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TMI Blog2021 (6) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Grounds of appeal raised by the Revenue in its lead case in ITA No.1159/AHD/2012 for AY. 2004-05 are as follows: "1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs. 1,90,30,400/- made by the A.O., on account of un explained cash credit u/s68 of the Act, without appreciating the facts of the case. 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs. 1,75,32,049/- made by the A.O., on account of un explained expenditure u/s69C of the Act, without appreciating the facts of the case. 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osits subsequent to 21.7.2003 in the bank accounts the assessee did not explain the sources. Therefore, AO rejected the contention of the assessee noted the factual aspects in his assessment order as derived from the agreement dated 21.07.2003 as under: "(a) The Surat District Co-Operative Spinning Mills Ltd. Called for offers on 08.07.2003 by way of advertisement in local newspaper. (b) The assessee made an offer to the mill based on his advertisement in newspaper on 08.07.2003 showing his interest to the offer (page no: 3 of the agreement). (c) After discussion with the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ld. Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition made by the Assessing Officer observing as follows: "6. 1 have gone through the assessment order as well as the submissions of the appellant. The brief fact of the case on the basis of submission of the appellant which are also part of assessment order and my decision on various issues are as under: i. The Surat District Co-Op Spinning Mills Limited wanted to sell, its land and for that purpose made an agreement with the appellant, 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 Rs. 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, [ii] The assessee made an offer showing his interest based on the advertisement, [iii] After taking into consideration of the past experiences in line of business, in the meeting of Board of Directors dated.21.07.2003, the assessee was granted the right as under writer. From the perusal of the bank statement, it is noticed that cash was deposited into his bank account, even prior to his appointment. Besides, the assessee had deposited huge cash in a very short period. It was also found that an amount of cash of Rs. 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only. He further stated that he has not carried out any land development activity and has not incurred any expenses for land development. Moreover, he has not prepared any trading account, profit and loss account and Balance Sheet of his property Concern M/s Shreeji Developers. 15. However, the AO noted that assessee has made an agreement dated 21.07.2003 with Surat District Co-Operative Spinning Mills Ltd. In the said agreement on page number 3, the status of the assessee 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edly mentioned that he only acted as agent without engaging himself in land development activities. Further, he has submitted that he has not incurred any expenses for land development activities. However, the said plea of the assessee was not accepted by AO. The AO noted that assessee has not proved with evidences as to who had incurred huge amount of expenses for land development. Further, the assessee, vide his submission dated 14.11.2011 stated that he has also received an amount of Rs. 5,25,96,148/- from members as development expenditure. The assessee was required to pay Rs. 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 Rs. 15,90,67,548/- only to the mill. The sources of this according to the assessee is Rs. 10,64,71,400/- being amount received from members for sale of land and Rs. 5,25,96,148/- being amount towards development charges. Thus, the entire of Rs. 15,90,67,548/- [Rs. 15,90,67,548/- + Rs. 5,25,96,158/-] was paid to the mill towards his liability to pay Rs. 18,86,12,838/- and the assessee did not kept any money to discharge his other obligation to develop the land. It was responsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and to incur all the required expenses for the said purpose. As per clause No.24, it was the responsibility of the assessee, to incur the expenses on land tax, betterment charges, premium conversion tax and town planning as well. However, the assessee contended that he acted only as agent without engaging himself in land development activities. He had not incurred any expenses for land development. The A.O. also found that the assessee was required to pay Rs. 18,86,12,838/- to mill, towards sale of land, however the assessee has made total payment of Rs. 15,90,67,848/- to the mill, for which it is contended that an amount of Rs. 10,64,71,400/- was received by him from members against sell of land and Rs. 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 expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er developing the same. However, he has not offered any profit for doing the business activities. Accordingly, the 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. The assessee, vide his reply dated 15.12.2011, submitted 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 Rs. 3951, then, the commission was to be paid to him @ 5% of amount in excess of sales price at Rs. 3951 sq. mtr. Since he had not sold any land at more than Rs. 3951 per sq mtr due to the fact that mill was itself selling the land at price lower than Rs. 3951 per sq mtr. and he was finding difficult to find customers at price more than Rs. 3951 per sq mtr., he has sold all the plots at price which was less than Rs. 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, A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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