Income Tax Appellate Tribunal - Amritsar
Healthy Holdings Pvt. Ltd. vs The Asstt. C.I.T. on 19 January, 2007
Equivalent citations: [2008]112ITD51(ASR), (2008)113TTJ(ASR)129
ORDER
A.D. Jain, Judicial Member
1. These are two appeals filed by two different assessees for the assessment year 1995-96 against two different orders both dated 16-1-2004 passed by the learned CIT(A), Jammu with headquarters (sic) Amritsar. The facts being common, for facility, they are being taken from the case of M/s .Healthy Holdings Pvt. Ltd., Jammu. The following grounds have been raised:
2. That the id. A.O. has erred on facts and in law in initiation of reassessment proceedings by recording the reasons in Use absence' of assessment records and therefore, the reassessment proceeding have been initiated without application of mind at the time of recording of reasons and the worthy CIT(A) has erred in confirming the action of the Assessing Officer.
3. That the ld. Assessing Officer had erred on facts and in law in ignoring the directions of the worthy CIT(A) on this issue while disposing of the appeal of the director of the company Shri Mohan Magotra for assessment year 1995-96 against order Under Sections 263/143(3) where the impugned amount was first sought to be assessed and the worthy CIT(A) set aside the assessment laying down the directions and guidelines for enquiries in the hands of the company or the director as the case emerge and the worthy CIT(A) has erred in confirming the action of the Assessing Officer.
4. That the ld. Assessing Officer has erred on facts and in law in not presenting Shri Budhi Parkash Bali for cross examination by the assessee company as per the directions of the worthy CIT(A) in the aforesaid order of the director of the company and the worthy CIT(A) has erred in confirming the action of the Assessing Officer
5. That the ld. Assessing Officer has erred on facts and in law in as much as he has not supplied the copy of the evidence in possession of the department regarding impugned payments and also recording his findings as to which place and as which person, these documents were found and seized and the statement of such person with regard to these documents and the worthy CIT (A) has erred in confirming the action of the Assessing Officer.
6. That the ld. Assessing Officer has erred on facts and in law in ignoring the evidence tendered in the shape of agreement with Shri Budhi Parkash Bali and the decree of the Delhi High-Court on the agreement arrived at between Shri Budhi Parkash Bali and the company which was stamped with the approval of Delhi High Court and the worthy CIT(A) has erred in confirming the action of the Assessing Officer.
7. That the ld. Assessing Officer has erred on facts and in Law in ignoring the directions of the CIT(A) regarding these transactions that if at all these payments are proved to have been received by the company, the same would be contract receipts in the hands of the company and only the profit element therein would be chargeable to tax and the worthy CIT(A) has erred in confirming the action of the Assessing Officer.
8. That the ld. Assessing Officer has failed to pinpoint and relate the alleged receipts to foundation and basement sections which were the subject matter of contract between company and Shri Budhi Parkash Bali and the worthy CIT(A) has erred in confirming the action of the Assessing Officer.
9. That the ld. Assessing Officer has erred on facts and in law in not recording finding according to the order of CIT(A) on this issue that he must establish as to how the company acting through its directors could have sold the. impugned offices and godowns where it was only a contractor and had no legal power to sell the property under the Transfer of Property Act and the worthy CIT(A) has erred in confirming the action of the Assessing Officer.
10. That the ld. Assessing Officer has failed on facts and in Jaw in ignoring the findings of the ld. CIT(A) that the total amount of alleged receipts relating to sale of offices and godowns on the respective floors which are the subject matter of the respective in the written submissions before the Assessing Officer had not been adjudicated upon by the id. Assessing Officer and the worthy CIT(A).has erred in confirming the action of the Assessing Officer.
11. That the ld. Assessing Officer has misstated that on the last date of hearing i.e. 24-3-2003, no body attended nor any submission was received in as much as letter dated 21-3-2003 casting onus on the Assessing Officer on the issues was delivered to him by the speed post by the Gandhi Nagar Post Office, Jammu on 24-3-2003 which appears to have been ignored by the ld. Assessing Officer for the reasons best known to him and the worthy CIT(A) has erred in confirming the action of the Assessing Officer.
12. That the ld. Assessing Officer has erred on facts and in law in making an addition of Rs. 1521697/- which needs 10 be deleted and the worthy CIT(A) has erred in confirming the action of the Assessing Officer.
13. That the appellant craves leave to add, amend or to withdraw any ground or grounds of appeals at or before the hearing of the appeal.
2. An additional ground of appeal has also been sought to be raised, which is as follows:
That the ld. Assessing Officer has grossly erred in law in invoking Section 150(1) of the Income tax Act, for reopening the assessment of the company by misconstruing the observation/finding of the Hon'ble Amritsar Bench in the case of Sh. Mohan Mangotra as a direction within the meaning of Section 150(1).
3. Apropos the additional ground, we find that, as contended on behalf of the assessee, it is purely a legal ground; not requiring any further facts to be gone into. The issue involved is necessary to be considered so as to correctly assess the tax liability of the assessee. As such, in the interest of justice, this additional ground is allowed to be raised.
4. The first issue raised by the assessee before us is that the reassessment proceedings have wrongly been initiated, whereas reasons for such reopening were recorded in the absence of the assessment records. The learned Counsel for the assessee has submitted that the original assessment order in this case was passed on 30-3-1998, under Section 143(3) of the Income tax Act (copy placed on record). Our attention has been drawn to the reasons recorded by the A.O. for reopening the completed assessment. A copy of these reasons is placed at page 40 of the assessee's paper book ("APB", for short). These reasons read as follows:
During the course of proceedings in the case of Shri Mohan Lal Mangotra, 29-Church Lane, Jammu presently B-68, Greater Kailash Pan I, New Delhi, it was observed that one Shri B.P. Bali owner of the property at 1/6, Kirti Nagar, New Delhi entered into an agreement with M/s. Good Faith Construction (P) Ltd., and M/s. Healthy Holdings Pvt. Ltd., 20-Church Lane, Jammu for the development of property of Mr. B.P. Bali as a commercial complex at a cost of Rs. 80,00,000/- and in case Shri B .P. Bali failed to make the payment of that amount, these two companies were to get 40 % of the constructed area which they would sell to realize the above invested amounts. At the time of search details regarding the sale of shops/complexes/offices were found and as per these details a total amount of Rs. 54,78,165/- was received as sale consideration by Shri Mohan Lal Mangotra. During the course of recording of statement of Shri B.P. Bali, it was deposed by him that 28 shops/offices was sold and he received cheque only for Rs. 20 lakhs and the balance amount of Rs. 34,78,165/- was retained by Shri Mangotra on behalf of these two companies as M.D. As per the findings of IT AT, Amritsar Bench, Amritsar vide their order dated 24-10-2000 in ITA No. 234(ASR)/1998 in the case of Shri Mohan, Mangotra, Jammu v. ACIT, Investigation Circle, Jammu vide para 7.2 page No. 11 has stated that since the agreement was between the two companies the addition was required to be made in the hands of these two companies, i.e., M/s Good Faith Construction (P) Ltd. and M/s. Healthy Holdings Pvt. Ltd. Therefore, keeping in view this fact I have reasons to believe that income to the extent of Rs. 17,39,803/- and Rs. 17,39,803/- has escaped the assessment in the hands of M/s Good Faith Construction (P) Ltd. and M/s. Healthy Holdings Pvt. Ltd., 20-Church Lane, RR, Jammu respectively.
5. The learned Counsel for the assessee submitted that a perusal of the above reasons recorded by the A.O. clearly shows that they contained no mention regarding the facts and the position obtaining in the original assessment order; that even if it is presumed that Section 151(1) of the Act is applicable, this section specifically states that the notice under Section 148 can be issued by an Assessing Officer not below the rank of ACIT or DCIT, whereas in the present case, the notice (copy at APB 39) was issued by the Income tax Officer. The learned Counsel for the assessee has further submitted that even so, the assessee's statement of income (copy at APB 41) was filed alongwith the return in response to the notice under Section 148 of the Act, for the assessment year 1995-96. It has been pointed out that the assessee's objections are at APB 42 to 43. According to the learned Counsel for the assessee, the decision of the Hon'ble Supreme Court in the case of "GKN Driveshafts (India) Ltd. v. ITO" 259 ITR 19 (SC) has been violated by the A.O. since the assessee's aforesaid objections have not been dealt with. By way of ground No. 3, it has been contended that the A.O. erred in ignoring the direction of the CIT(A), by virtue of which direction, the assessment was set-aside by the CIT(A) for fresh enquiry in the hands of the company or the director
5. The learned D.R., on the other hand, has submitted that first of all, it has to be seen as to whether there has been a direction by the Tribunal. According to him, if there was such a direction or finding of the Tribunal, Section 150(1) provides that a notice under Section 148 may be issued at any time for the purpose of making the assessment or reassessment or recomputation in consequence of or to give the effect to any such finding or direction. The learned D.R. has read out to us para 7.2 (APB 22 to 24) of the Tribunal order dated 24-10-2001 in I.T.A. No. 234(ASR)/1998, for the assessment year 1995-96, in the case of Shri Mohan Mangotra, Jammu. For ready reference, this paragraph is being reproduced hereunder-
7.2 As regards the transaction pertaining to property No. 1/6, Kirti Nagar, Industrial Area, New Delhi, it was explained by the assessee that at the relevant time he was one of the Directors of the companies namely M/s. Goodfaith Construction Pvt. Ltd. and M/s. Healthy Holdings Pvt. Ltd.; and being the director of the aforesaid company entered into an agreement with Shri B.P. Bali for development of the said property. In support of this, we find that the assessee has filed copies of agreement placed at page 7 to 34 of the paper book. The aforesaid fact is not denied by the authorities below. Shri B.P. Bali in his statement recorded on 18-6-1996 by the A.D.I. (Investigation) Unit-V(3) (which has been referred at 5 above) admitted that Shri Mohan Mangotra (the assessee) entered into an agreement in the capacity of Managing Director. Thus, it is an admitted that the sale proceeds of shops/offices received by the assessee was the capacity of the Managing Director of the companies namely M/s. Good faith Construction (P) Ltd. and M/s. Healthy Holdings Pvt .Ltd., New Delhi, and not in his individual capacity. In these circumstances, the learned CIT was not justified in treating sum of Rs. 34,78,165/- received by the assessee in his individual capacity, if no receipt of the aforesaid amount was shown then the addition was required to be made in the hands of the companies namely M/s. Goodfaith Construction (P) Ltd. and M/s. Healthy Holdings Pvt. Ltd. and not in the hands of the assessee. So the action of the ld. CIT cannot be said to be correct considering the legal position; From the statement of Shri B.P. Bali which was made the basis for taking the action Under Section 263, it is clear that the assessee never entered into an agreement in his individual capacity. The agreement was in between the two companies namely M/s. Goodfaith Construction (P) Ltd. and M/s .Heal thy Holdings Pvt. Ltd. and Shri B.P. Bali. The assessee executed an agreement in the capacity of the Managing Director and all the acts were on behalf of the aforesaid companies. Considering the totality of the facts as narrated above, it can safely be said that the ld. CIT was not justified in considering a sum of Rs. 34,78,165/- in the hands of the assessee. At the time of original assessment, no addition was made in the hands of the assessee because the amount was not related to the assessee. In view of that we are of the opinion that the assessment order can neither be said erroneous nor prejudicial to the interests of the Revenue, because the amount received out of sale proceeds of shops/offices was not related to the assessee in his individual capacity.
6. The learned D,R. has argued that the Tribunal has recorded specific findings in the case of Shri Mangotra, which findings are centeral to the issue. It is submitted that in view of these findings, in keeping with Section 150(1) of the Act, the notice under Section 148 was correctly issued. It is submitted that the order of the Tribunal was to be given effect to and, so, no permission for issuance of the notice was required and that even so, the permission of the JCIT was taken. It has been further submitted that upto the end of the financial year 1998, a notice could be issued with the approval of the JCIT as Section 2(16) of the Act defined "commissioner" to include JCIT and DCIT. Therefore, according to the learned CIT(A), due permission for issuance of notice under Section 148 of the Act was taken.
7. In his counter, the learned Counsel for the assessee has submitted that the matter before the Tribunal was regarding Shri Mangotra and not concerning the assessee. The learned Counsel for the assessee has submitted that further, the observations of the Tribunal in para 7.2 of the aforesaid order in the case of Shri Mangotra were challenged by the department before the Hon'ble High Court and that that being so, the department is blowing hot and cold in the same breath, which is not permissible. The learned Counsel for the assessee has further submitted that the provisions of Section 150(1) of the Act do not supersede those of Section 151.
8. Having considered the rival contentions in this regard, we are of the view that the assessee's grievance in this regard is ill-founded. As per " the provisions of Section 150(1) of the Act, a notice under Section 148 of the Act may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained any order passed, iner alia, by an authority in an appeal, reference or revision. In the present case, the Tribunal, vide order dated 24-10-2001, in the case of Shri Mohan Mangotra for the assessment year 1995-96, in para 7.2 of the order (supra) observed, inter alia, that the CIT(A) was not justified in treating the amount of Rs .3478165/- received by Shri Mangotra in his individual capacity, as income of the assessee, individual; and that if no receipt of this amount was shown, then addition was required to be made in the hands of the companies and not in the hands of the assessee, individual. Evidently, these observations of the Tribunal are "findings" and/or "directions". It was in order to give effect to these findings of the Tribunal that the notice under Section 148 of the Act was issued. This notice, in accordance with the provisions of Section 150(1), could be issued at any time and, therefore, issuance of such notice was valid. So far as regards the objection that the sanction for issuance of such notice was not proper, since Section 150(1) provides that such sanction has to come from an Assessing Officer not below the rank of the ACIT or DCIT, whereas in the present case, the issuance of such notice was sanctioned by the JCIT; Section 2(16), upto the end of the financial year 1998, provided that such a notice could be issued with the approval of (he JCIT, since "Commissioner" included "JCIT". This objection of the assessee by way of the additional ground of appeal is, therefore, rejected.
9. The next issue is pertaining to the merits of the addition of Rs. 15,63,665/- towards the alleged amount of sale proceeds in respect of the property of Shri B.P. Bali, situated at 1/6, Kirti Nagar, New Delhi, which amount was supposedly kept by the assessee. The facts in this regard are that Shri Mohan Mangotra received total sale proceeds amounting to Rs. 54,18,165/-, with regard to the sale of shop. Out of this amount, a sum of Rs. 47,10,341/- was received by Shri Mangotra up to 27-1-1992. The remaining amount of Rs. 767873/- was received in the year under consideration, i.e., assessment year 1995-96. A further sum of Rs. 517642/- was received by Shri Magotra on the sale of certain oilier flats. As per the A.O., these amounts were retained by Shri Mangosra and were passed on neither to Shri Bali, nor to the construction company, nor was any expenditure incurred with regard thereto. A total addition of Rs. 1563665/- was thus made. The learned CIT(A) has restored the issue to the file of the A.O. while observing as under:
4.4 I have carefully considered the facts of the case. It is seen that the A.O. has not dealt with certain basic issues which are material in deciding as to whether the receipts of the amounts by the appellant are part of the income from undisclosed sources. The undisputed facts of the case are that the property at 1/6, Kirti agar, New Delhi belong to Shri Budhi Parkash Bali. He entered into an agreement with the two construction companies for the construction of the commercial building. The construction companies were represented by Shri Mangotra. As per the terms of the agreement, the companies were required to make deposits of 10 % of the amount for which the property was agreed to be completed. The construction companies made the necessary deposits and also completed the construction of the building. The ownership over the constructed building also vested with Shri Bali. If that be so, I fail to understand as to how the appellant could get a part of the sale proceeds of the property. There is a possibility that the entire sale proceeds of the property were not to be brought on record. There is also a possibility that the apparent consideration cost must be the suppressed cost. If that be the situation, the unrecorded sale proceeds must have been shared between the. construction companies through Shri Mangotra and the owner, Shri Bali. It could be for this reason that the alleged amounts were received by Shri Mangotra to compensate him for the unrecorded cost of construction. However, to arrive at such a conclusion, more material has. to be brought on record. Such a proposition would further require some deduction for the unrecorded cost and only the profit element could be assessed in the hands of the recipient. As mentioned above, the construction was to be completed by the two companies cost of construction was also their responsibility. If the companies were bearing the cost, it is hard to believe that the amounts received by the appellant were not passed on to the companies. The only inference which could be drawn from the facts, referred to by the A.O., is that the appellant received the money on behalf of the two companies. I would like to clarify thai this inference is warranted on the basis of the available material. If the A.O. is able to bring some thing more on the record to substantiate his/her findings that the amounts referred to in the seized papers were actually retained by the appellant, then the addition in his case would be justified. This would require a detailed study of the accounts of the two companies for the year under consideration. It also needs to be seen as to how much parts , of the constructed building was sold out by Shri Bali and what part was transferred in the names of the two construction companies. This would require a reference to the seized and asstt. records of Shri Bali. The seized documents also need a detailed investigation to co-relate the receipts of the property sold. In particular, it is required to establish that the appellant was authorised to receive a part of the sale proceeds. Unless that is done, the natural presumption would be that he had no authority and might have received payments either on behalf of the construction companies or on behalf of Shri Bali. It is for this reason that I have referred to ¦ the possibility of the appellant receiving the amounts to cover up the unrecorded cost of construction which is not indicated in the agreement signed by the two companies. Therefore, the issue is restored to the file of the A.O. for ascertaining the facts and making out a better case to make any addition. Accordingly, the issue is restored to the file of the A.O. for fresh adjudication.
10. The grievance of the assessee is that inspite of the above elaborate direction given by the learned CIT(A) to the A.O. while remanding the issue to the file of the A.O. in the case of Shri Mohan Lal Mangotra, the A.O. did not put anything to the assessee and still proceeded to make the addition in the hands of the assessee company. Relying on the decision of the Hon'ble Supreme Court in the case of "Kjshinchand Chellaram v. CIT" 125 ITR 713 (SC), the learned Counsel for the assessee has submitted that the evidence which has not been put to the assessee cannot be used against the assessee. As such, according to the learned Counsel for the assessee, no addition in the hands of the assessee was called for.
11. On the other hand, the stand of the department in this regard is that the order of the learned CIT(A) in the case of Shri Mohan Lal Mangotra" is not at all relevant in the present case, since the findings contained therein are with regard, to the case of Shri Mangotra, individual and not regarding the case of the assessee company. Besides, it has also been contended that the said order of the CIT was against the order of the A.O. passed under Section 143(3), under Section 263 of the Act; that the order passed by the CIT under Section 263 of the Act had been quashed by the I.T.A.T. vide order dated 24-10-2001. It has further been contended that as per the original agreement dated 15-12-1991 between Shri Bali and M/s. Good Faith Construction P. Ltd. and M/s. Healthy Holdings P. Ltd., it had been agreed that the said two companies would construct the property and would receive amounts of Rs. 45 lacs and Rs. 35 lacs, respectively, from Shri Bali and in the event of non payment thereof, these companies would be entitled to sell 40% of the constructed premises. Therefore, as per the department, it cannot be said that these two companies did not have any right to execute the sale deeds regarding the properties. The department also contended that the agreement dated 29-11-1999 relied on by the assessee was much later than the search which was carried out on 7-4-1995, whereas the seized material related to a point much earlier in time and that, therefore, the said agreement dated 29-11-1999 was not at all relevant. Moreover, the department has also submitted that in the case of a property transaction, the unaccounted on-money received by the seller being over and above the apparent value of the transaction and the entire amount of on-money received representing the unaccounted income, there is no question of the profit element only out of the unaccounted money received being added as undisclosed income. Still further, the department contends that no evidence has been produced by the assessee to substantiate the claim that the major portion of the amount of Rs. 3478165/- was received by the assessee in the earlier assessment years and that only a sum of Rs. 767823/- was received in the year under consideration. It is also the case of the department that the seized material contains, details including the names and addresses of the parties to whom the shops were sold and unaccounted money was received, besides the statement of Shri Bali recorded by the Investigation Wing and that wherein he had admitted that Shri Mangotra had been looking after the sale of the offices, shops, etc. and receiving the sale consideration from the customers, leading to the uncontrovertible conclusion that Shri Mangotra did have a right to sell the properties and to receive the consideration thereon. There was sufficient evidence to show that Shri Mangotra had received a sum of Rs .34781.65/- on behalf of the two companies as on-money/unaccounted money regarding sale of shops etc., putting the onus on the assessee to prove that the on-money was not received during the year under consideration, but in the earlier years. Moreover, it was Shri Mangotra, who was exclusively having the knowledge of the actual date of receipt of on-money, but no evidence in this regard was produced.
12. We have heard the parties in this regard and have perused the material on record. Search and seizure action was carried out in the case of Shri Mohan Lal Mangotra, M.D. of M/s. Good Faith Construction P. Ltd. and M/s. Healthy Holding P.Ltd. on 7-4-1995, at B-68, Greater Kailash, New Delhi. Incriminating documents were found showing sale of certain properties of Shri Mangotra. Shri Mangotra had entered into an agreement dated 15-12-1991 with Shri B.P. Bali for construction of commercial property at 1/6 Industrial Area, Kirti Nagar, New Delhi. M/s .Good Faith Construction P. Ltd. was to construct the foundation and basement of the property for a consideration of Rs. 45 lacs, whereas M/s. Healthy Holding P. Ltd. was to construct the ground floor and the first floor of the said property for a total consideration of Rs .35 lacs. These companies were to deposit a sum of Rs. 45 lacs and Rs. 35 lacs respectively as a security amount with Shri Bali, who was the owner of the premises. The amounts of Rs. 35 lacs and Rs. 45 lacs were to be recovered by the said two companies from Shri Bali on completion of construction. As per clause 13.(1) of the said agreement, if Shri Bali failed to make the payment of the above amounts, the companies were to be entitled to ownership of 40% of the constructed area. The companies completed the construction of 110 shops out of which, 22 shops/offices were sold by Shri Mangotra, and as per seized documents, Annexure A-30 and Annexure A-3/A-I, Shri Mangotra received a sum of Rs. 5478165/-. for the sale of these shops. As per the statement of Shri Bali, Shri Mangotra recovered a total amount of Rs. 5478165/-, out of which, Rs. 20 lacs was paid to Shri Bali who, in turn, paid 40% of Rs. 20 lacs to the two companies. The balance of Rs. 3478165/- was received by Shri Mangotra and retained by him. In the assessment of Shri Mohan Lal Mangotra, Individual, income of Rs. 2340750/- was returned, including a surrender of Rs. 22 lacs. The A.O., vide order dated 29-3-1996, in addition to the returned income, added an amount of Rs. 2450000/- representing the unaccounted investment in the purchase of the land at village Charakpur, Gurgaon. The assessment was completed at an income of Rs. 4790750/-. The CIT(A), vide order dated 16-10-1996, deleted the addition, holding it to be already covered in the surrender made, amounting to Rs. 22 lacs. Later, an order under Section 263 of the Act was passed, holding the assessment order to be prejudicial to the interests of the Revenue. In an appeal against the aforesaid order passed under Section 263 of the Act, the Tribunal, vide order dated 24-2-2001, held, inter alia, that the CIT(A) was not justified in considering the sum of Rs. 3478145/- in the hands of the assessee, i.e., Shri Mangotra, since during the original assessment, no addition had been made in the hands of the assessee, Shri Mangotra, as the amount was not related to him. The Tribunal held the assessment order to be neither erroneous nor prejudicial to the interests of the Revenue, since the amount received out of sale proceeds of shops/offices was not related to Shri Mangotra in his individual capacity. It was in consequence of the aforesaid Tribunal order that a notice under Section 148 was issued by the assessee. For issuing such notice, the A.O. recorded reasons to the effect, inter alia, that as per the-findings of the I.T.A.T., the agreement was between the two companies and the addition was required to be made in the hands of these two companies, which led him to have reason to believe that income to the extent of Rs. 1739803/- each had escaped assessment in the hands of the companies, i.e., M/s.Good Faith Construction Co. and M/s. Healthy Holding P. Ltd. The A.O., vide the assessment order dated 31-3-2003, made the addition of Rs. 1521697/-, in the hands of M/s .Healthy Holdings Pvt. Ltd., i.e., the present assessee. The learned CIT(A) by virtue of the impugned order, has confirmed this addition.
13. From the order of the Tribunal.(supra), it is evident that the Tribunal held that the amount of the sale proceeds/on-money received had to be assessed in the hands of the assessee company. The observations of the Tribunal in this regard, are unequivocal.' Further, it is clear from the agreement dated 15-12-1991, that the assessee and M/s. Good Faith Construction. P. Ltd. undertook to cany out the construction on the property of Shri Bali at New Delhi. Shri Bali agreed to pay Rs. 45 lacs and Rs. 35 lacs respectively to these two companies for the said construction. The agreement also provided that in the event of Shri Bali failed to make payment within seven days from the raising of the bill, the contractor company had a right to remain in occupation and in possession or to sell 40 % of the constructed area or of the total maximum sale value of the constaicted building, whichever was higher, to compensate for the default in such payment. It can not, therefore, be said at all that neither of the two companies had any legal right to sell. No evidence whatsoever had been brought by the assessee to prove that any payment was received by the assessee company from Shri Bali for the construction of the said property.. No on-money had been shown as income of the companies, nor Shri Bali showed it as an individual income. The agreement dated 13-11-1999, in respect of compromise ' reached between the parties thereto, is of no help to the assessee, since it relates to a period of time much later to the search which was carried on to 7-4-1995 and it is the position as obtaining on the date of search, which is relevant.
14. It is further seen that the order dated 27:3-2000 passed by the A.O. was upset under Section 263 of the Act by the CIT. The said order of the CIT was quashed by the Tribunal vide its order dated 24-10-2001. Moreover, this order of the A.O. was in the case of Shri Mohan Lal Mangotra, Individual, and it did not have any bearing on the case of the present assessee and the other company, i.e., M/s. Good Faith Construction P. Ltd. Therefore, reliance by the assessee on the said order of the A.O. has rightly been rejected by the learned CIT(A). The assessee also placed reliance on the order dated 15-3r2001 passed by the CIT(A) in the case of Shri Mohan Lal Mangotra. This order, again, it is seen, does not have any relevance on the present case, since it pertained to Shri Mohan Lal Mangotra, Individual only, and not to the two companies. Moreover/again, the said order, as discussed above, stood quashed by the Tribunal. Apropos the agreement dated 29-11-1999 relied on by the assessee, this agreement also is irrelevant, being an agreement much later than the date of search, i.e., 7-4-1995. Also, the learned CIT(A) has correctly held that since in cases of property transaction, unaccounted on-money received by the seller over and above the apparent value of the transaction of the entire amount of on-money received represents , unaccounted income, there is no question of only profit element out of unaccounted on-money received being added as undisclosed income.
15. The assessee has also failed to prove its contention that a major portion of the amount of Rs. 3478165/- was received by the assessee in the earlier assessment year and that only a sum of Rs. 767823/- was received in the year under consideration, No evidence worth its name has, been produced to substantiate its claim. Moreover, the seized material clearly gives the names and addresses of the parties to whom shops were sold and from whom unaccounted money was received and also, in his statement, Shri Bali had admitted that Shri Mangotra had been looking after the sale of shops/offices, etc., and receiving sale consideration from the customers. Out of the sale proceeds, only a part was given to Shri Bali, the remaining amount having been retained by Shri Mohan Lal. Mangotra, which was shown neither in the hands of the companies, nor in the hands of Shri Mohan Lal Mangotra, Individual. This clearly goes to belie the claim that Shri Mangotra had no right, either in his Individual capacity or as director of the two companies, to sell the properties or to receive the sale consideration thereon. In fact, Shri Mangotra received a sum of Rs. 3478165/- as on-money/unaccounted money in respect of the sale of shops etc. The assessee miserably failed to prove otherwise.
16. The A.O., it is seen, merely carried out the directions issued by the I.T.A.T. by apportioning the amount of Rs. 3478165/- in the hands of the two companies," on account of money received on sale of shops/offices etc., at Rs. 1956468/- and Rs. 1521697/-, respectively. Pertinently, before the I.T.A.T., Shri Mangotra had filed an application, objecting to the observations of the Tribunal to the effect that unaccounted money received was required to be assessed in the hands of the two companies. This application was dismissed by the Tribunal.
17. In the above facts and the circumstances, finding no error in the order of the learned CIT(A), the same is hereby upheld.
18. In the result, both the appeals stand dismissed.
Order pronounced in the Open Court on 19th Jan., 2007.