TMI Blog2013 (9) TMI 1220X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,70,91,150/- in respect of 9 flats in Cabo Project which were surrendered to M/s Landscapre Developers vide agreement dated 26.03.2010 due to share of escalated cost of construction. 3. The learned CIT(A) failed to appreciate that 9 flats as above were subsequently sold by M/s Landscape Developers and entire consideration in respect of these 9 flats was received and accounted by them. 4. Without prejudice to the above the learned CIT(A) erred in making addition in the hands of the assessee of 9 flats sold and accounted by M/s Landscape Developers resulting in to double taxation. 5. The learned CIT(A) erred in confirming addition of ₹ 7,85,90,105/- as alleged undisclosed receipts from sale of Cabo project by relying on loose sheet which were mere projections. 6. The learned CIT(A) failed to appreciate that the fact of projections was also deposed by the assessee on 25.03.2010. 7. The learned CIT(A) erred in not appreciating that the sale of flats in Cabo Project surrendered to M/S Landscape Developers was accounted by them on the basis of actual sale by them and there was no consideration or part thereof received by the assessee. 8. The learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee was entitled to receive 42 flats alongwith 42 parking slots. As per the agreement to sale dt. 19.7.2004, the Assessee agreed to assign all the 42 flats in favour of Mr. Atanasio Teofilo Martins Monserrate. This agreement was subsequently amended by way of addendum dt. 5.3.2008 and according to that, Mr. Atanasio Monserrate was to receive 11 flats and accordingly the builder, M/s. Landscape Developers confirmed the same and balance 31 flats were to be allotted to the Assessee. These 11 flats were as under : 11 flats allotted to Atanasio Monserrate 1 D-202 117.32 2 D-204 112.72 3 D-205 246.89 4 D-206 246.89 5 E-102 155.96 6 E-205 250.04 7 E-206 250.04 8 E401/501 (2 flats) 321.22 116.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 107.98 10 F-202 113.75 10.72 11 F-203 109.60 8.36 12 F-204 118.80 13 F-205 253.96 14 F-206 253.96 15 F-301 107.98 16 F-302 109.75 17 F-303 109.60 18 F-304 114.80 19 F401/501 316.78 117.33 20 F402/502 318.44 117.11 3114.05 253.52 50% of terrace 126.76 3240.81 Total area as per addend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ASER and that the DEVELOPER/PURCHASER shall be free to enter into agreement with any third party for the sale of the said flats at the price as shall be decided by the DEVELOPER/PURCHASER. 5. That the VENDORS do hereby confirm the said verbal agreement entered by and between the parties hereto and do hereby declare that the VENDORS shall have not any claim against said Flats shown in the schedule II hereinunder or the DEVELOPER/PURCHASER concerning the said Flats. 6. The VENDORS declare that the VENDORS have full consent to the Agreements entered by the DEVELOPER/PURCHASER, with the third parties for the sale of (the said Flats listed in schedule III hereinunder and that the said agreements are signed and executed in pursuance to the verbal agreement arrived between the VENDORS and the DEVELOPER/PURCHASER. 8. This Addendum shall be read along with the said Agreement dated 5th October, 2002 and the schedule IV of the said Agreement dated 5th October, 2002, is amended as schedule IV of this addendum and out of, which the parties hereto admit that the fiats identified in schedule V of this agreement are allotted by the VENDORS to Mr. Atanasio Teofilo Martins Monserrate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and even the prices of cement, steel etc. have also increased. Therefore, the value of 42 flats will be much more than ₹ 2,52,40,000/- and therefore, the Assessee orally agreed with M/s. Landscape Developers to take only 33 flats, the super built-up area of which was more than 5989.5 sq. mtr. out of which 11 flats, the assessee has assigned in favour of Atanasio Monserrate vide agreement dt. 19.7.2004 and addendum thereto dt. 5.3.2008. The Assessee accordingly agreed and written agreement was executed as an addendum to the agreement of 5.10.2002 on 26.3.2010 mentioning therein this fact. For this, our attention was drawn towards Schedule III, IV and V to the agreement dt. 26.3.2010, copy of which is available at pg. 84-94 of the paper book. Our attention was also drawn towards the statement of the Assessee recorded u/s 131 just after the search by the DDIT (Inv.), Panaji. It was pointed out by referring to question no. 16, 17, 18, 19 to 22 that the agreement for assignment of rights in respect of 9 flats which the builder, M/s. Landscape Developers entered into, were found during the course of search. These were duly registered before the revenue authorities by M/s. Landsc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified as Odxell situated at Taleigao within the limits of Panaji Municipal Council, Tal. Tiswadi. As per the said agreement, the Assessee agreed to sell to M/s. Landscape Developers property admeasuring 16,140 sq. mtr. as described in Schedule VI thereto alongwith all its development right for a consideration of ₹ 2,52,40,000/-. It was agreed that M/s. Landscape Developers will construct a total super built-up area of 5,884 sq.mtr. + 211 sq. mtr. (terrace) i.e. saleable area of 5,989.5 sq. mtr. in terms of units and set off same against the total consideration payable by M/s. Landscape Developers to the Assessee. The details of the units were given in Schedule IV which consists of 42 units as well as 42 parking slots. Subsequently, M/s. Landscape Developers and the Assessee re-negotiated the terms and conditions and the Assessee by oral agreement dt. 4.4.2008 agreed that 9 flats alongwith parking slots shall be allotted to M/s. Landscape Developers and to give effect to this oral agreement, the agreement dt. 26.3.2010 was executed as an addendum to the agreement for sale and development dt. 5.10.2002. As per this addendum, the total consideration remains to be at ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt between M/s Land Scape Developers and me, portion does not come into my part of built up area and it to that of the builders, i.e, M/s Land Scape Developers. The above flats sold is from the share of the built up area of M/s Land scape Developers have nothing to do with the above sale agreements. Q.No.17 Please let me know the details of the Flat Nos ear marked for you as consideration as per the development agreement. Ans: The flats which are ear marked against the built up area, I am to receive are as per Schedule 2 of the addendum dated: 19.07.2004 me and Sri.Antatio Monseratte. Totally there are 42 flats out of which 11 flats have been assigned to Sri.Monseratte. The 7 flat Nos. from 'D1 Block are 201 to 206. 17 flats from 'E1 Block Flat Nos. 002, 101, 102, 201 to 206, 301 to 304, 401, 402, 501 and 502. From F‟ Block 18 flats Nos. 001, 002, 101, 102, 201 to 206, 301 to 304, 401, 402, 501 502. Q. No.l8 Please refer to the above two questions, the 9 flats referred in the question above are D-201, 203, E-001, 002, 101, 201, 202, 301 302. All these flats are out of those flats ear marked to you in your answer to Q. No. 16 and 17. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts was filed before us. We noted that these agreements had duly been registered in the office of the Sub-Registrar on the date as has been mentioned in question no. 16. The DDIT while recording the statement did not point out who is the seller or the vendor but has simply given the names of the buyers. From the agreements, we noted that each of the agreement for sale was registered by M/s. Landscape Developers in favour of the respective buyers as mentioned in question no. 16 for a consideration as has been mentioned in question no. 16. In none of the sale deeds, we noted, the Assessee is the vendor. Had the Assessee been the owner of these flats, the Assessee would have transferred these flats by executing these sale deeds before the Sub-Registrar office in favour of the respective buyers. From the registered agreements, it is apparent that it is M/s. Landscape Developers who has sold these flats to the various buyers against the consideration stated therein. We noted while going through the agreements that the description in respect of the agreements entered into between the Assessee and the vendor dt. 5.10.2002 has been referred to and the super built-up area was also referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the terms and conditions agreed between the Assessee and the Developer and the material found during the course of the search by way of agreement registered by M/s. Landscape Developers, we are of the firm view that no income has arisen or accrued to the Assessee out of the sale consideration of ₹ 2,28,31,505/- in respect of the 9 flats. We, accordingly, delete the addition amounting to ₹ 1,70,91,150/- (50% in case of each of the Assessee). 5. Ground nos. 5, 6, 7, 8 9 relates to the common issue relating to addition of ₹ 7,85,90,105/- (50% being added in the hands of each of the Assessee). The brief facts relating to these grounds are that during the course of search at the office of M/s. ESAR Builders, folder A/E/3 was seized from pg. 46-48. The pg. 46-48 contains details regarding Cabo project constructed by M/s. Landscape Developers. It was noted by the revenue from pg. 48 that the sale consideration for flats sold at Cabo was received partly in cash and partly by cheque. The relevant part of the sheet is reproduced as under :- Sq. mts . Rate Cheque Cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Due to revised list of increased area after the Agreement of Babush Balance available Area in E‟ Block = 228.50 Less 48.67 Surplus Area 179.83 On the basis of these seized papers, it was analysed that pg. 46 corroborates with the built-up area of 1920.50 given to Mr. Babush (Atanasia Monserrate) as per agreement dt. 5.10.2002. As per agreement with M/s. Audi Construction Pvt. Ltd., the built-up area of 2657.95 was sold for consideration of ₹ 15.15 crores and the income arising from the said transaction is being proposed to be declared by the Assessee for A.Y 2011-12. The built-up area of 1362.38 mentioned as area sold to Hyder Khan family is also a true transaction. It was observed that the total area mentioned as sold to Hyder Khan family at pg. 46 is 1362.38 which is the same area as has been mentioned in pg. 48 as sold to Hyder Khan family and therefore, Hyder Khan family has paid consideration of ₹ 10,14,21,700/- for a super built-up area of 1362.38. When this paper was confronted to Sadiq Sheikh, Sadiq Sheikh stated in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above flats which matched with the cash portion mentioned on pg. 48 of A/EB/3. The AO after affording an opportunity to the Assessee made the addition in respect of sum of ₹ 7,85,90,195/- after reducing the sum of ₹ 2,28,31,505/- being the sale consideration of 9 flats sold to Hyder Khan family. The Assessee went in appeal before CIT(A). The CIT(A) also confirmed the addition by observing as under : I find that the appellant has failed to substantiate the surrender of 9 flats to Landscape Developers for which agreements to sale have already been entered into 2008 while the said modification to the development agreement has been shown to have been entered much later, on 26.03.2010, that is after the search proceedings in the case of the appellant and after bringing on record that proceeds from these sale agreements/sale deeds have not been declared by the appellant. Moreover, it is seen that the appellant has failed to establish any details with regard to the escalation cost for which these flats are stated to have been surrendered to builder. No evidence with regard to the cost of construction of the flats in respect of Cabo project has been brought on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the Developer and not by the Assessee. This fact has duly been accepted when Mr. Dinar Tarkar, the key person of M/s. Landscape Developers was summoned u/s 131 and his statement on oath was recorded on 25.11.2011. In this regard, attention was drawn towards question no. 29 and answer thereto was relevant. On the basis of this question it is apparent that the cheque portion of the sale has duly been received by M/s. Landscape Developers and this fact has also been accepted by the tax authorities. A document has to be accepted in toto. If the cheque portion has been received by M/s. Landscape Developers, how the Assessee can receive the cash portion? The cash, if any, has been received on the sale of these flats which belonged to M/s. Landscape Developers and should have been assessed in the hands of M/s. Landscape Developers. The Assessee has not received any such cash at all. It was stressed that this relates to the same 9 flats which were not allotted by M/s. Landscape Developers to the Assessee in view of the oral agreement dt. 4.4.2008 subsequently put into writing on 26.3.2010. The Sale Deed in respect of these flats has been executed by M/s. Landscape Developers. M/s. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments. In the case of CIT v Badar Durrez Ahmed and Rajiv Shakdher 308 ITR 230 the Hon'able Delhi High Court has held that no addition can be made when there was no corroborative or direct evidence to presume that the notings/jottings recorded in the said two diaries had materialised in to transactions giving rise to income which has not been disclosed in regular assessment in regular books of account. 2. There was no circumstantial evidence found in the form of extra cash or unexplained investment to the extent of ₹ 7.85 cr. and cash found of ₹ 2.50 lakh was explained and accepted. Reliance is placed on the decision in the case of S.P.Goyal v DCIT 82 ITD 85 ( Mum ) In the case of ACIT v Kences Foundation (P) Ltd 289 ITR 509 (Mad) it was held that, Whether since at time of search except for said documents, no other material was found to hold that assessee received any cash from the purchasers for sale of built up area, documents seized from premises of assessee could not be said to be a conclusive proof to arrive at undisclosed income. In the case of Nirmal Fashions (P) ltd v DCIT 25 SOT 387 (Kol) while considering applicability of section 292C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as referred to statement on oath of Mr. Dinar Tarkar wherein the sale of 9 flats by M/S Landscape developers is clearly established. In the said statement Mr. Dinar Tarkar accepted the sale of 9 flats but denied receipt of cash portion as stated in loose sheet. However no cross examination of the purported payer was done. In the case of Prakash Chand Nahta v CIT 301 ITR 134/170 Taxman 520 (MP) it was held that, in the absence of affording a reasonable opportunity of cross examination the addition could not be sustained. In the present case addition is done without any cross examination which was required to be done in the interest of natural justice. This was also pressed before the Hon CIT Appeals VI, in point no 7 of submission dated 24.07.2013 filed and acknowledged by the CIT (A), Bangalore which was totally brushed 11. In view of the above and coupled with the facts that i) M/S Landscape Developers have sold these 9 flats and accounted sale proceeds, ii) no extra cash or investment outside books was found iii ) cash of ₹ 2.50 lakhs found was explained and accepted, iv ) addition is made on the basis of loose sheet without any circumstantial evidence, the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umentary evidence in support of the transaction. Ans. On going through the papers numbered A/EB/4, portion A, it appears that Mr. Sadiq Sheikh had a sub deal with these parties. I have come to know about this for the first time and I am shocked at this revelation. All my doubts are getting more and more clear. Landscape developers has nothing to do with this statement found in the premises of Sadiq Sheikh. 0.30. It is true that the said paper is found and inventoried from the premises of Mr. Sadiq Sheikh. However, the properties mentioned there in are sold by M/s Landscape Developers and stated to have accounted in the books of accounts, ie. Amount received by cheque as reflected in the said inventory. When you are accepting the receipt of cheque portion mentioned in the inventory there are entries regarding the cash in the same inventory? How can you deny the receipt of cash and what is basis for the same. Ans. The cash portion mentioned in the subject paper is either a private deal of Mr. Sadiq Sheikh or another story like the letter to Shri. Armando. I have personally not spoken to Mr.Sadiq Sheikh for almost three years and I have no idea of what he is meaning wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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