assessee had sold flats and that there was no basis to assume that Assessee would have ch .....

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respect of Flat No. 4-1104 of Ratnakar III to establish the allegation about the nexus between the impounded loose paper page no. 130 & 129 of Annexure BF-117. He further submitted that no incriminating material in respect of unaccounted booking receipt received from any Members of Ratnakar III Scheme was found during the course of Survey proceedings and even the impounded page no. 129 nowhere has the notings with respect to any cash payment by the Member in respect of Flat No. C-1104 of Rat .....

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y cogent material evidences and/or independent clinching evidences as regard to the receipt of on money collected by assessee from the Members of Ratnakar III Scheme that was build and developed by the Assessee, is contrary to the realities of the transaction and that mere existence or reason for suspicion would not tantamount to evidence and or material and any addition made on that ground is inadmissible. With respect to the addition being confirmed by ld. CIT(A). Ld. A.R. submitted that ld. C .....

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No. 1089/A/2011 order dated 18.02.2013 Delhi High Court (iv) Rajdeep Builders vs. ACIT (2012) 52 SOT 62 (v) Cit vs. Dolphin Builders P. Ltd. (2013) 356 ITR 420 (M.P) 7. He further submitted that all the transactions are through Registered Deed and the books of accounts have also not been rejected. He therefore submitted that the entire addition has been based on the basis of suspicion and without any material evidence and therefore the same needs to be deleted. The ld. D.R. on the other hand str .....

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course of survey papers were found from the Assessee s premises and were impounded and based on those papers additions have been made. We find that A.O apart from the papers found had also considered the prices of properties as available in the public domain like 99 acres.com, magic bricks.com and other public documents as stated in his order, to arrive at the conclusion that Assessee had indeed received on money . We also that ld. CIT(A) had upheld the order of A.O and to support the order of .....

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d to also demonstrate that Assessee was confronted by ld. CIT(A) with the facts of Sambhav Infrastructure Pvt. Ltd. (supra) and after considering the submissions of Assessee with respect to the observations made in Sambhav Infrastructure (supra) as to how it would apply to the facts of Assessee the additions were upheld. It is a settled law that the principles of natural justice requires that Assessee should have knowledge of the material that is going to be used against him so that he may be ab .....

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