TMI Blog2021 (11) TMI 916X X X X Extracts X X X X X X X X Extracts X X X X ..... tes per sq ft are charged on built up area only In all the agreements the built area as well as total sale consideration has been mentioned clearly. When all these explanation, documents were before the AO, he must bring on record any contrary evidence, he must have made the inquiry from the purchasers when the data or details of the purchasers were before him, before making the addition on account of understatement of sales. The Assessing Officer has not brought on record any contrary evidence except these loose papers. The Notarized sales agreements cannot be discarded in front of loose rough estimated papers without bringing any contrary evidences to rebut the same. On this preposition, we draw strength from the decision of the Hon ble MP High court in the case of CIT v/s Dolphin Builders (P) Ltd . [ 2013 (6) TMI 103 - MADHYA PRADESH HIGH COURT] wherein it was held that Department had not examined any purchaser or flat owner to verify correctness of noting that some higher amount was paid by said purchaser to B Builders or fact that actual price was much higher to price which was recorded in account books. The Tribunal had also found that if any amount was collected in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11-12 and 2012-13 on 04.05.2017 and also filed additional written submissions dated 02.11.2017 filed on 03.11.2017. Certain specific plea and arguments related to the issue under consideration have been submitted through this additional written submission filed on 03/11/2017. However, on perusal of the order of the ITAT dated 17/12/2018, it is very clear that the additional written submission dated 02.11.2017 which was filed on 03/11/2017 have not been considered at all by the ITAT before passing the above said order dated 17/12/2018. In the written submission, the ld AR had specifically taken the plea and arguments that no evidence relating to receipt of excess sale consideration is available on record and with the arguments he had also referred various related judgments. He also mentioned that the loose papers relied upon for addition by the AO was not related to the year under consideration. In fact the loose papers were found during the course of search on 10.03.2010 and seized. The related year of search was assessment year 2010-11 and accordingly the period under consideration in this appeal was succeeding or later year and the loose papers were not at all related to the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sales and marketing the flats and the AO has recorded his statements u/s 131 on dt. 21.04.2010 vide page 17-18 of the assessment order. In his Statements Sh. Ankit Jain has stated as under:. Despite by referring the relevant portion of statement of Shri Ankit Jain recorded as above during the post search proceedings to the effect that the price of each flat is ₹ 26,65,600/-. Then, he has estimated the total sale consideration of three flats sold during the year under consideration at ₹ 79,96,800/- at the rate of ₹ 26,65,600/- per flat as against ₹ 14,00,000/-, 15,45,000/- and 14,00,000/- respectively shown by the assessee totalling to ₹ 43,45,000/- and accordingly he concluded that there was under statement of sales to the extent of ₹ 36,51,800/- (79,96,800/- less 43,45,000/-) in the year under consideration. Thus, the AO has made addition of ₹ 36,51,800/- as understatement of sales. 7. In first appeal, before the ld. CIT(A) the assessee has filed the detailed WS and legal position and stated before him that the AO has made the addition of ₹ 36,51,800/- just on the basis of assumption and presumption without bri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search proceedings but AO misinterpreted the explanations of the Marketing Manager Shri Ankit Jain in this respect and hence arrived at wrong conclusion. During the course of search and post search proceedings the statement of Marketing Manager Shri Ankit Jain was recorded on 21/10/2010 under section 131 and the Ld. AO has also referred such statement at page 28 and 29 of his order in para 8.6. In this statement at question No.3 information and explanations related to size of flats have been asked for against which Shri Ankit Jain has clearly explained and stated that the size of flats are 1001 sqft.(built up area) and 1126 sqft. (built up area) only. Similarly the Ld. Officer has asked clarification about the size of flats mentioned in the broacher i.e. 1666 and 1484 sqft. In response thereto he has clearly explained that this was nothing but super built up area of both type of flats constructed by the Company. Further, against specific question regarding charging of rates by the assessee Company from the customer in question No.5 he has clearly stated the facts that the rates per sqft are charged on built up area only. There were documents related to sale agreement of flats execu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the case. The deeming provisions cannot be applied mechanically ignoring the true and real facts of the case, the material evidences available on records and the surrounding circumstances and the statements recorded by the department during the course of search and post search proceedings. The AO appears to be confused about the position of super built up area and built up area the terms used in this line of business. Actually as per law actual built up area can be sold to the buyer but in order to charge regular maintenance expenses the common areas is being included proportionately and informed/advertise to the buyer in order to avoid confusion in future regarding maintenance charges. Similar is the position of confusion about charging of parking space to the AO. He has estimated on assumptions and presumptions the sale consideration on the basis of projected amount in rough noting on the subjected loose papers. That on such loose papers it is very clearly reflected that the rate of 1400 per sq ft to 1600 sq ft has been applied on projected calculations. Further there may be calculations for furnished flats and for non-furnished flats also. In this respect of the specific m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasoning how the assessee has derived income from such noting. No addition can be made only on the basis of assumptions, presumptions or guess work ignoring the record and assessment order it is very clear that the ld. AO has proceeded only on suspicion. It is settled principle of law that an allegation remains a mere allegation unless proved. Suspicion cannot take the place of reality. In this respect he relied on the following judicial pronouncements: (1) Dhakeshwari Cotton Mills 26 ITR 775 (SC) (2) R.B.N.J. Naidu v/s CIT 29 ITR 194 (Nag), (3) Kanpur Steel Co. Ltd. v/s CIT 32 ITR 56 (All). (4) CIT v/s Kulwant Rai 291 ITR 36( Del). (5) CIT v/s Shalimar Buildwell Pvt Ltd 86 CCH 250(All). That it is an admitted fact in this case as is appearing on proper appreciation of the paper that the loose paper does not reflect the date of transaction, nature of transaction, the person in whose writing it was noted, position whether transaction executed or not, whether executed by the assessee or not and whether the assessee has derived any income from such transaction. In support of all the above arguments assessee also relied on ratio of the following decided c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on alleged loose paper is open to more than one interpretations and did not prove conclusively that any transaction was actually executed or not by the appellant. Considering these specific facts of this case it is very clear that the ld. AO has proceeded only on suspicion. 7.3.3 I have found that during the course of search and post search proceedings as well as later on the assessee has denied that they have not executed any transactions of such nature and noting on such loose papers which is not in the hand writing of any of the office bearer. 7.3.4 I have noticed that the AO confused about the terms super built up area and built up area used at different places. In the local laws applicable for registration of immovable property the built up area is being considered in the documents of registration as has been appearing in the sale agreements placed on records. The super built up area is published to include the common area of complex on proportionate basis normally for charging maintenance from different flat owners. The AO seems to have based his inference for sale considerations charged by the appellant on super built up area ignoring notarized sale agreement w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial evidences seized and statement available on record. In impugned assessment order it is very clear that the AO has proceeded only on on assumptions. It is settled principal of law that an allegation remains a mere allegation unless proved. Presumptions and assumptions cannot take the place or reality. 7.3.9 Considering the specific facts and ratio of various judgments discussed herein above I am in the considered view that such loose papers is technically, legally and factually can only be termed as rough, deaf and dumb papers and under no circumstances it can be utilized as evidence heating the same as a legal document. Further the loose papers are undated, unsigned and does not reflect the exact nature or actual execution of transactions by the company. No adverse inference can be drawn on the basis of such paper on suspicion as the noting on such paper is open to more' than one possible of interpretations in absence of cogent and speaking adverse material by inquiry/verification for such estimation. Hence, the addition made by the AO in this case of ₹ 36,51,800/- in the year under consideration is not justified. Accordingly, the addition of ₹ 36,51,800/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd value shown in the sale deed had to be accepted. Also refer CIT v/s Smt. Raj Kumari Vimla Devi (2005) 279 ITR 360(All). CIT v/s Shweta Buchar 192 Taxman 67(P H) Also refer Hussain Ali Bohara in ITA No. 564 578/JDH/2011 3.4. In this connection we also relying on the decision of Honble Rajasthan High Court in CIT v/s K.K. Enterprises 178 Taxman 187(Raj.)/13 DTR 289 wherein it has been held that AO determined the sale price of the plots by adopting the rate of ₹ 40 per sq.ft. on the basis of rate taken by sub registrar and made addition to assessee s income not justified. Apparently, there was no reliable material on record before the assessing authority to assume sale of plots at ₹ 40 per sq. ft.. In the absence of any evidence on record, it cannot be presumed hat land has been sold by the assessee at a higher price than the consideration shown in the registered sale deeds- Rates of property fixed by the Stamp valuation Authority for registration purpose cannot be applied to arrive at the price for which the property might have been sold . Recently followed by the Honble Bench in the case of Manoj Dubey in ITA No. 294/JP/2016 dt. 09.06.2017. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers without bringing any positive, corroborative evidence on records in support he has proceeded on his own imagination, assumptions, presumptions or guess work. Further when the Assessing officer himself recorded the statements of Marketing manager Sh. Ankit Jain who was handling the sales was recorded on 21/10/2010 U/s 131 wherein he has clearly explained and stated about the size of flats are 1001 sq ft.(built up area) and 1126 sq ft. (built up area) only. He also explained about the size of flats mentioned in the broacher i.e. 1666 and 1484 sq ft. that this was nothing but super built up area of both type of flats constructed by the Company. Regarding charging of rates by the assessee Company from the customer in question No.5 he has clearly stated the facts that the rates per sq ft are charged on built up area only. We have also gone through the documents related to sale agreement of flats executed prior to the date of search and available with the assessee which were also seized by the search party, E.g. Sale agreement dated 22/01/2010, 9/02/2010 and 16/1/2010, between the company and Shri Mahesh Chandra Swarnkar, Shri Pawan Dagalia and Shri Virndra Singh Chajjad respectively ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Y. 2011-12 and 2012-13. Thus no addition can be made in later A.Y.s. 2011-12 and 2012-13 on projection basis and a past seized documents can be used for future or later years i.e for A.Y. 2011-12 2012-13, until and unless the Assessing officer was not having any concrete evidence, which were absent in the present case. 14. Further we would also like to say that there was no inquiry or evidence on record that whether any excess or own money has been received by the assessee from the purchasers over and above the amount mentioned in such agreements. The actual amounts received are appearing in the registered sale. In this regard we draw strength from the decision of the Hon ble Jurisdictional Rajasthan High Court in the case CIT v/s K.K. Enterprises 178 Taxman 187(Raj.)/13 DTR 289 wherein it has been held that AO determined the sale price of the plots by adopting the rate of ₹ 40 per sq.ft. on the basis of rate taken by sub registrar and made addition to assessee s income not justified. Apparently, there was no reliable material on record before the assessing authority to assume sale of plots at ₹ 40 per sq. ft.. In the absence of any evidence on record, it cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dues-No evidence that consideration actually received was more than what was disclosed or declared by the assessee-There was thus no understatement of full value of consideration-No capital gains under the first proviso to s. 12B was, therefore, leviable. In the case of CIT v/s Shalimar Buildwell Pvt Ltd 86 CCH 250(All) it has been held that no additions can be made on own guess work, assumption, presumption and suspicion. An allegation remains a mere allegation unless proved. Suspicion may be strong however cannot take the place of reality, are the settled principles. In the present case looking to the above facts and circumstances it is clear that he made the addition own guess work, assumption, presumption and suspicion by using rough estimated cutting noting which were prior to the A.Y. s under consideration which was not desirable in the eye of law. Hence also no were liable to be made. The ld. CIT-DR has not brought on record any new facts or circumstances to controvert the findings so recorded by the ld. CIT(A) qua this issue, therefore, considering the totality of facts and circumstances of the case and in view of the above findings of the ld. CIT(A) and judgments reli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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