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TMI Blog2018 (11) TMI 1336X X X X Extracts X X X X X X X X Extracts X X X X ..... to as the "Trust"). The Assessing Officer (A.O for brevity) made additions of undisclosed income, finding the source of the payments made by the assessee to the Trust having not been fully revealed. The First Appellate Authority reduced the additions made by the A.O and there was an appeal filed from that order of the First Appellate Authority before the Tribunal by the Revenue. The assessee also filed appeals with respect to the additions as confirmed by the First Appellate Authority. The Tribunal modified the said additions made by the First Appellate Authority and confined it to Rs. 50,00,000/- distributed between the three years at the rate of Rs. 15,00,000/- for the first two years and Rs. 20,00,000/-for the last year. The Revenue has filed the six appeals seeking restoration of the order of the A.O. The questions of law raised on that count are re-framed by us as follows. We specifically notice the Revenue having raised a question on the perversity of the findings which we incorporate here: 1.Whether the Tribunal was correct in having interfered with the order of the Assessing Officer confining the addition for the three years to Rs. 50,00,000/- when there was absolutely n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en an income generated. An estimation was made computing the income at Rs. 20,00,000/- in each of the assessment years. The first appellate authority reduced it to Rs. 10,00,000/-. The Tribunal deleted it in toto. We do not find any reason to sustain the said addition. We see that the Assessing Officer had proceeded on mere surmises and conjectures and had also stated that the assessee was not able to prove that the businesses abroad had not generated any income. The assessee cannot be asked to prove the negative. No material was recovered as to any income having been generated from the businesses abroad. We do not think that an estimation would be proper without any evidence at all. We, hence, uphold the order of the Tribunal deleting the addition from the income generated from Abu Dhabi. We immediately observe that the source found from such income, by the first appellate authority would however have to be reduced in view of the said finding; while considering the source for the real estate transaction. 4. The next ground is with respect to the assessment year 2004-05 in which the assessee had claimed as source, an amount of Rs. 1,25,00,000/- from sale of various items of the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882); or" 6. Obviously, there was a surrender of the land and buildings to the assessee on the basis of the agreement, since before the sale was concluded, the buildings were demolished and the plant and machinery dismantled and sold. The assessee, who had obtained possession of the land and building, had also effected sale of the same and had obtained Rs. 1,19,75,000/- which is treated as income for the previous assessment year. In such circumstances, the order of the Tribunal deleting the assessment with respect to capital gains has also to be set aside. We notice the judgement of the Honourable Supreme Court in (2017) 398 ITR 0531 (SC) [Commissioner of Income Tax v. Balbir Singh Maini], which found part-performance to be possible only if there is a registered document, which was on account of the amendment to the Registration Act in 2011 which was long after the assessment years, which are subject herein. The amendment would have only prospective effect and in such circumstances, the registration or non-registration of the sale deed would not regulate the part-performance as discernible from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the said Trust in pursuance of the agreement, before the sale itself took place and there are sufficient indications that the property came into the hands of the assessee, in part performance of the agreement to sell. Later, the assessee is said to have entered into a further agreement to sell with one Sethumadhavan on 28.06.2004. Subsequently on the assessee's request, which again was at the instance of Sethumadhavan, the Trust executed sale deeds in favour of various persons selling the property as small extends. The assessee sought to substantiate the source from various documents produced in each of the years asserting loans availed and so on and so forth as also the amounts received from Sethumadhavan, the second party of the agreement dated 28.06.2004. The assessee also claimed that certain amounts were paid by the purchasers of small extends directly to the Trust, which stood adjusted in the name of the assessee. Fact Findings in the Financial Year 2002-2003(AY 2003-04):- 9. For the assessment year 2002-03, the assessment order lists out the admitted payments made by the assessee to the Trust. A total of Rs. 1,00,00,100/- was paid on various dates between 27.01.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect to the balance amount of Rs. 61,00,000/-. Even then, the A.O accepted the contention of the assessee with respect to the sale having generated Rs. 1.25 Crores which was also asserted to have been paid in lieu of sale consideration to the Trust. The A.O however, reduced Rs. 5,25,000/- as the cost of old machinery, furniture etc. which even as per the agreement dated 24.09.2004 (Annexure-I produced in I.T.A 252 of 2010) was to be paid to the Trust. The agreement was one of purchase of machinery, furniture, fittings including electrical and other sundry assets and scrap for a consolidated amount of Rs. 5,25,000/-. Hence the source was accepted of Rs. 1,19,75,000/-. There was a further contention that the assessee's NRI account with Vijaya Bannk Perinthalmanna shows remittances from abroad of Rs. 15,00,000/- on August,2003 and Rs. 10,00,000/- in October 2003. It was contended that the said amounts were also utilised by the assessee for payment to the Trust. On a perusal of the pass book, the Assessing Officer found that Rs. 14,00,000/- was debited in the name of two strangers; of Rs. 7,00,000/- each. Rs. 14,00,000/- hence was declined to be accepted as source for payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- and Rs. 6,00,000/- were not given credit to by the A.O. The Appellate Authority also found that there was an excess payment of Rs. 10,99,000/- which was not identified. Setting off that amount from Rs. 14,00,000/- given credit to in first appeal, the reduction made to the the income of the year was confined to Rs. 3,01,000/-. The income from real estate being and Rs. 6,00,000/- was directed to be set off from the payments to the Trust. The first appellate authority hence fixed the addition at Rs. 55,47,200/- giving additional credit of Rs. 9,01,000/-. As we noticed the Tribunal fixed the income of the subject year at Rs. 20,00,000/- and also deleted the income from business in Abudhabi. The Consideration:- 13. The learned Senior Counsel would specifically take us through the counter affidavit filed in ITA No.224/2010 and argue on the basis of the various documents produced therein to further substantiate the source from which the payments were made to the Trust. It is the specific contention that a number of documents were produced before the Tribunal which showed the agreements executed with various persons selling smaller extends of property from the larger extend which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years being 2003-04 and 2004-05 when the assessee paid a total amount of Rs. 3,03,39,600/- [1,00,00,100 (in 2003-04) + 2,03,39,500/- (in 2004-05)]. In the assessment year 2005-06 the assessee had made further payments of Rs. 28,49,200/- before 28.06.2004. Hence before the agreement with Sethumadhavan the assesee had paid a total consideration of Rs. 3,31,88,800/- to the Trust and what was remaining for payment out of the total of Rs. 4,34,97,000/- was Rs. 1,03,08,200/-. 16. For the first of the years under consideration, ie: 2003-04 the first appellate authority has granted a relief of Rs. 1,00,000/- on the ground of arithmetical error and Rs. 50,000/- as expenditure incurred. The addition accepted as modified by the First Appellate Authority is hence Rs. 89,55,100/-. We notice the affidavit filed by the assessee before the ITAT. For the assessment year 2003-04 the assessee does not have any contention other than the contention with respect to the loan availed of Rs. 28,00,000/-. Out of Rs. 28,00,000/- claimed, Rs. 9,95,000/- was allowed by the A.O himself. We see that the confirmation letters from the other parties were filed before the Tribunal. We permit the balance loan amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperties having separate extends of 10 and 25 cents, carried out on 01.04.2004 and 14.05.2004, as seen from Annexure R1(d), produced in I.T.A. No. 239 of 2010. 19. We find that the First Appellate Authority had erred insofar as finding that there is no addition made of a payment of Rs. 10,99,000/- reducing the credit to be further given as Rs. 3,01,000/-. We see from the assessment order that the total undisclosed income for the assessment year 2005-06 was determined at Rs. 64,48,200/- out of a total payment of Rs. 1,09,48,200/-. The further allowance made of Rs. 14 lakhs in first appeal has to be fully allowed. This would bring the figure to Rs. 50,48,200/-. As in the previous years there was an allowance of Rs. 6,00,000/- made as income received from real estate which addition stood sustained by the Tribunal. There was also an allowance towards expenditure made in the previous years of Rs. 50,000/- which has to be allowed this year too. The figure hence would come to Rs. 43,98,200/-. We have to take note of the agreement with Sethumadhavan, produced at Annexure J in ITA No.252/2010, specifically indicating that there was an amount of Rs. 25,00,000/- paid on 28.06.2004 when the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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