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TMI Blog2017 (9) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... s erred in sustaining the Order of the Assessing Officer by relying out of context and without application of mind on the Order passed by CIT (Appeals) for A.Y. 2006-07 in Appeal No. CIT(A)-16/ITO 8(1)(3)/IT-151/2011-12. 2. On the facts and in the circumstances of the case and in law, the learned CIT (Appeals) has erred in sustaining the Order of the Assessing Officer in treating income arising from sale of two flats in J. P. Nagar, E Building as arising from business of development of property and erroneously holding that the sale proceeds of flat no. 7, flat no. 16 and flat no. 306 aggregating to Rs. 8,50,0001- as income arising under the head "Income from Other Sources" 3. On the facts and in the circumstances of the case and in law, the learned CIT (Appeals) has erred in sustaining the Order of the Assessing Officer by ignoring the fact that the appellant is a developer of property as can be evidenced from past records and hence the provisions of section 50C are not applicable and consequently adopting the value adopted by the Stamp Authorities namely of Rs. 14,11,000/- instead of the rate mentioned in the Agreement of Rs. 6,96,000/- is unjustifiable and erroneous in law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 383 (SC) and the same may be adjudicated on merits. The ld. D.R. opposed the admission of the additional ground of appeal . We have heard rival contentions.. We have observed that additional ground raised by the assessee is purely of legal nature and keeping in view the ratio of decision of Hon'ble Supreme Court in the case of National Thermal Power Corporation Limited (supra), the said additional ground of appeal being legal ground is hereby ordered to be admitted in the interest of justice . We order accordingly. 5. The brief facts of the case are that the assessee company is engaged in the development of land, construction of buildings and sale of flats. The A.O. during the course of assessment proceedings u/s 143(3) r.w.s. 143(2) of the 1961 Act observed that the assessee had shown sales of Rs. 17,41,000/- and other income of Rs. 4000/-. The AO observed that the assessee had as per the Balance Sheet, shown the value of inventory of flats as on 31.3.2011 of Rs. 15,71,011/-. The assessee was asked to explain complete details of the project, flats sold along with copy of agreements and inventory of flats at the year ending on 31st March, 2011. In response, the assessee had su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it filed return of income showing profit of more than 8% on total sales . The assessee referred to provisions of Section 44AD of the 1961 Act . It was also submitted that provisions of Section 50C of the 1961 Act cannot be invoked as the assessee is developer of flat . The assessee requested for accepting the sale value as returned by the assessee but the assessee's submission were rejected by the A.O. . It was observed by the AO that the assessee has furnished only copies of three agreements in support of sale shown in the Profit and Loss Account and out of three agreements, one agreement w.r.t. flat no 306 was registered on 26-04-2006 for Rs. 2,00,000/- against market value of Rs. 2,63,211/- and hence flat no 306 cannot be said to have been sold during previous year relevant to assessment year. Since the assessee produced only two agreements, the AO held that the assessee has sold only two flats during the year. The AO observed that registration value of these two flats of which agreements are produced are flat no. 15 and 310 and its registration value is Rs. 6,96,000/- as against market value of Rs. 14,11,000/- and hence market value was treated as sale value and accordingly i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd thereafter his daughter, Veena Patel was appointed as a Director who unfortunately was not conversant with the affairs of the business. All the old documents were not properly preserved and it was with great difficulty that copies of the Agreement were obtained from the members owning the said flats who initially were reluctant to oblige. The above two Agreements go to the root of the matter since in absence of the said Agreements, the Assessing Officer has treated the sale proceeds of flats as Income from Other Sources. Reliance is placed on the decision of Madhya Pradesh High Court in the case of Daljeet Kaur v. ITO 212 Taxation 46 wherein it has been held that the additional evidence which is critical and goes to the very root of the matter cannot be rejected outright and a reasonable approach is required regarding its acceptance. Your appellant will, therefore, be grateful if the said additional evidence is admitted to meet the ends of justice. Yours faithfully, For Das Patel Land Developers Pvt. Ltd. Sd/- Veena Patel Director" Thus, the ld. counsel prayed that the additional evidence may please be admitted as it could not be submitted earlier as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the authorities below. Considering the factual matrix of the matter, we are of the considered view that these additional evidences submitted by the assessee now being two agreements for sale of flat should be admitted in the interest of justice as they are critical for adjudicating the issue covered by this appeal and goes to the root of the matter because the authorities below have taken adverse view against the assessee mainly because these agreements were not submitted before them. Thus, we are inclined to set aside and restore the issues covered by this appeal to the file of the AO for de-novo determination of the issue on merits in accordance with law. The A.O. shall admit all the necessary evidences and explanations submitted by the assessee in de-novo proceedings in the interest of justice and adjudicate the matter on merits in accordance with law after giving proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law. We order accordingly. 10. In the result, appeal of the assessee in ITA No. 3197/Mum/2015 for assessment year 2011-12 is allowed for statistical purpose. Order pronounced in the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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