TMI Blog2021 (6) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... lopment work. There was no evidence with the AO to prove or even indicate that such amount was spent by assessee on the development of land in concern which was sold. AO made addition purely on surmises and conjecture. The burden of proving a transaction to be bogus has to be strictly discharged by adducing legal evidences, which would directly prove the fact of bogusness or establish circumstance unerringly and reasonably raising an interference to that effect. In the case of Umacharan Shah Bros. [ 1959 (5) TMI 11 - SUPREME COURT] held that suspicion however strong, cannot take the place of evidence. Therefore, we do not find any infirmity on the order of Ld.CIT(A), hence, we approve the order of Ld.CIT(A). Estimation of fees income - assessee was asked to show cause as to why 2% of total amount paid during the year to mill should not be considered as his income for acting as underwriter on the behalf of mill - HELD THAT:- As submitted that assessee was granted the right to sell the land on behalf of the mill, after developing it and he would get a commission at the rate of 5% of amount in excesses of sell price of ₹ 3951 per sq. mts. However, the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of ₹ 12,50,000/- made by the A.O., on account of estimation of fees income without appreciating the facts of the case. 4. On the facts and in the circumstances of the case and in law, the Ld.CIT(A), ought to have up held the order of the A.O. 5. It is, therefore, prayed that the order of the Ld.CIT(A) be set-a-side and that of the A.O. be restored. 4. Now, we shall take all these grounds one by one. Ground No.1 raised by the Revenue relates to addition of ₹ 1,90,30,400/- made by Assessing Officer, on account of unexplained cash credit under section 68 of the Act. 5. Facts of the issue, which can be stated quite shortly are as follows: The assessee has filed his return of income declaring total income of ₹ 44,401/- on 07-02-2006. The assessee s case was reopened by AO on 12-10-2010 and notice u/s 148 was issued and served upon the assessee on 15-10-2011. Subsequently, notice u/s. 143(2)/142(1) along with questionnaire was issued on 11-05-2011 and 01-07-2011 and served upon the assessee. In response to the above notices, Shri Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee in the meeting of Board of Directors of mill dated 21.07.2003, the assessee was granted the right as underwriter by mill based on resolution passed in committee meeting of mill (page no.3 of the agreement). After taking in to his past experience in the line of business. 7. Based on above, it was observed by AO that the assessee was granted the right to sell the land of the mill with effect from 21.07.2003 only. There was no any reference given in the agreement for any other agreements or letters grating him the right prior to 21.07.2003. However, the assessee has come forward with a story that it had received the huge amount of cash from customers against plot and deposited into bank with effect from 08.07.2003 onwards. Thus, AO was of the view that prior to acquiring the right, the assessee has made a device to give the colour of genuineness to his black money advancing the story that the money deposited into bank were received from the customers. The complete name and address as and confirmations have not been furnished by assessee. Thus, the assessee has made up a make believe story. The AO also noted that the assessee has not submitted with evidences the eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant, the details of terms condition are already mentioned in the above para 4 5. ii. The appellant was to receive a commission of 5% on sell consideration of the land sold by the appellant on behalf of The Surat District Co-Op Spinning Mills Limited if the land was sold on specified rate price of ₹ 3,951/-'per sq. yard. But later on The Surat District Co-Op' Spinning Mills Limited itself started to sell the plot of adjoining land at rate lower than ₹ 3,951/- per sq. yard. This act of the mill affected the appellant's effort to sell the land as per agreement. iii. Whatever money was received as sale consideration by the appellant was fully transmitted to The Surat District Co-Op Spinning Mills Limited through banking channel. About this fact, there is no dispute. iv. The appellant has not been paid a single penny as commission on the sales affected through the appellant. And there is no evidence with the revenue that the appellant has been paid any commission either by cheque or cash or out of books of account. v. The appellant has not spent any amount towards development of the land sold. The revenue has no also evidence to pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of cash of ₹ 1,90,30,400/- deposited into bank on various dates from 8-07-2003 to 30-09-2003 and immediately after 21-07-2003 by way of entries of ₹ 45,000/-.Thus, prior to acquiring the right, the assessee had made a device to give a color of genuineness to his black money with a plea that the same were received from the customers. However, the assessee had not proved the identity nor even furnished the confirmation, PAN and other details, as to whether they are assessed to tax or not. The A.O. noted that assessee has not proved primafacie the identity of the creditor, his capacity i.e. creditworthiness and genuineness of the transaction. As it was not satisfactorily explained by the assessee, the A.O. had rightly made addition of ₹ 1,90,30,400/- to the total income of the assessee u/s.68 of the Act. 11. Learned Authorized Representative (in short the Ld. AR ) relied on the order of Ld. CIT(A) and defended the order passed by the ld. CIT(A). 12. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has duly been defined as land developers, project consultant and underwriter who had completed various projects in past. Accordingly, he was assigned the 'work' in the capacity of proprietor of M/s Shreeji Developers. Moreover, the assessee himself signed the agreement being party of the other part. Hence, the observations of the assessee which stated that he had not carried out any business are not acceptable at all. The AO noted the factual aspects as derived from the agreement dated 21.07.2003 and supplement agreement dated 16. 10.2004 as under: 1. Vide clause no: 11 on page no: 7 of the agreement dated 21.07.2003, it was responsibility of the assessee to put the scheme for sale of plots of land. He has to incur the expenses viz plan permission expenses, architect fees, conversion charges for land from industrial land to residential land etc 2. Vide clause no: 12 on page no: 8 of the agreement dated 21.07.2003, the assessee has to incur the expenses viz expenses for internal roads, street lights, drainage and water facilities and he was granted the right to recover such expenses from the buyers. 3. Vide clause no: 18 on page no: 9 of the agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that he has also received an amount of ₹ 5,25,96,148/- from members as development expenditure. The assessee was required to pay ₹ 18,86,12,838/- to mill towards sale of land only as per agreement dated 21.07.2003. However, the assessee has paid total amount of ₹ 15,90,67,548/- only to the mill. The sources of this according to the assessee is ₹ 10,64,71,400/- being amount received from members for sale of land and ₹ 5,25,96,148/- being amount towards development charges. Thus, the entire of ₹ 15,90,67,548/- [₹ 15,90,67,548/- + ₹ 5,25,96,158/-] was paid to the mill towards his liability to pay ₹ 18,86,12,838/- and the assessee did not kept any money to discharge his other obligation to develop the land. It was responsibility of the assessee to develop the land and incur expenditure for that purpose. The assessee has collected the land development expenditure from customers but this source was diverted to the mill for discharging his liability to pay₹ 18,86,12,838/- leaving no money to fund developments expenses. The land was duly plotted and necessary development was carried out by the assessee as per agreement and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land development. The A.O. also found that the assessee was required to pay ₹ 18,86,12,838/- to mill, towards sale of land, however the assessee has made total payment of ₹ 15,90,67,848/- to the mill, for which it is contended that an amount of ₹ 10,64,71,400/- was received by him from members against sell of land and ₹ 5,25,96,148/- received from members towards development charges. The assessee had carried out the development work by making plots. But, the assessee did not shown any sources available with him. The assessee failed to prove the sources of expenses incurred by him with cogent evidences. The assessee only pleaded that he had not carried out any land development activities. Therefore, the A.O. has rightly made addition u/s 69C of the Act, considering l/3rd of the development expenditure incurred by the assessee of ₹ 5,25,96,148/- i.e. ₹ 1,75,32,049/- was disallowed by AO, therefore, AO order may be upheld. 19. On the other hand, learned counsel for the assessee defended the order passed by the ld. CIT(A). 20. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that he was appointed as agent to sell the plots on behalf of mill. He was entitled to commission only if the sales price per sq. mtr was more than ₹ 3951, then, the commission was to be paid to him @ 5% of amount in excess of sales price at ₹ 3951 sq. mtr. Since he had not sold any land at more than ₹ 3951 per sq mtr due to the fact that mill was itself selling the land at price lower than ₹ 3951 per sq mtr. and he was finding difficult to find customers at price more than ₹ 3951 per sq mtr., he has sold all the plots at price which was less than ₹ 3951 per sq mtr. Hence, assessee has not earned any profit. 23. However, the AO rejected the contention of the assessee. He noted that no prudent businessman would carry out such responsible task without earning any single rupee and taking such huge risk on his head. Therefore, AO held that the assessee must have earned 2% as his net income on payments made to the mill in absence of maintenance of books of accounts, vouchers etc. Hence, considering the principle of human probability, ₹ 12,50,000 (being 2% of ₹ 6,25,00,000) was added to the total income as income for rendering the se ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
