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2016 (12) TMI 800 - ITAT CHANDIGARH

2016 (12) TMI 800 - ITAT CHANDIGARH - TMI - Addition on assessee's share on account of profit generated on arrangement of additional land - Held that:- The Assessing Officer made the above addition on the basis of tripartite agreement to sell dated 29.06.2005. The ld. CIT (Appeals) noted that properties were sold by the respective persons by entering into agreement directly with M/s. Gee City Builders and assessee has never entered into any agreement with six persons for purchase of properties. .....

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ther through any document or agreement to sell. The Assessing Officer has not conducted any further inquiry to find out the involvement of assessee in any purchase and sale of land through six registered sale deeds. In the absence of any evidence on record against assessee to act as middleman or conduit, ld. CIT (Appeals) was justified in deleting the addition. This ground of appeal of the revenue has no merit. Same is, accordingly, dismissed. - ITA Nos. 542 and 565/CHD/2015 - Dated:- 9-11-2016 .....

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at the major issues have already been adjudicated by ITAT Chandigarh Bench in the connected matters of ITO vs. Shri Bimal Suri and ACIT vs. Shri Shekhar Chawla in ITA Nos. 664/2011 and 680/2011 of assessment year 2006-07 vide order dated 20.09.2016, copy of the same is filed on record. It is, therefore, submitted that three issues are covered by order in the case of Shri Bimal Suri (supra). In the background of these facts, we proceed to decide the cross appeals as under. ITA 565/2015 (Assessee& .....

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es of forged documents found from the third party premises and without making any inquiry. The ld. CIT(A) has also erred in ignoring the registered sale deed." "4 That the Learned CIT (A) has wrongly upheld the addition of ₹ 1,44,50,000/- on account of profit earned on sale of land of 25 Kanal 10 marlas at Lohgarh to M/s. Parshav Colonisers and Consultants Pvt. Ltd. without appreciating the fact that the appellant has not sold any land to M/s. Parshav Colonisers and Consultants P .....

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s and also erred by ignoring the registered sale deed." 6. The brief facts of the case are that a survey operation under section 133A of the Act was conducted at the business premises of M/s. Chandigarh Overseas Pvt. Ltd., Chandigarh and its sister concerns. During the course of survey, certain loose papers, copies of the agreements and other documents were found and impounded. The important impounded documents which were considered for assessment of income are as under:- i) Agreement to Se .....

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s Pvt. Ltd. and to its sister concerns. 8. During the course of assessment proceedings the Assessing Officer examined the documents. One of the impounded document is 'Agreement to Sell' dated 29.01.2005 executed between the sellers (i) Smt. Pushpinder Kaur (ii) Shri Gurtej Singh (iii) Preetpal Singh and the buyers; (i) Shri Gulshan Rai (ii) Shri Jagpal Singh (assessee) and (iii) Shri Bimal Suri. Other documents noted above were considered to determine profit earned on sale of lands. All .....

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se of Shri Bimal Suri (supra) in paras 3 to 32 of the order read as under:- ITA No. 664/CHD/2011 (Bimal Suri) "3. The Revenue has filed the present appeal on the following grounds:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing appeal of the assessee without appreciating the facts of the case. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 1,12,04,166/- on a .....

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e assessee on account of profit on sale of land, the assessee having I/3rd share in such profit. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 19,65,625/- on account of profit on sale of land to M/s. Gee City builders (P) Ltd. measuring 8K 10M i.e. 1/3rd to total land of 25K 10M)." 4. The brief facts of the case are that a survey under section 133A of the Income Tax Act, 1961 (in short 'the Act') was con .....

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dditions on the basis of photocopies of the agreement found from the premises of Chandigarh Overseas Private Limited. The details of documents have been mentioned in the impugned order as below:- i) Agreement to sell dated 29.1.2005. ii) Backside of page 2 of the agreement to sell dated 29.1.2005. iii) Registered sale deed for 8 kanal 10 marlas. iv) Agreement to sell dated 19.4.2005. v) Agreement to sell dated 29.6.2005. 5. The ground No. 1 raised by the Revenue is general and needs no adjudicat .....

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gpal Singh. 3. Sh. Bimal Suri (the assessee). 8. As per this agreement, the seller had agreed to sell land 25 kanals 10 marlas situated at Village Lohgarh at the rate of ₹ 1,18,00,000/- per acre to the buyers. The assessee is the one of the buyer and total consideration comes to ₹ 3,76,12,500/-. The Assessing Officer also noticed from the backside of agreement to sell that the sellers have received an amount of ₹ 2,62,50,000/- upto 15.06.2005. The Assessing Officer further, not .....

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n value shown in the registered sale deed and agreement to sell and made addition of ₹ 1,12,04,166/-. The Assessing Officer reproduced the assessee's explanation in para 4 of the assessment order but did not accept the explanation of assessee that the property was purchased by them at throw away price in view of cash receipts of ₹ 2,62,50,000/- mentioned in impounded documents and cash receipts of ₹ 2.10 crores mentioned on the back side of page 2 of the agreement to sell. .....

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nd not found from the assessee's premises. Further, he also explained the inconsistency in the above documents as below:- 10. These documents are not in any way related to assessee and these were forged documents and the assessee has not executed document Nos. 18 and 19. Moreover, from the perusal of photocopies of documents, it is clear that the agreement is not on stamp paper and signature of all parties to agreement are missing. We also submit that part of contents mentioned in page 33 of .....

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ce land sold by Mrs. Pushpinder and others and consideration received by sellers. Further the Assessing Officer has not supplied the copies of returns of sellers. Further the assessee during the course of assessment proceedings has already explained that the assessee and other 2 persons, namely S/Shri Jagpal Singh and Bimal Suri had agreed to purchase 25 kanals 11 marlas Land for consideration of ₹ 1.20 crore and paid biana of ₹ 40 lacs and the assessee and other 2 persons could not .....

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o agreement to sell for the purchase of 25 kanals 18 marlas for the total consideration of ₹ 1.20 crores with Mrs. Pushpinder Kaur, S/Shri Gurtej Singh and Pritpal Singh. Under the said agreement to sell, i.e. for total consideration of ₹ 1.20 crores, the assessee along with other persons, namely, S/Shri Jagpal Singh and Gulshan Rai Satija. The assessee and other two persons has paid total sum of ₹ 40 lacs in equal proportion as on 29.01.2005. The Assessing Officer has made add .....

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pportunity was given to the assessee to cross examine the persons with whom the alleged agreement was entered into. The assessee had already denied the contents of agreement on the basis of which the addition was made. The Assessing Officer had not made any enquiry from any of the parties to verify the truth. The assessee alongwith other two persons to the agreement has paid in previous financial year 2004-05 ₹ 40 lacs in cash against the total consideration of ₹ 1.20 crores and due .....

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/Shri Gulshan Rai, Jagpal Singh and Bimal Suri (having 50% share) and Shri Shekhar Chawla (having 50% share) for the total sales consideration of ₹ 42,50,000/-. The registered sale deed for the same was executed as on 17.06.2005. The copy of the registration deed is enclosed herewith for your kind reference. The rest of area of land i.e. 2/3rd of the total land was not sold to assessee and the assessee is not aware of the facts to whom and at what rate the said rest of land was sold. The A .....

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d. Further, the counsel argued that the presumption is only with regard to the person from whose possession and control the books of accounts and documents are found. Moreover, this presumption is rebuttable presumption. The presumption with respect of photocopy of documents found from the third parties premises could not be made against assessee. 12. The assessee along with two other persons had purchased land measuring 4 kanals 5 marlas for consideration of ₹ 21.25 lakhs through register .....

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also placed reliance on judgment given by Madras High Court in case of CIT vs. P.V. Kalyana Sundaram, 282 ITR 259 concluding that in absence of any independent enquiry, Assessing Officer was not justified in making addition towards purchase consideration of land merely on the basis of statement of seller, who gave conflicting statements. He also stated that that the Hon'ble Supreme Court affirmed the decision of Madras High Court quoted supra. 14. The counsel also placed reliance on followin .....

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s 20 to 23 of the impugned order are reproduced as under:- (a) The incriminating documents were not found from the assessee's premises as these documents were found from Chandigarh overseas Private Limited and the assessing officer has not proved any connection with the appellant and therefore onus was on the department to prove that these document belong to appellant. (b) The documents found are only photocopies and no original documents were found and as Supreme Court decision in case of M .....

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ngs. (d) The assessing officer relied on the return of income filed by the buyers and there were no details with respect to sale consideration received from original buyers and new buyers and during the course of appellate proceedings no such returns were produced. (e) The appellant and other buyers had not purchased the entire land as shown in agreement to sell dated 29-01-2005 and even in registered sale deed 1/3 share of total land was purchased by original buyers and other party and therefor .....

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and therefore probability of forging the contents to prepare document No. 18 and 19 cannot be entirely ruled out. 21. Further the ITAT, I Delhi Bench judgment in case of Ram Saroop Saini, HUF vs. Assistant Commissioner of income Tax reported at 15 SOT 470 (Del) has dealt the case relating to agreement to sell, statement and understatement of sale consideration case. In this case the Hon'ble Tribunal concluded as under:- "In the absence of any material, understatement of sale considerati .....

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cuments, requisite Court fee stamp is not affixed, AO did not possess the originals and the assessee was not given any opportunity to cross-examine the property agent who had allegedly made an adverse statement and, therefore, no addition can be sustained." 22. In view of above discussion and judgment given by Kerala High court reported at 128 Taxman 848. Amount stated in the sale deed cannot be ignored on the basis of agreement of sale unless it is proved that the agreement of sale was act .....

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eted, allowing assessee's appeal on this ground." 16. On ground No. 3, the Assessing Officer made addition of ₹ 1,44,50,000/-. The Assessing Officer also noticed that the document Nos. 15 and 16 of Annexure B-2 is an agreement to sell dated 19.04.2005 of the same land i.e. 25 kanal 10 marlas and as per these documents, the land has been further agreed to be sold to M/s. Parsav Colonisers and Consultants Pvt. Ltd. at a rate of 2,54,00,000/- per acre and also noticed that it is ment .....

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k, Sector 34-A, Chandigarh branch. It was confirmed from the information received that the Ch. No. 165251 had been issued in favour of Smt. Pushpinder Kaur (seller) by debit to the account of M/s. Parsav Colonisers. It established beyond doubt that the agreement to sell in question was correct and the entire amount of consideration at ₹ 8,09,62,500/- proved. 18. Thus the sellers i.e. S/Shri Gulshan Rai Satija, Jagpal Singh and Bimal Suri have earned profit on sale of this land as below:- S .....

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hat the assessee had not entered into any agreement dated 19.4.2005 and that these documents were forged and bogus and were not found from the premises of assessee. Further the department did not make any enquiry from M/s. Parsav Colonisers and Consultant Limited to know the truth. 20. During the course of appellate proceedings, the counsel of assessee submitted that M/s. Parshav Colonisers and Consultants Pvt. Ltd. had not purchased any land at Lohgarh from the assessee and Other two persons ti .....

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at no land at Lohgarh was ever sold to M/s. Parshav Colonisers and Consultants Pvt. Ltd. There is no evidence with the department that the land was actually purchased by M/s. Parshav Colonisers and Consultants Pvt. Ltd. from the assessee. Further, it was submitted that the assessee had not sold any land at Lohgarh to Parshav Colonizers and Consultants Pvt. Ltd. till date and therefore, the question of profit on sale of land does not arise. Without prejudice to aforesaid submissions, the assessee .....

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ecuted by assessee and which were collected at the back of assessee from the premises of third parties not related to assessee. Further the Assessing Officer had not made any inquiry from original sellers, buyers and companies to know the truth. Further the Assessing Officer has not made any enquiry from parshav Coloniser consultants Private Limited to know the truth and purchase consideration paid if any to assessee and other alleged owners. The assessee has not sold any land to Parshav Colonis .....

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5 it is mentioned advance has been given and date of registry has been fixed on 15-06-2005 and it is shocking that no effort was made to know the completion of transaction and simply on the fact that cheque of ₹ 3 issued in favour of Pushpinder Kaur has been issued by debiting the account of Parsav Colonisers addition has been made. The assessing officer has not brought any material on record to prove sale of land to Parsav Colonisers and Consultant Private Limited and in view of my observ .....

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2 that on the back side of document No. 30 an amount of ₹ 1,30,01,100/- has been received as advance money by S/Shri Gulshan Rai, Jagpal Singh, Bimal Suri (assessee) and Shekhar Chawla. 23. As per details available on back side of Document No. 30 of Annexure B:2, an amount of ₹ 22,00,000/- by cheque has been received by Shri Shekhar Chawla, an amount of ₹ 22,00,000/- by Cheque has been received by the seller, i.e. Party No. 2 and another amount of ₹ 85,00,000/- by cheques .....

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re bound to get additional land measuring 2500 square yards arranged and transferred on the same rate i.e. ₹ 3.65 lac per acre and get it registered in the name of party No. 3 within six months irrespective of the rate at which the land is arranged from the original owner. This additional land is adjoining to the main land purchased by party No. 3. After that additional payment of ₹ 1.59 lacs will be made by party No. 3 as party payment within seven days from the date of execution of .....

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e. This indeed was the intention of the buyers, the assessee being one of them, to further sell the land at profit without getting it registered in its own name. This was a common occurrence around the period when prices of real estate were escalating by the day in the areas around Zirakpur and there was a frantic growth of residential Commercial Estates in the area by Private Builders. • It refers to the agreement dated 20.04.2005 with Parsav Colonisers. • It has reference to the regi .....

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ted 29.06.2005, was sold to Gee City Consultants P. Ltd. The cost price of this land was @ ₹ 2,54,00,000/- per acre which comes to ₹ 2,69,00,000/- adopted as per the agreement dated 19.04.2005. The sale price of this land comes to ₹ 3,87,81,250/- calculated @ ₹ 3.65 crores per acre as per the agreement dated 29.06.2005. 24. In view of this, the profit on sale of this land measuring 8 kanal 10 marlas is calculated as under:- Sale consideration @ ₹ 3.65 Crores per acr .....

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ents were procured from the premises of the assessee. The Assessing Officer has not made any enquiry from Gee City Builders Pvt. Ltd, and by relying on the photocopy of documents which was not executed by assessee and made addition without any enquiry from Gee City Builders Pvt. Ltd. Further in photocopy, all parties to agreement have not signed and, therefore, it cannot be relied upon. The counsel also placed reliance upon the Jurisdictional High Court judgment in case of CIT vs. RAM KUMAR 163 .....

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sale unless it is proved that the agreement of sale was acted upon and the amount stated in the agreement was actually paid. On the basis of agreement to sell it cannot be concluded that the price mentioned in the sale deed is not correct and also placed reliance on judgment given by Madras High Court in case of CIT vs. P.V. Kalyana Sundaram, 282 ITR 259 (affirmed by Supreme Court) concluded that in absence of any independent enquiry, AO was not justified in making addition on account of profit .....

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ing secondary evidence are admissible under the Evidence Act. The learned D.R. referred to sections 63, 64 and 65 of the Evidence Act. The learned D.R. submitted that on the photocopy of the agreement to sell, there are signature of the assessee in which it was provided that sale deed can be executed in the name of any person. The learned D.R. submitted that the CIT (Appeals) should not have deleted all the above additions. 28. On the other hand, the learned counsel for the assessee reiterated t .....

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A No. 979/2010 dated 20.9.2010, in which departmental appeal was dismissed observing that the original documents were never confronted to the assessee and nothing has been brought on record as to what happened to the original documents. There is no material even to indicate that photocopies are the copies of the original documents. The learned counsel for the assessee also submitted that no enquiry was conducted from any party, i.e. buyer or seller to the agreement to sell. In the case of one of .....

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is not in dispute that survey was conducted at the premises of Chandigarh Overseas Private Limited and its sister concerns and during the course of survey, certain loose papers including copies of agreement to sell in question were impounded. Thus, no agreement to sell or any incriminating documents were found from the possession of the assessee. There is no recovery of any incriminating document from the power and possession of the assessee. The Assessing Officer has not brought any material o .....

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original documents were found. Therefore, photocopies of the documents would have little evidentiary value. It is also admitted fact that the survey party as well as Assessing Officer has not made any enquiry from any seller or buyer, M/s. Parsav Colonisers and Consultants Private Limited and M/s. Gee City Builders Private Limited with respect to sale/purchase of any land from the assessee or from any original sellers directly or indirectly. No material have been brought on record if the assess .....

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e findings of the Tribunal in which it was held that the photocopies of the documents have very little evidentiary value and in the absence of original documents, photocopies of the documents are not admissible and cannot be the basis for making addition. It is, therefore, a fact that no original agreements to sell were found from any person and original documents were never confronted to the assessee. Therefore, there is no question of preparing copies from the original agreement to sell. There .....

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ated to the agreement to sell, therefore, there was no justification to make any addition against the assessee on the basis of such agreement to sell. Even in the case of M/s. Gee City Builders Private Limited, the Assessing Officer passed regular assessment order under section 153A r.w.s. 143(3)) of the Act but no addition have been made in this case. The learned CIT (Appeals) on proper appreciation of facts and material on record correctly deleted the additions. 30. Considering the above discu .....

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). We find that issue and facts are identical in the case of the assessee as have been considered in the case of Shri Bimal Suri (supra) in which ld. CIT(A) deleted all these additions and Tribunal dismissed departmental appeal on same facts. Following the order in the case of Shri Bimal Suri (supra), we set aside the orders of authorities below and delete all the additions. Ground Nos. 2, 4 and 5 of appeal of the assessee are allowed. 11. On ground No. 3, assessee challenged the addition of  .....

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fficer computed assessee's 1/6th share in the investment (1/3rd of 1/2) as under:- i) Addl . Investment in land ₹ 2,50,000/-(Rs. 42,50,000/- ₹ 40 lacs) ii) Stamp Duty Rs.3,82,500/- iii ) Registration Fee ₹ 10,000/- ₹ 6,42,500/- iv) 1/6th share of assessee ₹ 1,07,084 12. It was noted that since the assessee was unable to show any corresponding withdrawal of the amount either out of his bank accounts or in cash book, Assessing Officer made the addition of ₹ .....

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n reflected in the books of account, therefore, no undisclosed investments have been shown. The ld. CIT (Appeals), however, did not accept contention of the assessee and dismissed this ground of appeal of the assessee. 14. After considering rival submissions, we are of the view matter requires re-consideration at the level of the Assessing Officer. The explanation of the assessee that ₹ 42,50,000/- have been paid through banking channel and other expenses are reflected in the books of acco .....

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e file of Assessing Officer with direction to re-decide this issue by giving reasonable sufficient opportunity of being heard to the assessee. The Assessing Officer shall pass speaking order on the basis of material produced on record by the assessee. This ground of appeal of the assessee is allowed for statistical purposes. 15. On ground No. 6, assessee challenged the addition of ₹ 24,83,333/- on account of unexplained bank credits. The revenue on ground No. 2 challenged the order of ld. .....

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Since assessee did not furnish any explanation about the credits, therefore, same were considered as unexplained cash credits and 1/3rd share of the credit i.e. ₹ 24,83,333/- was added to the returned income of the assessee. 16. The assessee challenged the addition before ld. CIT (Appeals) and written submission of the assessee is reproduced in the impugned order in which the assessee explained that DCIT, Circle 6(1) accepted source of deposit in joint account in the case of Shri Bimal Sur .....

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property on 28.06.2005 and balance was deposited by the assessee out of cash available with him. Further, there is addition of ₹ 5,75,000/- and ₹ 21,25,000/- in bank as on 31.08.2005 and 03.09.2005 which sum comes to ₹ 27 lacs. The assessee has made withdrawals of ₹ 27 lacs from the bank on 11.08.2005 which was re-deposited with the bank. There is a deposit of ₹ 22 lacs as on 28.06.2005 and the said amount has been received from Shri Sumesh Chawla against advance o .....

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account is operated by the assessee alongwith two other persons which was used for purchase and sale transaction of the land and ultimately sold to M/s. Gee City Builders. No explanation is filed at the assessment stage. The explanation submitted by assessee is not supported by any documentary evidence and is after thought. The ld. CIT (Appeals), however, considering that Assessing Officer computed the addition of ₹ 1,44,50,000/- as assessee's share of profit earned on sale considerat .....

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t is also mentioned in the assessment order. The Assessing Officer in the remand report contended that these are additional evidences under Rule 46A of IT Rules. The ld. CIT (Appeals), instead of deciding the issue on merit, deleted the addition because Assessing Officer has made addition on account of profit earned by assessee and given telescoping benefit of addition of ₹ 1.44 Cr on which we have deleted the addition on ground No. 4 following the order of ITAT Chandigarh in the case of S .....

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d made specific submission before ld. CIT (Appeals) that addition is liable to be deleted because similar addition was deleted in the case of Shri Bimal Suri and assessee explained that same amount was withdrawn and re-deposited in the same bank account and certain amounts were available to the assessee therefore, it should be decided on the basis of the evidence and material already on record. Since according to the Assessing Officer, no explanation was filed on this ground before him at assess .....

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. This ground of appeal of the assessee and revenue are allowed for statistical purposes. 18. There is no other ground left in assessee's appeal. 18(i) Assessee's appeal is partly allowed. ITA 542/2015 (Departmental Appeal) 19. Ground No. 2 in departmental appeal for deleting addition of ₹ 24,83,333/- have already been adjudicated in assessee's appeal above. 20. The only ground left for consideration is ground No. 1 in departmental appeal, which reads as under:- "Whether o .....

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. yds. and transfer the same at the same rate of ₹ 3.65 Cr per acre to M/s. Gee City Builders. The Assessing Officer noted from the impounded documents that six properties were sold by different sellers namely S/Shri Surjan Singh, Karam Chand, Manjit Singh, Karamjeet, Bhagwant Singh, Deepak Sharma and Ishar Singh Nagpal. All six properties were registered in the name of buyer M/s. Gee City Builders. Although the sale amounts as per registered sale deed were lower as reflected in the chart .....

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lenged the addition before ld. CIT (Appeals) and written submission of the assessee is reproduced in the impugned order in which the assessee briefly submitted that Assessing Officer has relied upon tripartite agreement which the assessee has never executed. Further, even if photo copy found from the premises of third party, though not admitted, the signature of the assessee is missing. It was submitted that Assessing Officer in the case of Shri Bimal Suri did not make the similar addition. It w .....

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er reiterated the facts stated in the assessment order and submitted that Assessing Officer made the addition on the basis of tripartite agreement discussed by the Assessing Officer in the assessment order. 23. The ld. CIT (Appeals) considering material on record, deleted the entire addition. His findings in para 11.3 of the impugned order are reproduced as under:- "11.3 I have gone through the facts of the case, written submission filed by the appellant, remand report of the AO and the ass .....

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Rai Satija. In respect of two properties, the A.O. has mentioned the buyers as Gee City Builder through Sh. Gulshan Rai Satija. The AO has noted that Gulshan Rai Satija has acted as middle man. On the other hand, the appellant has submitted that the AO has made addition on account of notional profit on the basis of the registration of 2500 sq. yds. land belonging to various parties surrounded to 25 kanal 10 marla land. The properties were sold by the respective persons by entering into agreement .....

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property in the name of Gee City Builders. There is no evidence that the appellant was involved in such deals either through any document as agreement to sell or any other evidence showing that the appellant and other and Parshav Colonisers made any purchase of these properties as additional land and sold to Gee City Builders. The AO has also not conducted any further enquiry to find out any involvement of the appellant in the purchase and sale of the additional land through 6 registered sale d .....

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lders either as purchaser or seller or as middle man. Therefore, in the absence of any evidence regarding earning profit or commission on such arrangement of additional land of 2500 sq. yds. to Gee City Builders, the A.O. was not justified in calculating the notional profit earned on account of such registration of 2500 sq. yds. land belonging to various other parties. Therefore, the addition of ₹ 32,91,383/- as appellant share of profit is deleted. This ground of appeal is allowed". .....

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