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TMI Blog2022 (12) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 declaring total income of Rs.7,80,16,050/-. 2.1 During the course of assessment proceedings, the Assessing Officer noted that during the course of search and seizure operation, it was found that the company has given its land admeasuring 7,000 sq. yards situated at H.No 5-4-156,157, Indira Nagar, Ginwala Compound, MM G Road, Secunderabad for development to M/s Namishree Infratech to construct residential apartments and commercial space named as Project T-19 on which assessee had not paid any capital gain tax. He noted that while examining this issue, assessee submitted that there were certain litigation on this land which was settled in the City Civil Court in the year 2014. Assessee produced the copy of the court settlement order also. After this order, Assessee Company again entered into supplementary agreement on 16.03.2015 for executing constructions. Assessee submitted the copy of supplementary agreement too. As per supplementary agreement, the assessee company's share comes to 1,18,895 square feet in total. He noted that during the course of recording the statement on 22.11.2017, the director of the assessee company Shri Satchidanand had stated that against the land given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur business premises situated at 5th floor. Anand Capital, Ameerpet. Hyderabad on 21.11.2017, it was replied vide question no 12 that, your company Ms. Mechineni Projects Pvt Ltd entered joint development agreement with M/s. Namishree Infratech to construct residential and com1mercial space against which your company has got its share of 1,18,895. Further you have stated that the company M/s Mechineni Projects P Ltd has not offered any capital gains on joint development agreement and arrived a consideration of Rs 29.72 crores adopting construction cost of Rs 2500/- of total area allotted and admitted an amount of Rs 13.72 crores as Long 1Term Capita Gains after reducing the cost of acquisition of Rs.16 crores in the hands M/s. Mechineni of the Projects Pvt Lid. Please reconfirm the same. Ans. During the course of search and seizure operation on 21.11.2017. I have admitted a total consideration of Rs.29.72 towards total built up area of 1,18,895 (residential: 46.310 commercial :72585) adopting the rate Rs.2,500/-which is very high. Subsequently, after verifying the copy of construction agreement entered between one of the landlords with developer M/s. Namishree Infratech, wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t-up area @ estimated cost of construction Rs.2200/- per sq.ft. Other than statement u/s 132(4), the AO has not brought anything on record to prove that the cost per sq.ft. was Rs.2200/ per sq.ft. (2) No incriminating material was brought on record by the Assessing Officer to Corroborate with evidence that the cost per sq.ft. was Rs.2200/- (3) The appellant on his part has furnished confirmation letter from the Developer M/s Namishree Infratech vide letter dated 21.10.2019 which stated that the estimated cost of construction was likely to be Rs.1600/- for the total project, before the AO. The AO has simply disregarded the evidence and explanation of the appellant. The Assessing Officer has made addition without considering the confirmation letter submitted by the developer and the construction agreement entered by the developer with the other landowners for Rs. 1,600/- construction cost per sq.ft. has adopted Rs. 2,200/- per sq. ft as construction cost. 4) The AO has made addition which is only based on the statement of the Director of the appellant company u/s 132(4), the same is not tenable in the absence of any corroborative evidence suggesting that the cost per rate was R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o retract from its admission within a reasonable time as held by the case of Hon'ble High Court of Rajasthan in the case of Pr. CIT (Central), Jaipur Vs Roshan Lal Sancheti. 8. The appellant craves leave to amend or alter any ground or add any other grounds which may be necessary". 8. The learned DR strongly opposed the order of the learned CIT (A) in deleting the addition made by the Assessing Officer. He submitted that when the assessee himself during the course of search proceeding admitted the cost of construction at Rs.2200/- per sq.ft, therefore, the learned CIT (A) is not justified in deleting the addition made by the Assessing Officer. The learned DR also filed the following written submissions: "Search & Seizure conducted on21-11-2017. A Search and Seizure operation u/s.132 of the IT Act were conducted in the case of M/s.Raghuram & Trishala group on 21-11-2017 and warrant in the case of M/s. Mechineni Projects Pvt. Ltd., was executed. Sworn statement of Sri M. Satchidananda Rao dated 21-11- 2017: During the course of search, a sworn statement was recorded on 21-11-2017 and answer to question to number 12, Sri M.Satchidananda Rao submitted that the company ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 10,65,77,091/- is added back to the income of the assessee as income from Capital Gain. Submitted for kind perusal of your honours and necessary orders." 9. The learned Counsel for the assessee, on the other hand, strongly relied on the order of the learned CIT (A). He submitted that the addition cannot be made solely on the basis of 132(4) statement without bringing any corroborative material. He submitted that when the builder himself has considered the cost of construction at Rs.1600/- per sq. ft which has been accepted by the same Assessing Officer, therefore, he should not have determined the cost of construction at Rs.2200/- per sq. ft for determining the capital gain in the hands of the assessee. Relying on various decisions, he submitted that the learned CIT (A) was fully justified in deleting the addition. He also filed the following facts sheet: S.No Particulars Date 1 Original return filed for the financial year 2016-17 31.3.2017 2 Date of search 21.11.2017 3 Notice u/s 153A issued 30.05.2018 4 Date of filing return in response to notice 153A 01.11.2018 5 Date of statement recorded 22.11.2017 6 Date of further statement recorded 22.01.2018 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of additional income during the course of search and seizure and survey operation reads as under: "Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, confession during the course of search & seizure and survey operation do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of search and seizures operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely". 11.1 We further find, the CBDT letter (F.No.286/98/2013- IT (In\NV.II) dated 18.12.2014 reads as under: Instances/complaints of undue influence/coercion have come to notice of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ao with the Developer M/s. Namishree Infratech Project was Rs.1600/-. We find during the course of assessment proceedings; the assessee had furnished a confirmation letter from the developer M/s. Namishree Infratech Project vide letter dated 21.10.2019 that the estimated cost of construction was likely to be Rs.1600/- for the total project. However, the Assessing Officer had completely disregarded the same although he is also the Assessing Officer of the Developer. In the instant case, we find the addition was based solely on the basis of the statement of the Director of the assessee company at the time of search in the statement recorded u/s 132(4) but not backed by any other tangible or cogent evidence. It has been held in various decisions that addition cannot be made solely on the basis of statement recorded u/s 132(4) without any corroborative evidence to substantiate the same especially when the assessee has retracted from his earlier statement by producing cogent evidence which has not been rebutted by the Assessing Officer in any manner. In this view of the matter and in view of the detailed discussion by the learned CIT (A) while deleting the addition, we do not find any i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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