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2016 (10) TMI 695 - ITAT MUMBAI

2016 (10) TMI 695 - ITAT MUMBAI - TMI - Ex parte assessment u/s 144 - Held that:- it is required to make investigation by the department against the plaintiffs as to how cash amount of ₹ 50 lakhs was available with them which they claimed to have paid to the assessee. The department has not carried out any enquiry with the plaintiffs whether any sum was available with them which was said to have been paid to assessee. Therefore, in the absence of any such enquiry and since the department d .....

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oroughly and pass appropriate orders in accordance with law after giving adequate opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purpose. - I.TA No. 3643/Mum/2014 - Dated:- 31-8-2016 - SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, JUDICIAL MEMBER For The Appellant : Shri Jayesh Dadia For The Respondent : Shri Airiju Jaikaran ORDER PER C.N. PRASAD, JM: This appeal is filed by the assessee against the order of the Ld. CIT(A)-35, Mumbai .....

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of the case in giving findings that there is transfer of land, accordingly capital gain has arisen and income is subject to tax under the head capital gains. The action is unjustified and unwarranted as there is no transfer of land. 3. Brief facts are that in this case, information was received by the revenue department from Hon'ble Bombay High Court and it was directed therein to conduct necessary enquiries. It was pointed out by the Hon'ble High Court in Notice of Motion NO.3778 of 20 .....

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iff, whereas it was claimed by them to have made payment of ₹ 50 lakhs in cash out of total ₹ 52.5 lakhs consideration. It was observed in the assessment order that the subject matter of assessment order is only for verification as per the directions of the High Court, regarding how the defendant has accepted such huge amount in cash. Relevant para of the High Court order is reproduced. 9. In fact, the matter requires to be investigated by the Income Tax Department against plaintiffs .....

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r of Income Tax (Vigi1ance, Aayakar Bhavan, Mumbai to consider all these aspects and take the matter to its logical and against plaintiffs and defendant no.1, as may be advised. The Commissioner of Income Tax to appraise this Court about the course of action adopted by him in the fact situation of this case. That report be submitted within six weeks from today. Copy of this order be also forwarded to the Standing Counsel for the Income Tax Department as also the Additional Solicitor General of I .....

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s. (1) Nature of business carried out by you. (2) Details and addresses of all concerns in which you are a proprietor, partner or Director etc. (3) Copy of Return for A. Y. 05-06 along with all annexures. (4) Copy of the sale agreement as above along with details of receipt of sale proceeds. (5) Details of alI your bank accounts. 5. However the assessee failed to file any reply before the prescribed date and hence the case was reopened by issue of notice u/s.148 dated 29.3.2010 recording the fol .....

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agreement dated 21.3.2005 in relation to property admeasuring about 25000 sq.mtrs. for which Ghanshyambhai h. Patadia had Power of Attorney. In order to verify the fact whether the receipts were disclosed in the return filed with the dept. a notice dt 18.03.10 was issued to the assessee under section 133(6) of the IT Act 1961 with approval of CIT-25, and duly served on the assessee on 19.03.10 requiring him to furnish relevant details on or before 24.03.10. However, there is no compliance from .....

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21.03.2005 and accept the cash, in regards I clarify that I entered into transaction but party make fraud with me and money is not paid. In this reference I already file police complaint against Mr.Prashant Navneet Perekh, Raju Faddu and others on 13th February, 2006. For your ready reference and clarification I attached herewith photocopy of FIR (First Information Report). There is no business carried out by me. I am neither partner in partnership firm nor director in any company. I have regula .....

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x the alleged receipt of ₹ 50 lakhs in cash in the hands of the assessee. 8. On appeal, the Ld. CIT(A) sustained the order of the Assessing Officer observing that the assessee has entered into an agreement for sale of land on 21.3.2005 with the buyer. Later on deed of cancellation was entered into on 10.2.206 with the buyer. Both assessee and the buyer disputed with regard to the agreement for selling and buying land. The Ld. CIT(A) was also of the view that since the deed of cancellation .....

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he physical possession of the property. ii) The assessee stated that impugned land transfer under consideration has been compulsorily acquired by Government under the Salt Section. iii) The total sale consideration was not received by the assessee . iv) The provisions of Sec. 53A of the Transfer of Property Act could not said to have been fulfilled, no transfer of any property ought to have taken place. 10. It was further submitted during the remand proceedings before the Assessing Officer as un .....

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he above plot land has been compulsorily acquired by the Government of India with New Survey No. 378 under Salt Section. e) The proposed buyer has also filed a suit against the seller for the refund of the earnest money of ₹ 50,00,000/- together with the interest at the rate of 18% per annum as specified in the petition filed by the buyer (para. d page no 3) f) The case is still pending for in Bombay High Court for its final Order. 11. The Ld. Counsel for the assessee submits that none of .....

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below. This assessment was made ex-parte by the Assessing Officer u/s. 144 as best judgement assessment as the assessee could not file the requisite details called for. The assessee submitted before the Assessing Officer as under: Out of the total consideration of ₹ 52,50,000/- amount equal to ₹ 50,00,000/- received by the assessee is considered as 'earnest money' received. For your reedy reference we submit a close definition of 'earnest money' s as under: An earnes .....

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the amount received is in terms of earnest money which the assessing officer has also confirmed from the petition filed by the purchaser (Mr.Prashant Naveet Parekh) in the Bombay High Court in which the purchaser has claimed that he has paid the earnest money of ₹ 50,00,000/- from para. d Page no 3 of the petition .The assessing officer in his Remand Report dated 29th May, 2012 has also considered the amount received by the assessee is in terms of earnest money. From the above points it ca .....

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eady reference, we submit the following case law on immovable property: Title to immovable property of value over rupees one hundred gets transferred only on the execution of the sale deed. A mere Agreement to sell would not constitute a sale. - (1957) 32 ITR 190 (SC) Provident Investment Co. Ltd. (1985) 152 ITR 744 (Mad) Jayalakshmi Rajendran All that the intended Purchaser acquires under such agreement is an equity to obtain specific performance. (1986) 161 ITR 92 (Bom) R.R. Sood Delivery of p .....

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luded in his net wealth. (1986) 162 ITR 888 (SC) Nawab Sir Osman Ali Khan. The concept of sale of an immovable property which is included in the "capital asset" as defined under section 2(14) has to be gathered from section 54 of the Transfer of Property Act, 1882. Where it is apparent that the parties had clearly intended that despite the execution and registration of the sale deeds, transfer by way of sale will become effective only on payment of the entire consideration amount. On t .....

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lot of land dated 21st March 2005 for a sum of ₹ 52, 50, 000/- with Mr. Prashant Naveet Parekh. b) As the purchasing party i.e. ( Mr. Prashant Naveet Parekh ) has cheated assessee by not paying the above sum, so deed of Cancellation has been made dated 10th February 2006. c) FIR has been lodged against Mr. Prashant Naveet Parekh dated 12th February 2006 FIR No. 55/06, Year 2006, Kandivali Police station (Mumbai). d) The above plot land has been compulsorily acquired by the Government of In .....

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cial principles and the understanding of practical businessmen.- (1965) 57 ITR 306 (SC) Cocanada Radhaswami Bank Ltd. In computing profits or losses for purpose of income tax, commercial principles or practices commonly used by accountants must be observed and applied. Thus, in working out capital gains or losses, the principles that have to be applied are those which are a part of commercial practice or those to which an ordinary man of business will resort when computing his business income. ( .....

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