TMI Blog2016 (4) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... actual position of the project even as on the date of assessment and he has not recorded the findings whether the developer started the construction work at any time during the assessment year 2006-07. The condition laid down under Section 53A of the Transfer of Property Act was not satisfied in the assessment year 2006-07. - . When time is essence of the contract, and the time schedule is not adhered to, it cannot be said that such a contract confers any rights on the vendor/landlord to seek redressal under Section 53A of the Transfer of Property Act. This agreement of JDA cannot, therefore, be said to be in the nature of a contract referred to in Section 53A of the Transfer of Property Act. It cannot, therefore, be said that the provisions of Section 2(47)(v) will apply in the situation before us. - no capital gain arises in the hands of the assessee for the asst. year 2006-07 and the appeal of the assessee for the asst. year is to be allowed. - Decided in favor of assessee. Denial of cost of improvement the assessee has not produced anything to prove the cost of construction. It is the duty of the assessee to produce necessary evidence to show that the assessee actually i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 013 for the asst. years 2006-07, 2009-10, 2010-11 and 2011-12 with regard to reduction of penalty from 300% to 100% levied by the Assessing Officer u/s.271(1)(c) of the Act in respect of these assessment years. 4. First, we take up the appeals of the assessee in ITA Nos.1779 to 1784/Mds/2013. 4.1 The facts of the case as narrated for the assessment year 2006-07 are that M/s. Coromandel Cables Pvt. Ltd. (for short CCPL) is incorporated in 1976 to carry on the business of manufacture of cables. However, on account of operational losses and due to labour unrest, the factory at Perungudi, Chennai, was shut down in late 1990. Subsequently, the founder promoters of the company sold their entire stake in the company to the present shareholders namely Smt. Rani Gopinath, Shri T. Chinnadurai and Shri M. Ganesan in 2003. On 23.11.2005 the assessee company entered into Joint Development Agreement (JDA) with Doshi Housing (firm) on 23.11.2005 for construction of a residential complex by name Etopia-1. 4.2 There was a survey operation u/s.133A on 24.1.2012. It was found that the assessee has not filed the return of income for the asst. years 2006-07 and 2007-08 till the date of survey. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07, since the facts are similar in all these asst. years. 6. Before us, the ld. AR reiterated the submissions, which was advanced before the CIT(Appeals). The ld. DR relied on the order of the CIT(Appeals). 7. We have gone through the reasons recorded for reopening of the reasons recorded for the reopening. In this case, the assessment was reopened to consider the tax incidence on entering into JDA dated 23.11.2005 with Doshi Housing. After duly recording the reasons for reopening, notice u/s.148 of the Act was issued to the assessee on 30.1.2012. 7.1 In our opinion, section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word reason in the phrase reason to believe would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, the Assessing Officer is free to initiate the proceedings u/s.147 of the Act. We have no hesitation in confirming the action of the AO in reopening of assessment in all these appeals and reject this ground of appeal of the assessee. 8. The next common ground in all the above appeals is with regard to invoking the provisions of sec.2(47)(v) of the Act based on the JDA entered into by the assessee with Doshi Housing on 23.11.2005, which was found during the course of survey u/s.133A of the Act on 24.1.2012. 9. The facts of the issue are that during the course of survey u/s.133A, JDA dated 23.11.2005 was found. On the same day, a sworn statement of Smt. Rani Gopinath was recorded u/s.131 of the Act. She confirmed that the share of her son from the firm, should also be included to the value of sale consideration and it amounts to ₹ 25 crores. According to the JDA, the assessee has to receive 37.54% of total saleable area in the project Etopia-I . The assessee has received a cheque No.088218 dated 24.11.2005 drawn on Central Bank of India, Chennai -8 by M/s. Doshi Housing for ₹ 10,00,000/- which was mentioned in the JDA dated 23.11.2005. It was also recorded by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 12,20,07,920 Against this, the assessee is in appeal before us. 10. The ld. AR submitted that the assessment proceedings for the assessment year 2006-07 was reopened consequent to the survey under section 133A of the Act on 24-1-2012 and in completing the said re-assessment the A.O. had shifted the incidence of the capital gain tax from the land transaction hereinbefore referred to based on the deemed transfer theory as per section 2(47)( v) of the Act to the first assessment year viz., 2006-07 as well as based on the impounded JDA, which was also entered into with the same purchaser on the same date as well as not registered. 10.1 The ld. AR further submitted that the Assessing Officer had computed the long term capital gain on the presumption of the possession vesting with the Developer and occurrence of deemed transfer while rejecting the sale agreement inasmuch as the A.O. had further referred to the survey statement recorded from Mrs.Rani Gopinath. 10.2 Further, the ld. AR submitted that the Assessing Officer had questioned the induction of the related parties in M/s.Doshi Housing, partnership firm, who were shown as purchasers in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the JDA as well as questioning the constitution of the partnership firm by purchaser are not relevant to the issue under consideration and the assessee company submits that the JDA was not pressed into service by them for computing the capital gain tax while circumventing the deemed transfer theory. 10.9 He submitted that first of all, in the implementation of the JDA, the deemed transfer theory cannot be roped in and further it is to be noted that if the survey results including the documents impounded as well as the sworn statements are taken into consideration, it is fatal for the revenue's case. If the assessee company is considered as a joint developer as understood by the Assessing Officer in the assessment order passed for the reassessment year 2006-07, the provisions of section 45(2) of the Act should not be overlooked while the subsequent sale transaction should be considered for taxation under the head income from business . 10.10 Further, the ld. AR contended that in the survey statement the Managing Director of the assessee company had confirmed in answer to question No.15 that the impounded joint development agreement was not acted upon as well as not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eporting of long term capital gains by the assessee company in the subsequent four assessment years, viz., 2008- 09 to 2011-12. If the purchaser/the other developer booked the cost of purchase of land in those assessment years, shifting of the incidence of capital gains to the first assessment year, viz., 2006-07, in such circumstances is wholly unjustified. 10.16 The ld. AR submitted that the sworn statement of the partner of the purchaser was also referred to by the Assessing Officer in the reassessment order for the assessment year 2006- 07 and apparently in the said statement marked as Annexure G to the said reassessment order for the assessment year 2006-07, it was stated in answer to question No.8 that the impounded JDA was not enforced and implemented. The said crucial aspect was not addressed in the assessment order for the assessment year 2006-07. 10.17 Further, as the joint developer/land owner, the assessee company is also entitled for deduction under section 80IB(10) of the Act to the extent of the profits proportionately earned by them and the survey results as well as the understanding of the A.O. clearly indicate the role of the assessee company as a joint devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opal AIR 1960 SC 100 4) V. Kunhanbu v. CIT (219 ITR 325) (Kerala) 11.2 Further, the ld. DR submitted that Smt. Rani Gopinath is well educated and is conscious of what she was telling and she was assisted and advised by her C.A., Sri Ramasubramaniam, her son Sri Surendranath, her business partners Shri Mehul Doshi and Harshad Doshi, during the course of survey. She was not alone, her own son also agreed for the facts disclosed by Smt. Rani Gopinath in a letter form independently on the day of survey itself and the same facts put to Sri Mehil Doshi, partner of Doshi Housing, who has also confirmed in his statements given on the same day of survey. 11.3 The ld. DR further submitted that it is evident that the statement given by Smt. Rani Gopinath is on the factual information admitted voluntarily. As seen from the answer to Q.22 of her statement, it was asked whether she has got anything else to say. For that simple question she said so many things like she will consult and take approval from her C.A who was present during the survey proceedings and come forward to offer the additional income of ₹ 25 crores voluntarily, that she may be excused from penalty, that she wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt filed before him by Smt. Rani Gopinath is also not correct. The retraction letter was addressed to the Commissioner and filed originally in his office. Only a copy was filed before the AO on 22.2.2012. In the hierarchy a report was called for by the Commissioner to dispose off the petition before him. In the scheme of things, the AO has submitted his report and the opinion of the Commissioner was communicated officially by the Income-tax Officer (HQs), attached to the O/o Commissioner of Income-tax- I, Chennai. 11.6 Regarding taxing of profits in the hands of the developer which were attributed to the assessee holding that ₹ 25 crores paid to one of the partners were taken as part of sale proceeds of land held by the assessee, the ld. DR submitted that the assessee holds that there cannot be an acquiesce on a statutory provisions and the share of profits of Shri Surendernath cannot be attributed to the land as he was a rightful partner. Doshi Housing is entitled for deduction u/s.80IB(10) and Shri Surendernath was entitled for profit of ₹ 25 crores which are again exempt u/s.10(2A) of the Act. 11.7 The ld. DR argued that the JDA is the essential and principal d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o mention the sale value in it. It only mentions that the actual sale consideration to be received from buyers as per guideline value would be sale consideration. The document also mentions a receipt of advance of ₹ 10 lakhs only vide Cheque No.088218 dated 24.11.2005 drawn on Central Bank of India, Chennai 600 008. The characteristics of a true and independently existing sale agreement are not exhibited in this sale agreement. It clearly implies that there is a certain other document which ensures the vendor of the land, is not in any way, deprived of the actual value, the land transfer ought to generate. This document is exactly hidden from view of the Department. The apparent deficiency in the documentation which would stand the test before the courts, in case of dishonor of the terms and conditions, is sufficed by the Joint Development Agreement dated 23.11.2005 comprising 10 Pages. It incorporates all the essential qualities a true agreement must possess in it, in stark comparison to the sale agreement dated 23.11.2005. As stated earlier, this important record was hidden from the view of the Department, neither was it produced before the .Income Tax Officer, while the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in implementation. 11.12 He drew our attention to the relevant part of the transfer as per the JDA is reproduced: And WHEREAS THE OWNER have requested the DEVELOPER to develop the entire SAID property of 3 acres and 34.5 cents more fully described in Schedule - A hereunder. And WHEREAS OWNER have agreed to sell to the DEVELOPER or its nominee 2 acres and 8.68 cents of land more fully described in Schedule-B hereunder out of the Schedule - A detailed property, and accept as total sales consideration 37.54% of the area sanctionable on the entire land of 3 acres and 34.5 cents described in Schedule-A hereunder, such area allotable to the OWNER more fully described in Schedule-C hereunder . According to the ld. DR, it is clear from the above para that 62.45% of land or 2.68 acres of land, have been sold out by the assessee company to the developer in view of which the sale consideration equalvent to 37.54% of the saleable area was receivable. 11.13 He submitted that the assessee has taken another stand to show that the transfer has not taken place as on 23.11.2005 relevant to AY 2006-07. He argued that there were encumbrances, police cases, court cases and other litig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following conditions need to be fulfilled. There should be contract for consideration; it should be in writing; it should be signed by the transferor; it should pertain to the transfer of immovable property; the transferee should have taken possession of property; lastly, transferee should be ready and willing to perform the contract. That even arrangements confirming privileges of ownership, without transfer of title, could fall under Section 2(47)(v) . 12.1 Their Lordships, having made the above observations, took note of the fact that Section 2(47)(v) was introduced in the Act w.e.f. asst. year 1988-89 because prior thereto, in most cases, it was argued on behalf of the assessee that no transfer took place till execution of conveyance. It was also noted by their Lordships that, in this scenario, assessee used to enter into agreements for developing properties with the builders and under arrangement with the builders, they used to confer privileges of ownership without executing conveyance, and to plug that loophole, Section 2(47)(v) came to be introduced in the Act. 12.2 There was no dispute on whether or not the conditions of Section 53A of the Transfer of Property Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that the contract, though required to be registered, has not been registered, or, where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed thereof by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the, transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than the right specifically provided by the terms of the contract; Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof. (Emphasis, italicized in print, supplied by us now) 12.5 A plain reading of the Section 53A of the Transfer of Property Act shows that in order that a contract can be termed to be of the nature referred to in Section 53A of the Transfer of Property Act it is one of the necessary preconditions that transferee should have or is willing to perform his pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be performed, it cannot be said that the provisions of Section 53A of the Transfer of Property Act will come into play on the facts of that case. It is only elementary that, unless provisions of Section 53A of the Transfer of Property Act are satisfied on the facts of a case, the transaction in question cannot fall within the scope of deemed transfer under Section 2(47)(v) of the IT Act. Let us therefore consider whether the transferee, on the facts of the present case, can be said to have 'performed or is willing to perform' its obligations under the agreement. 13. In the present case, there is a JDA dated 23.11.2005 between the assessee and Doshi Housing and on the same day, there is also a sale agreement between the same parties. There is one more sale agreement on the same day. In the sale agreement, there is mentioning of payment of ₹ 10 lakhs vide cheque No.088218 dated 24.11.2005 drawn on Central Bank of India, Chennai 600 08. In the two agreements, i.e. sale agreement and JDA, it is not mentioned that the possession of the property was handed over to the Doshi Housing. It is specifically mentioned in the agreement of sale in clause (5) as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m all the duties, rights and obligations as envisaged in the Sale Agreement dated 23.11.2005. The Developers have taken possession of the property and they are entitled to construct and develop the schedule mentioned property as per the sanctioned plan. 13.5 Thus, as seen from the JDA, the possession has not been given and also sale consideration is quantified at 37.54% of sanctionable construction area. The assessee only received refundable deposit of ₹ 10 lakhs. As such, the assessee has received a meagre amount as refundable deposit, which cannot be construed as receipt of part of sale consideration. There is no evidence to show that the developer got approval of the building plan from the Municipality for construction of the building. The sanction of the building plan is utmost important for the implementation of the agreement entered between the parties. Without sanction of the building plan, the very genesis of the agreement fails. To enable the execution of the agreement, firstly, plan is to be approved by the competent authority. In fact, there is nothing on record to show that building plan was got approved on or before 31.3.2006 in the relevant asst. year 2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the assessment year 2006-07. He went on to proceed on the sole issue with regard to entering into JDA and the statement given by Smt. Rani Gopinath during the survey conducted u/s.133A of the Act. Further, handing over the possession of the property is only one of the conditions u/s 53A of the Transfer of Property Act, but it is not the sole and isolated condition because of the supplementary agreement dated 23.11.2005. It was stated by the ld. DR that the developer has taken the possession of the property and the developer was entered into JDA to develop the property as per sanctioned plan. It cannot be presumed that all the conditions required u/s.2(47)(v) of the Act are fulfilled. On these facts, it is not possible to hold that the transferee was willing to perform its obligations in the financial year 2005-06 relevant to the asst. year 2006-07, in which the capital gains are sought to tax by the Assessing Officer. 14. We are of the opinion that the condition laid down under Section 53A of the Transfer of Property Act was not satisfied in the assessment year 2006-07. Once we come to the conclusion that the transferee was not 'willing to perform', as stipulated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This agreement of JDA cannot, therefore, be said to be in the nature of a contract referred to in Section 53A of the Transfer of Property Act. It cannot, therefore, be said that the provisions of Section 2(47)(v) will apply in the situation before us. 15.1 Considering the facts and circumstances of the present case as discussed above, we are of the considered view that the assessee deserves to succeed on reason that the capital gains could not have been taxed in this assessment year in appeal before us. 15.2 Further, the ld. DR relied on the sworn statement recorded from Smt. Rani Gopinath. As discussed earlier, in the sworn statement dated 24.1.2012, she has offered capital gains. It was stated that the company had intentionally and deliberately through a ruse in the form of introducing the son as a partner of the Developer firm, suppressed taxable profits and she confirmed that the share of profits of her son from the firm should also be included to the value of sale consideration and offered to tax. However, those statements were retracted by the same person vide letter filed before the CIT(Appeals) on 22.2.2012, which is kept on record. In that letter, she stated that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to the DR, the sum and substance of this case is that the assessee sold the impugned property to M/s. Doshi Housing and the sale consideration was routed through Shri M.G.Surendranath, who is son of Smt. Rani Gopinath, Managing Director of the assessee company. According to the DR, the entire issue is required to be considered in its proper perspective and has to be treated as one common transaction entered through three separate agreements but in common principle underlying is that it is a transfer u/s.2(47(v) of the Act. 15.5 Admittedly, in this case, Shri MG Surendranath was inducted into the partnership of M/s. Doshi Housing. Accordingly, he received a sum of ₹ 25,64,59,023/- during the period from 1.4.2009 to 31.3.2010, which is mentioned in the assessment order at page 80. Shri M.G.Surendranath is an independent assessee, he is major and he is at liberty to enter into any agreement as per law. According to the ld. AR, the receipt of profit from Doshi Housing by Shri M.G.Surendranath, which was accepted in his hands cannot be a reason to treat the same as taxable in the hands of the assessee on the ground that Mr. Surendranath is the son of the Managing Director o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the development activity in the asst. year 2006-07. Further, even if, we consider the sale agreement dated 23.11.2005 as validly executed sale agreement, there is no mention of the sale consideration in that sale agreement. It was mentioned in clause 2 of the sale agreement that consideration payable and date of payment of the consideration cannot be fixed at the time of signing of said sale agreement and the same shall be actual sale consideration realised from the prospective purchasers of undivided shares in the said property at the guideline value fixed by the Registration Department of Govt. of Tamilnadu prevailing at the time of each sale. The vendor, the present assessee authorised the purchaser i.e. Doshi Housing to collect the sale consideration from the prospective purchasers on behalf of the assessee and the said sale consideration shall be paid by the purchaser to the vender on completion of the project and also it was mentioned in clause 5 that absolute possession of the landed property in the hands of the present assessee also. The sale agreement was entered into in respect of 3 acres and 34.5 cents of land property. However, the JDA was entered for transfer of prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the land owner to the developer is not mentioned in the JDA and it is to be construed as deferred till the handing over of the stipulated portion of the marked built up area by the developer to the land owner. Upto that point of time, the developer was only licensed to enter the property for the limited purpose of development and construction as discussed earlier. The transfer does not take place immediately and the liability to capital gains does not arise until the built up area earmarked for the land owner as constructed and handed over. However, when the registration of document transferring undivided interest in land is done in favour of flat owner, then to that extent liability to capital gains tax to be paid by the assessee as held in the case of Chaturbhuj Dwarkadas Kapadia v. CIT, (260 ITR 491)(Bom.) CIT v. Citibank N.A .[261 ITR 570] (Bom) and in the case of R. Vijayalakshmi v. Appu Hotels P. Ltd. [257 ITR 4](Mad). In our opinion, the transaction emanating from the JDA dated 23.11.2005 cannot be liable to be taxed in the asst. year 2006-07 in terms of sec.2(47)(v) of the Act. 16.3 Further, as held by the Madras High Court in the case of CIT v. G. Saroja (301 ITR 124) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear that compulsory registration of all documents is necessary w.e.f. 24th Sept, 2001. -Also observed that the unregistered sale agreement, GPA and will transfers could also be used to obtain specific performance or to defend possession under section 53A of the Transfer of Property Act. -It was also finally clarified that any genuine or good faith transactions would not be invalidated by this decision. Since the Supreme Court has protected the genuine transactions, those were executed previously (before the date of making compulsory registration of all transfer documents under the registration Act, 1908) and supported by unregistered documents, by providing an option to get it registered and claim better title on the property involved therein, we may infer that transfer or sale of capital assets took place under the category of deemed concept as per section 2(47)(v) prior to the amendment made in the Registration and other relevant laws in the year 2001 through unregistered agreement of sale/contract of sale as back up document would be considered as transfer for capital gain taxation. But the taxability of deemed transfer of capital assets as per sec.2(47)(v) after the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not be treated as stock-in-trade of the assessee. Thus it was held that the mere fact that sale deed had not been executed was not conclusive for holding that the amount received was only earnest money and not trading receipt. 16.7 Further, the Hon ble Supreme Court in the case of Sardar Govindrao Mahadik and Anr. v. Devi Sahai and Ors. AIR 1982 SC 989, 1982(1) SCALE 191, (1982) 1 SCC 237, [1982] 2 SCR 186 has analysed the concept of part performance under section 53A of Transfer of Property Act and after analysing and referring to various case laws observed as under: To qualify for the protection of the doctrine of part performance it must be shown that there is a contract to transfer for consideration immovable property and the contract is evidenced by a writing signed by the person sought to be bound by it and from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty. These are prerequisites to invoke the equitable doctrine of part performance. After establishing the aforementioned circumstances it must be further shown that a transferee had in part performance of the contract either taken possession of the property or any part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The developer obtained permissions till the financial year ending 31-3-1996 and had also paid almost sale price except for the small amount. Bombay Municipal Corporation, however, issued a commencement certificate permitting construction only on 15-11-1996. Ultimately the power of attorney was executed on 12-3-1999. The assessee paid the tax on capital gain in A.Y. 1999-2000. The department contended that transfer had taken place during year ended 31-3-1996 relevant to A.Y. 1996-97 and accordingly, taxed the assessee in A.Y. 1996-97. The Hon ble High Court after fully discussing the scope of clause (v) of section 2(47) of the Act and also laying down guidelines for applying the clause held on the facts that the transfer had not taken place in the year ended 31-3-1996 and accordingly, capital gain was not chargeable in A.Y. 1996-97. 17.1 In the case of Jasbir Singh Sarkaria reported in 294 ITR 196 (AAR) again scope and implication of clause (v) of section 2(47) of the Act had been analysed in order to decide whether giving of possession with GPA in favour of developer amounts to transfer to give rise to chargeability of capital gain. In the fact of above case initially agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t-up-area to the land owner along with consideration of ₹ 30 lakhs. ₹ 10 lakhs have been paid during the year. Subsequently the agreement was modified on 27-2-1996 and consideration was increased to ₹ 40 lakhs in cash and 8.5% of built-up-area. The developer had further made payment of ₹ 25 lakhs, aggregating to ₹ 35 lakhs out of ₹ 40 lakhs payable. The developer had to construct seven blocks of the property. He had put up foundation for all seven blocks. He has also constructed super structure of four blocks. At this juncture the said agreement was cancelled. Another builder was brought in to complete the construction. An agreement dated 8-1-2003 was executed along with earlier builder being a confirming party. The subsequent builder completed the project. Pursuant to notice u/s. 148 of the Act the land owner filed return for assessment year 2003-04 showing capital gain and contended that the possession of land was handed over at the time of entering into the agreement dated 8-1-2003. All the appellate authorities examining the facts held that possession of the land have been handed over pursuant to initial agreement dated 30-6-1994. Considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1779/Mds/2013 for the asst. year 2006-07 is partly allowed. 20. ITANo.1780/Mds/2013 : For the asst. year 2007-08, the assessee did not file any return of income. Therefore, an action u/s.133A was conducted in the case of the assessee and consequent to the survey operations, the assessee filed a return of income on 10.4.2012 admitting a gain of ₹ 55,84,094/-. However, the said return of income was lodged by the AO that the same was filed much after the due date envisaged u/s.139(4) of the Act. The AO, thereafter came to the conclusion that the income of the assessee as declared in the return of income had escaped assessment and therefore, reopened the assessee by issue of notice u/s.148 of the Act. The assessee requested that the return already filed on 10.4.2012 may be taken as the return filed in response to the notice u/s.148 of the Act. The AO completed the assessment vide order dated 14.6.2012 passed u/s.143(3) r.w.s.147 of the Act assessing the total income protectively at ₹ 1,24,83,684/-. In completing the assessment, the AO rejected the claim of expenditure incurred towards cost of improvement of ₹ 8,99,590/- 21. As we have held in the asst. year 2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of hearing to the assessee and the AO shall work out the capital gains afresh. Accordingly, the levy of interest u/s.234A for the asst. year 2008-09 is to be computed, which is mandatory in nature. 24. Regarding the denial of cost of improvement, if the assessee places necessary evidence, the same to be considered. The assessee has produced a copy of agreement between the assessee and contractor alleged to have been entered on 11.5.2005. The AO found that the agreement lacks credence mainly because the impoverishment of the appropriate contents which a true agreement ought to incorporate in it. The AO did not believe that the amounts were left unpaid for a period of 6 years and no proof of payment was also submitted. The AO was of the opinion that the bills provided by Takshil Trading P. Ltd. cannot rely upon in view of the Commercial Department, Maharashtra viz. MahaVat. 25. Before us, the ld. AR submitted that report as well as document have no relevance with the assessment of the assessee. However, the assessee has not produced anything to prove the cost of construction. It is the duty of the assessee to produce necessary evidence to show that the assessee actually incurr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue raised by the Revenue in these appeals is with regard to cancelling the protective assessment for the assessment year 2008-09 as the income assessed was based on the income admitted by the assessee. Since, we have confirmed the substantive assessment with certain directions in the assessee s appeal for the assessment years 2007-08 and 2008-09, the appeals of the Revenue in ITA Nos. 1945 1946/Mds/2013 for the A.Ys. 2007-08 and 2008-09 are partly allowed for statistical purposes. 30. ITA Nos.1785 to 1788/Mds/13 (Assessee) : These are penalty appeals directed against the common order of the CIT(Appeals) dated 28.3.2013, wherein the CIT(Appeals) sustained the penalty levied u/s.271(1)(c) of the Act at 100% of tax sought to be evaded instead of 300% levied by the A.O. in respect of quantum additions. The AO after observing that the transfer took place in terms of JDA dated 23.11.2005 for the asst. year 2006-07, determined the income for these asst. years 2006-07, 2009-10, 2010-11 and 2011-12, correspondingly he levied penalty at 300% of tax to be evaded. On appeal, the CIT(Appeals) reduced it to 100%. Against this, the assessee is in appeal before us for all these four ass ..... 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