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Geeta Rasik Shah Versus ACIT, Central Circle-2, Mumbai

2017 (9) TMI 810 - ITAT MUMBAI

Assessment u/s 153A - non disclosure of portion of taxable income - Held that:- A notice u/s.153A of the Act can be issued in the cases where action u/s.132 is carried out. As far as additions are concerned same can be made on the basis of some seized material. But he case before us is unique as the assessee herself has admitted that by mistake she had not disclosed a portion of her taxable income. It was never argued by the assessee that she had not earned income from cancellation of booking of .....

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apital gain? - Transfer u/s 2(47) - Held that:- The income arising out of surrendering the flat to the builder had to be taxed under the head capital gains and not under the head income from other sources. Considering the period of holding of the asset he assessee is entitled to benefit of indexation and the disputed amount is to be taxed as long-term capital gain. See CIT Versus Vijay Kumar Ajit Kumar Vijay Flexible Containers [1989 (9) TMI 16 - BOMBAY High Court]. Second effective ground of ap .....

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ns, filed her return of income on 23/05/ 2007, declaring total income of ₹ 18.02 lakhs. The Assessing Officer(AO)completed the assess -ment u/s.143(3)of the Act, on 31/10/2008, determining the income of the assessee at ₹ 18, 02,940/-. During the course of hearing before us, the Authorised Representative(AR)stated that the assessee was not interested in pursuing GOA-3. Hence, same stands dismissed as not pressed. Brief Facts: 2. First effective ground of appeal is about addition of &# .....

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n of income for the year under appeal on 13/12/2011, declaring the same total income that was shown in the original return. During the assessment proceedings, the AO noticed that the assessee had shown a flat at Andheri appearing on the asset side of the balance sheet as on 31/03/2005, valued at ₹ 1.15 crores other than her residential house, that the same was carried forward from AY. 2004- 05. Verification of the balance sheet for the year under consideration revealed that the said proper .....

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n place. He issued a letter to Rajesh Construction Co.(RCC)and called for certain details with regard to allotment of flat. 2.1. After considering the available material and the bank statement maintained by the assessee with Shamrao Vithal Co-Operative Bank Bandra, he held that the assessee had received ₹ 4.04 crores from RCC in the month of November,2005, that she had only paid a token amount towards the advance of flat, that no actual purchase deed was executed, that she cancelled the tr .....

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9 crores on account of compensation received from the builder on termination of allotment of flats booked with RCC. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority(FAA)and raised various grounds of appeal including not complying with the principles of natural justice in making the addition on account of compensation received and not sharing the information collected from RCC. It was argued that no incriminating material was found and sei .....

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nd that investment in flat at Andheri appearing as on 31/03/ 2006 did not appear in the subsequent year, that the AO called for information from RCC, that the addition made by the assessee was a result of the enquiries carried out by the AO during the assessment proceedings and not a result of any incriminating evidence found in the course of search action. He relied upon certain case laws and stated that the addition made by the AO was not based on seized incriminating records, that he was not .....

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ndependently, that the assessee in the year 2001 had invested in her own name and in the names of then minor daughters certain amounts for booking of flats with RCC, that in the year 2005 the said allotments were cancelled and the amounts were refunded to her with compensation, that her daughters did not get any compensation, that the daughters of the assessee were minor in the year 2001, that the agreements were signed by her on their behalf, that the daughters at the time of cancellation of al .....

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flat or the subsequent cancellation was found in the course of search action and that the order passed by the AO was bad in law, that the requirement of initiating the process of assessment u/s.153A was carrying out of the search u/s.132, that section 153A/153C did not contain the words or phrases incriminating material or undisclosed income, that had the legislature intended to restrict the scope of assessment u/s.153A only to material found during the search it would have been indicated so as .....

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case of Chetandass Lachman Dass (211 taxman 61) and held that addition to be made in assessment u/s. 153A or 153C of the Act were not required to be restricted to incriminating material found during the search, that as per the letter of the assessee dated 20/03/2013 income arising out of compensation received over and above the advance on cancellation of the transaction with RCC was not admitted in the original return of income, that the undisclosed income was discovered consequent to search op .....

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that amount received on cancellation was liable to be assessed under the head capital gains with resultant benefit of indexed cost of acquisition, the FAA held that the contention of the assessee was not sustainable in law, that she had only booked flats in her name is and in the names of minor daughters in the year 2001 by paying token advances for several flats in different buildings, that she had not placed on record agreement of sale, if any, entered into with the respective builders, that .....

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the flat was not taken and that no deemed income from house property was considered, that the booking of flats did not based any right in the capital asset, that RCC had paid the compensation and that same was in the nature of interest on advance paid by the assessee in the year 2001, that there was only allotment letter issued to the assessee, that she had a mere right to sue for damages on the basis of allotment letter, that no transfer, as contemplated in section 2(47)of the Act had taken pla .....

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not come to an agreement or understanding under which assessee assigned rights, title and interest to third party and received consideration hat by paying advance money she did not get any right which could be termed as capital asset, that the amount in question was paid by way of compensation on account of failure of the builder to fulfill the terms of agreement and not for relinquishment/extinguishment of any right of the assessee, that the AO was justified in assessing the sum received from .....

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her was correct. He directed the AO to verify the claim of the assessee that compensation of ₹ 1.12 crores was received in respect of the same flats booked in the names of the minors and on due verification allow the claim made by the assessee. Finally, he held that addition to the extent of ₹ 1.77crores under the head income from other sources had to be confirmed. 4. Before us, the AR stated that in absence of seizure of incriminating documents no addition could be made to the inco .....

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he assessee were transacted through the said bank account, that the amount in dispute related to seized documents, that the assessee had admitted that books of accounts were not available, that there was specific reference to bank passbooks in the question and also recorded during the course of search proceedings, that the assessee had admitted that bank passed of Shamrao Vitthal Co-Operative Bank would be produced later on, that the accounts of the assessee were not properly drawn prior to sear .....

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ional High Court. She relied upon the cases of E N Gopakumar (75 taxman.com 215), St. Francis Clay Decor Tiles (385 ITR 624)and Chetan Das Lachman Das (supra). 5. We have heard the rival submissions. Find that an action u/s.132 of the Act was carried out in the case of the assessee on 24/03/2011 hat the AO had completed the assessment u/s. 153A of the Act adding ₹ 2.89 crores to her income on account of cancellation of booking of flat hat the assessee had not shown the said income in her o .....

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litating the assessment proceedings. Therefore narrow construction section 132 of the Act in never advised by the Hon ble Courts. Search and seizure s one of the tools hough the harshest one o collect due taxes from the assessees. Such actions may lead to unearth undisclosed incomes. Assessment of searched persons is part of the overall exercise to determine their tax liabilities. A notice u/s.153A of the Act can be issued in the cases where action u/s.132 is carried out. As far as additions are .....

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tted the inadvertent mistake he AO accepted her claim in principle. In light of the peculiar facts and circumstances of the case e decide the jurisdictional issue against the assessee. 6. Second effective ground of appeal is about head of income under which the compensation received on cancellation of the flats should be assessed i.e.whether it should be taxed under the head income from capital gains or income from other sources. Related to it is the issue of indexation f the disputed amount is .....

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he asset sold, that he did not grant beneficial rate of taxes to the assessee, as provided under section 112 of the Act. He referred to the provisions of section 2 (14) of the Act and stated that capital asset meant property of any kind held by an assessee, that under the allotment letter the assessee was granted right to acquire the identified flats for a particular consideration, that she had also made payment of a major portion of the flat cost to the builder, that the allotment of flats held .....

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acquisition. He relied upon the cases of Madhu Kaul(363 ITR 54) ijay Flexible Containers (186 ITR 693), Hilla J B Wadia(216 ITR 376) raveen Gupta(137TTJ 307)and CBDT circular No.471 ated 15/ 10/ 1986. The DR supported the order of the FAA. 6.2. We have heard the rival submissions and perused the material before us. We find that the AO and FAA had rejected the claim of the assessee on the ground that by paying token advance she did not get any right which could be termed as capital assets within .....

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in the month of June, 1986. Payment of first instalments by the assessee on 04/07/1986, conferred a right upon the assessee to hold a flat. The AO held that amount received by the assessee on sale of flat was not long-term capital gain. Matter travelled up to the Hon ble Punjab and Haryana High Court. Deciding the case in favour of the assessee, the Hon ble Court held that mere fact that possession was delivered later would not detract from the fact that allottee was conferred a right to hold p .....

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t. In that matter the assessee firm had entered into an agreement for purchase of an immovable property. It paid ₹ 17,500 as earnest money. Subsequently, it had to file a suit for specific performance of the agreement for sale or n the alternative or damages for its breach. Consent terms were arrived at in the suit and a decree was passed in favour of the assessee for the sum of ₹ 1,17,500/-and interest. The said sum was received by the assessee during the course of the previous year .....

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as capital gains.On a reference Hon ble Court held as under: ….under the agreement to purchase the property, the assessee had acquired the right to have the immovable property conveyed to him. He was, under the law, entitled to exercise that right not only against his vendors but also against a transferee with notice or a gratuitous transferee. He could assign that right. What he acquired under the said agreement for sale was, therefore, property within the meaning of the Income-tax Act, .....

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