Income Tax Appellate Tribunal - Indore
Hare Krishna Colonizers Pvt. Ltd., ... vs Assessee on 20 December, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARMA, A.M.
PAN NO. : AAACH9189G
I.T.(SS).A.Nos. 62 to 66/Ind/2010 and 74 & 75/Ind/2010
A.Ys. :2000-01 to 2004-05 & 2006-07, 2003-04 & 2005-06
M/s.Hare Krishna ACIT,
Colonizers Pvt.Ltd.,
E-5/137, Arera Colony, vs 1(2),
Bhopal. Bhopal
Appellant Respondent
PAN NO. : AAACH9189G
I.T.(SS).A.Nos. 67 to 73/Ind/2010
A.Ys. :2000-01 to 2006-07
ACIT, M/s.Hare Krishna
Colonizers Pvt.Ltd.,
1(2), vs E-5/137, Arera Colony,
Bhopal Bhopal.
Appellant Respondent
Assessee by : Shri H.P.Verma and Shri Girish
Agarwal, Advocates
Department by : Shri Arun Dewan, Sr. DR
Date of Hearing : 20 .12.2011
Date of : 31.01.2012
pronouncement
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ORDER
PER R. C. SHARMA, A.M.
These are cross appeals filed by the assessee and Revenue against the order of CIT(A) for the assessment year 2000-01 to 2006-07.
2. Common grievance of the assessee and Revenue in all the years relates to the net profit rate applied by the CIT(A) at 6.5 % as against net profit rate of 4.7 % shown by the assessee.
3. Grounds taken by the assessee in assessment year 2000-01 are as under :-
1. On the facts and in the circumstances of the case, the ld. CIT(A) was not justified in holding that the order passed by the Assessing Officer was not illegal, invalid and untenable in law.
2. On the facts and in the circumstances of the case, the ld. CIT(A) was not justified in not accepting the books result and in applying the net profit rate of 6.5 % as against the net profit rate of 0.93 % shown by the appellant.
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4. Rival contentions have been heard and records perused.
Facts of the case are that the assessee is a Company doing work of construction under the name and style of M/s. Hare Krishna Colonizers Pvt.Ltd. There was search at the place of some of the persons, who happened to be Directors of the assessee company. As there was no search at assessee company, action u/s 153C was taken in the hands of assessee company from assessment years 2000-01 to 2006-
07. In the assessment order, the Assessing Officer observed that the assessee company deals in real estate and as a developer and builder. The Assessing Officer stated that the assessee had simply furnished print out of ledgers and no specific details were furnished before him. The Assessing Officer further stated that during the course of search, Shri Ramnath Sharma, one of the Directors of the Company admitted that the group was earning unaccounted money on purchase and sale of property by receiving and making payment of On money. The Assessing Officer further noted 3
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that the assessee company had shown low gross profit by pointing out that the assessee has not furnished the required detailed. The Assessing Officer rejected book result and applied gross profit rate of 25 % of the turnover shown by the assessee in each assessment year. Thus, trading addition was made in each of the year. In appellate proceedings, the AR submitted that the assessee company had maintained regular books of account which were duly audited and the returns were filed on the basis of the audited accounts. All the sales, purchases and expenses were supported by vouchers. During the assessment proceedings, the appellant had produced account books and had also furnished photocopy of ledgers before the AO and the Ld. AO had not pointed out any defects in the books of account. The AR of the appellant also submitted (i) that there is no evidence found even during the search, which may indicate that the appellant received any 'on money' in any transaction of sale or purchase or that the appellant entered into any transactions, which were not accounted for in the books of account, (ii) that the G.P. shown by the appellant was the actual GP earned by the appellant, which 4
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was between 10 % to I5 % in the different assessment years and that it was not low and that the assessing officer had not cited any comparable case, where any builder had shown the GP as high as 25 % ; and (iii) that declaration made by one of the directors of unaccounted income of Rs.1.83 crores could not have any adverse effect on the genuineness of account books of the assessee. He submitted that on the contrary since the additional income had been declared by the director of the company and assessed in the hands of the directors of the company, the book results of the company should not be disturbed. Thus, it was argued that there was no justification for the AO to invoke provisions of section 145(3) of the Act and to reject books of account for these assessment years. It was further submitted that in the case of builders, it is unusual for the department to apply the GP rate, where usually the N.P. rate is applied if the account books are rejected. He submitted as an alternative argument that even if the books of account are rejected, the application of GP rate of 25 % is too unreasonable. He referred to the order of ITA T Agra Bench in the case of Dass 5
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Builders (P) Ltd. Vs. DCIT (2004) 88 TTJ (Agra) 651, wherein N.P. rate of 4 % on the declared sales is applied. He submitted that the facts of said case are identical with the facts of the case of the appellant. Thus, the AR of the appellant requested that the book results of the appellant be accepted or in the alternative, the NP rate of 4 % be applied on the sales in place of GP rate of 25 % applied by the Assessing Officer.
5. By the impugned order, the ld. CIT(A) observed that in the case of assessee who is engaged in the business of contractors and building constructions, net profit rate on the sales should be applied after rejecting the books of account in place of gross profit rates. Gross profit rate is generally applied in the cases of concerns dealing mainly in trading of goods. Moreover, the AO had applied a GP Rate of 25 % which is on the higher side. The AR contended in the alternate argument that NP rate of 4 % on the sales may be applied, relying on the decision in the case of Dass Builders Pvt. Ltd. Vs. DCIT, (2004) 88 6
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TTJ (Agra) 651. It may be noted that NP rate depends on facts and circumstances of each case. I came across the decision of Hon'ble ITAT Indore Bench in appeal no. 193 & 194/Ind/2003 for A.Y. 1992-93 and 1994-95 dated 1 9.08.2004 and in ITA No. 884/Ind/96 for A.Y. 1993-94 dated 19.09.2002 in the case of M/s Sav Builders Bhopal, vs. ACIT wherein the Hon'ble ITAT has estimated the net profit @ 6 %. In the instant case, the assessee had shown NP rates in different years as under:
A.Y. Net Profit rate shown
by the appellant
2000-01 0.93 %
2001-02 3.47 %
2002-03 0.76%
2003-04 1.26%
2004-05 4.6%
2005-06 6.15 %
Section 44AD of the Act provided for 8 % of net profit in the case of an assessee engaged in the business of civil construction where gross receipts does not exceed an amount of forty. lakhs rupees. In the instant case, the gross receipts in all the years were more than forty lakhs rupees and, 7
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hence, the rate of 8 % of net profit of gross receipts cannot be applied. Therefore, considering the facts and circumstance of the case and that the appellant company itself had shown net profit rate in A.Y. 2005-06 at 6.15 % on the sales, I am of the opinion that it would be fair and reasonable if NP rate of 6.5 % on the sales is applied. After applying net profit at 6.5 % on the sales, the estimation of NP in different A.Ys were worked out.
6. Aggrieved by the above order of the CIT(A), both assessee and Revenue are in appeal before us.
7. Contention of the ld. Authorized Representative was that considering section 153C, it can be said that the provision of section 153C is harsh with respect to the person who has not been searched as also echoed by Supreme Court in the context of section 158BD in the case of Manish Maheshwari v. Asstt. CIT [2007] 289 ITR 341.
A person against whom no search warrant has been authorized should not be equated with the person against whom search is authorized so as to make assessment in his 8
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case also in the same manner as in the case of person searched as per provision of section 153A. There are vital points of distinction in both the cases -
(a) Extensive enquiries are conducted and information is collected by high ranking Departmental officials before forming 'reason to believe' regarding undisclosed income and issuing search warrant against the person to be searched. No 'reason to believe' regarding undisclosed income is formed and recorded by the competent authority with respect to the other person. To make assessment or reassessment of such other person mandatorily for seven years cannot be justified on the ground of plain equity.
(b) No opportunity to explain whether assets are disclosed in the hands of other person is provided to him during search before taking decision of seizure. Third person cannot be put in a worse position than the person searched. Under such situation, even disclosed assets belonging to other person may be seized and in that case invoking provision of section 153C can not be the 9
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intention of the Legislature.
The provision of section 153C needs to be read down in a manner so as to achieve the actual legislative intent. The literal interpretation of the provision of this section needs to be toned down so that there are no unintended severe repercussions on the third person.
8. It was further submitted that the powers of the assessing officer u/s 153C are not unbridled but are loaded with several restrictions. It is also illogical that strict conditions should be necessary for a search and consequent assessment u/s 153A and that there should be no restrictions for the assessing officer for the issue of the notice and assessment u/s 153C in the case of a third party, who has to suffer the same harsh consequences of reassessment of six preceding assessment years. Your honour will appreciate that in order to make the provisions logical, enough safeguards to protect the interests of the innocent assessee and several restrictions on the assessing officer are provided in the provisions of Sec. 153C and that unless some incriminating documents belongings to the third party are seized, no action in a casual manner can be 10
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taken against a third party just to make the roving enquires. The above contention of the appellant is also supported by the recent court decisions as under:-
1. L.J.J. International Ltd vs. Dy. CIT, (2008) 119 TTJ (Kol) 214.
2. S.R.Batliboi & Co. vs. CIT (Investigation), (2009) 181 Taxman 9 Delhi.
No action was called for u/s 153C in this case.
9. It was further contended by the ld. Authorized Representative that In the instant case, no incriminating material belonging to the appellant satisfying ~he assessing officer about any escaped income of the appellant for the above said six assessment years has been found and the Id. assessing officer has simply disturbed the old assessment and has re-assessed the income u/s 153C by applying the higher G.P. rate of 25% without 11
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pointing out any defects in the ale books as against the G.P. shown by the appellant between 8.48% to 15.66% in the different assessment years on the basis of duly audited accounts books. On these facts, when there is no incriminating material seized and no satisfaction is recorded, the notice issued u/s 153C and consequent assessment is illegal.
Reghubar MandaI Harihar MandaI vs State of Bihar 7 STC 770 SC :
"When the returns and the books of accounts are rejected, the AO must make an estimate and to that extent he must make an estimate and to that extent he must make a guess but the estimate must be related to some evidence or material , and it must be something more than mere suspicion."
State of Orissa vs Maharaja Shri B.P. Singh Deo 76 ITR 690 SC :
"The mere fact that the material placed by the assessee before the assessing authorities is unreliable does not empower those authorities to make an arbitrary order. The power to levy assessment on the 12
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basis of best judgment is not an arbitrary power; it is an assessment on the basis of best judgment. In other words, the assessment must be based on some relevant material. It is not a power that can be exercised under the sweet will and pleasure of the concerned authorities. The scope of that power has been explained over and over again by this court."
Commissioner of Income Tax v. Laxminarayan Badridas 51TR 170 PC :
"He (the assessing authority) must not act dishonestly, or vindictively or capriciously because he must exercise judgment in the matter. He must make what he honestly believes to be a fair estimate of the proper figure of assessment, and for this purpose he must, their Lordships think, be able to take into consideration local knowledge and repute in regard to the assessee's circumstances, and his own knowledge of previous returns by and assessments of the assessee, and all other matters which he thinks will assist him in arriving at a fair and proper estimate; and though there must necessarily be guess-work in the matter, it must be honest guesswork. In that sense, too, the assessment must be to some extent arbitrary."
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CIT vs Dr. M.K.E. Memon 248 ITR 310 (Bom.) :
The search was carried but in December 96 in the course of which certain books were found for the period November 1993 to December 1996. The AO made the addition for the entire block period on the basis of such books. The court held that addition could not be made for the period prior to November 1993.
10. We have considered the rival submissions and have gone through the orders of the authorities below and found from record that the assessee company was dealing in real estate and was developing and selling flats. However, no search was carried out at assessee company's business premises, however, on the basis of search carried out at residence of some of the Directors/partners, the Assessing Officer framed assessment u/s 153C in the hands of assessee company. After pointing out some defects in the reply filed by the assessee, the Assessing Officer rejected the books of account and net trading account by applying gross profit rate of 25 % as against gross profit rate of 10.3 % to 15.66 % shown by the assessee in different years, 14
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without any basis and without referring to any seized material, documents/evidence. However, the ld. CIT(A) has given partial relief to the assessee by applying net profit rate of 6.5 % as against different net profit rates shown by the assessee. Thus, the net addition was retained by the ld.CIT(A) on the basis of estimated net profit rate applied by him. From the record, we found that gross profit rate of assessee has increased after every year as the Directors gained experience in this line of business. The turnover of the assessee company also kept on increasing year after year. From assessment year 2000-01, the sales of Rs. 69.73 lakhs were jumped to Rs. 1.32 crores in assessment year 2005-06 with increase for gross profit from 10.3 % to 14.99 % showing that the direct expenses decreased from year to year. No major discrepancy was noted by the Assessing Officer in the books of account, which was maintained in regular course of course business and duly audited accounts were furnished before the Assessing Officer for verification. The lower authorities were of the view that 15
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the assessee has not valued the stock properly whereas we found that the stock was valued at cost in each of the year. The assessee has furnished quantitative details of the stock. The quantity of stock with quantitative details of purchase and sales were also submitted to the Assessing Officer vide reply in question nos. 4 & 5 for each. As per the reply submitted before the Assessing Officer, which found placed at 34, 38, 43, 48,54 & 60 of the paper book, we found that vouchers were submitted before the Assessing Officer, whereas the Assessing Officer in the assessment order has remarked that no such details were furnished. We found that variation in the net profit rates were shown because of indirect expenses, which kept on fluctuating depending on facts and circumstances of each year. However, genuineness of expenditure were never doubted nor it was case of Assessing Officer that expenditure were not incurred for the purpose of business. Most of the expenditure consisted of salary, conveyance, depreciation, bank interest, directors remuneration, legal and professional 16
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charges and office rent. Looking to the quantum assessee's business, the amount of indirect expenditure by the assessee and debited to the books of account appears to be reasonable as against the sales shown by the assessee in the assessment year :-
A.Y. Sales shown G.P. rate N.P. rate
by the shown by shown by the
assessee the assessee assessee
2000-01 6973010 10.3 % 0.93 %
2001-02 3441370 10.49 % (-)3.47 %
2002-03 7591000 13.5 % 2.3 %
2003-04 5660955 15.66% 1.26%
2004-05 9454625 13.05 % 4.6%
2005-06 13294800 14.99% 6.15%
11. The assessee had shown total administrative expenses in the assessment year 2000-01 to 2006-07 respectively as per details given below :-
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A.Y. 2000- A.Y. 2001-02 A.Y.2002-03 A.Y. 2003·04 A. Y. 2004-05 A. Y. 2005-06 A. Y. 2006-07 01 No. Expenses Head PB19 PB 31 PB 55 PB 81 PB 104 PB 132 PB 160
1. Salary 1,16,000 73,500 1,51,200 1,61,500 1,63,300 2,27,000 2,46,000
2. Conveyance 30,100 26,200 28,400 37,485 39,385 37,894 45,890
3. Depreciation 63,984 64,028 47,700 76,231 80,865 1,28,953 1,09,190
4. Bank interest 46,433 78,350 9,414 16,200 6,747 1,473 15,126
5. Directors 2,50,000 1,50,000 3,75,000 3,75,000 3,75,000 3,75,000 3,75,000 Remuneration
6. Legal & 5,000 42,244 52,356 45,700 12,600 2,65,026 13,555 Professional expo
7. Office Rent - - - 12,000 12,000 12,000 12,000
8. Total Rs. 5,11,517 4,34,322 6,64,070 7,24,116 6,89,927 10,47,346 8,22,761 Total Administrative
9.
6,51,228 5,41,968 8,54,283 7,83.891 7,71,626 11,78,776 10,49,743
10. l~ Exp Percentage 78.55% 80.1% 77.73% 92.37% 89.4% 88.85% 73.38%
12. The verifiable expenses which are to the extent of fixed in nature, also for element of variability as is clear from above table row no.10. Against these, the ld. CIT(A) has considered net profit rate of 6.5 % at constant and fixed rate for all the years, which is not correct. As per our considered view, the disallowance if at all has to be made, had to be made after considering the verifiability of these expenses year on year basis. After verifying the complete detail filed before the lower 18
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authorities, as per our considered view, the disallowance of expenses should be restricted to the following extent : -
A.Y. A.Y. A.Y. A.Y. A.Y. A.Y. A.Y. No. Head 2000-01 2001-02 2002·03 2003·04 2004-05 2005-06 2006·07
1. Expenses other than major verifiable 1.39.711 1.07,646 1,90,213 59,775 81,699 1,31,400 2,26,982 expenses. Chart - III, Column (9·8)
13. In view of the above discussion, we modify both the orders of lower authorities and direct that addition should be restricted as below :-
A.Y. A.Y. A.Y. A.Y. A.Y. A.Y. A.Y. No. Head 2000-01 2001-02 2002·03 2003·04 2004-05 2005-06 2006·07
1. Expenses other than major verifiable 1.39.711 1.07,646 1,90,213 59,775 81,699 1,31,400 2,26,982 expenses. Chart - III, Column (9·8)
14. We direct accordingly.
15. In the assessment year 2006-07, the assessee has taken one more ground with regard to addition made on account of sale of plot at Chuna Bhatti for reconsideration of Rs. 1,42,70,256/-.
16. Facts in brief are that during the course of search & seizure operations, an agreement to sell between the assessee and Shri Shyamnath Sharma as sellers and Shri Paramjeet Chandok & Smt. Badamidevi Jain as purchasers 19
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for the sale of 1.04 acre land for a consideration of Rs. l,42,70,256/ was found. When Shri Ramnath Sharma, one of the directors of the company, was confronted with the agreement of sell and asked to explain the nature of transaction, he stated that this transaction was for the total consideration of Rs.1,42,00,000/- and upto the date of search i.e. 16.09.2005, the assessee had received Rs.71,00,000/-,out of which Rs. 4l,OO,OOO/- lakhs had been accounted for and the balance of Rs. 30,00,000/- received in cash were not recorded in the books of account and he offered this amount as income from undisclosed sources and promised to pay tax thereon.
17. During the course of assessment proceedings, the assessee was asked to explain the transaction recorded in the agreement to sell seized as LPS- 5 and page No.6 of LPS-
1. The assessee submitted before the AO that the assessee and other co-owner made an agreement to sell of land measuring 0.420 at Chuna Bhatti with Shri Paramjeet Singh Chandok and Smt. Badamidevi Jain for a consideration of Rs. 1,42,70,256/-. The assessee had 20
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received Rs. 20,00,000/- in cash as advance against the said agreement from Shri Paramjeet Singh Chandak. However, later on the said agreement was cancelled and the assessee had returned the advance amount to the vendee. But the AO did not accept the contention of the assessee. The A.O. noticed that the possession of land had been given and the other party was constructing residential houses on the said land. The AO concluded that the assessee actually transferred the said land for a consideration of Rs. 1,42,00,000/- and, therefore, liable to pay tax on the profits & gains arising in respect of this deed. It was noted by the AO that appellant had shown total cost of the entire land at Rs.32,00,000/- and, accordingly, the profit worked out at Rs. l,08,00,000/-. However, the AO further noticed that Rs.30,00,000/- had already been considered in the income surrendered by the directors totaling to Rs.1.83 crores at the time of search and, therefore, he made an addition of the balance amount of Rs. 78,00,000/- as unaccounted sale of the year.
18. By the impugned order, the ld. CIT(A) upheld the 21
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addition to the extent of Rs. 75,02,692/- as against addition of Rs. 78 lakhs made by the Assessing Officer after having the following observations :-
"5.4 I have carefully considered the submission of the appellant and the facts of the case. The admitted fact of the case are that 3/4th parts of the property was owned by the appellant and 1/4th part was owned by Shri Shyamnath Sharma. They have entered into an 'agreement to sell' for the sale of the property to Shri Paramjeet Singh Chandok and Smt.Badamidevi Jain w/o late Shri B.LJain for a consideration of Rs.1,42,70,256/-. The agreement was entered on 30.04.2005, the date mentioned in the alleged deed for cancellation of agreement dated 29.06.2005. As per the appellant, the agreement to sell entered on 30.04.2005 was subsequently cancelled vide deed dated 29.06.2005. Thereafter, the property was sold for a consideration of Rs. 40,OO,OOO/- only vide sale deed registered on 25.10.2005. Out of the sale consideration of Rs.
40,OO,OOO/-, the appellant had shown sale proceeds of Rs.32,00,000/- and the other co-owner, Shri Shyamnath Sharma, had shown Rs.8,00,000/-. 22
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Thus, the argument of the appellant was that the actual consideration for the sale of the said property was Rs. 40,OO,OOO/- only. On perusal of the documents and considering the fact of the case, the submission of the appellant is not found tenable. First, when the director of the appellant, Shri Ramnath Sharma, was confronted with the agreement to sell found during the course of search in his statement recorded u/s 132(4) on 16.09.2005, he had categorically stated that the property was sold for a total consideration of Rs.1,42,00,000/-. Second, the deed for cancellation of agreement to sell dated 30.04.2005 has been purported to be entered on 29.06.2005 but it is conspicuous to note that no such deed of cancellation was found during the course of search and seizure operations on 16.09.2005 . Third, had the deed for cancellation of agreement to sell been entered on 29.06.2005, it would have been in the knowledge of Shri Ramnath Sharma and he would have pointed out the same in 23
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his statement recorded u/s 132(4). Fourth, it is also pertinent to note that agreement to sell was entered on 30.04.2005 between the appellant and Sh. Somnath Sharma as sellers and the purchasers were (i) Shri Paramjeet Singh Chandok s/o late Shri Sardar S.H.Chandok and (ii) Smt. Badamidevi Jain W/o late Shri B.LJain. The final sale deed which was subsequently registered on 25.10.2005 also shows that the property was sold to the same persons and only one more person was added which is evident from the deed wherein the purchasers are (i) Smt.Harpal Kaur w/o Shri Paramjeet Singh Chandok (ii) Smt. Badamidevi Jain w/o late Shri B.LJain and (iii) Smt.Babita w/o Shri Naresh Kumar. It is highly improbable that a property for which the agreement to sell was entered in April, 2005 for a consideration of Rs.1.42 crores approximately would be sold to the same purchasers after about six months period in October, 2005 for a sale consideration of Rs.40,00,000/- 24
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only. This is against the test of the principle of human probability. It may not be out of place to mention here that it is a normal practice that agreement to sell is entered at the actual sale consideration to enforce the payments whereas subsequently the sale deed is registered at a lower price. Therefore, considering the totality of facts and circumstances of the case and the test of human probability, I am of the considered opinion that the appellant and the co-owner, Shri Shyamnath Sharma, had sold the property for a total consideration of Rs. l,42,70,256/- as shown in the agreement to sell entered on 30.04.2005. As mentioned hereinabove the appellant owned 3/4th parts of the property and one part was owned by Shri Shyamnath Sharma. The appellant's 3/41h share in the total consideration of Rs. 1,42,70,256/- works out at Rs. 1,07,02,692/-. It may also be noted here that the appellant had already debited in its books of account, the total purchase 25
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consideration on the 3/4th of land at Rs. 32,60,467/-. The appellant had shown sale receipts of only Rs.32,00,0OO/-, as against the actual share of the appellant in the sale proceeds of Rs. 1,07,02,692/-. The appellant had shown the said land as stock in trade. Thus, the appellant had understated the sale receipts on the sale of the said land by Rs. 75,02,692/- ( Rs. 1,07,02,692/- - Rs. 32,00,000/-). If the actual sale proceeds of the said land of Rs. 1,07,02,692/- is substituted in place of the sale proceeds of Rs. 32,00,000/- shown by the appellant, it amounts to an addition of Rs. 75,02,692/- in the returned income. Therefore, the addition to the extent of Rs. 75,02,692/- is confirmed as against the addition of Rs. 78,00,000/- made by the Assessing Officer. In the result, the appellant gets a relief of Rs. 2,97,308/- ( Rs. 78,00,000/- - Rs. 75,02,6923/-)."
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19. It was contended by the ld. Authorized Representative that agreement to sale the Chunna Bhatti, Bhopal land measuring 1.04 acres was not acted upon. The sale-agreement was between four selling parties to two buying parties. This draft agreement suffered from the various shortcomings. He further contended that fair market value of the land was Rs. 63 lakhs as per Collector and stamp duty was also charged accordingly. He further submitted that provisions of Section 53A of the T.P. Act, was not applicable in so far as possession of the land was not given as per the agreement itself and the major amount was still outstanding. As per ld. Authorized Representative , the statement of Shri Ramnath Sharma was not correct with regard to Rs. 1.42 crores u/s 132(4) on 16.9.2005.
Shri Ramnath Sharma categorically stated that the property was sold. In fact the property was sold on 25.10.2005 after the search and statement of the deponent. This fact itself shows that Ramnath Sharma was not correct in stating the fact.
20. In view of the above contention, the ld. Authorized 27
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Representative submitted that the Assessing Officer was not justified in treating the transaction as sale, in so far as agreement found during the course of search was cancelled and fresh sale deed was registered, wherein value of plot was determined by Collector at Rs. 63 lakhs for the purpose of stamp duty and stamp duty was also charged accordingly.
21. On the other hand the, ld. Senior DR relied on the finding recorded by the lower authorities with regard to the agreement found during course of search and the statement recorded u/s 132(4) of the Income-tax Act, 1961,.
22. We have considered the rival submissions and have gone through the orders of the authorities below and found from record that the agreement to sale was found during search indicating sale consideration at Rs. 1,42,70,256/-. In the statement recorded u/s 132(4) one of the directors of the company Shri Ramnath Sharma has given a statement that property was sold for this much of consideration and Rs. 20 lakhs was also paid in advance. It was also stated that up to the date of search i.e. on 16.9.2005, the assessee had received Rs. 71 lakhs out of which Rs. 41 lakhs had been accounted for and the balance of Rs. 30 lakhs received in cash was not recorded in the books of account, which was also offered as income from undisclosed sources. Since the alleged cancellation deed was found 28
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during course of search accompanied by the statement recorded u/s 132(4) clearly indicate that there was no cancellation of plot. Accordingly, the Assessing Officer was justified in treating the difference in sale consideration actually disclosed in the return as compared to the sale consideration found recorded on the sale agreement, which was found during course of search. The ld. CIT(A) after recording detailed finding correctly computed the gain on such sale at Rs. 75,02,692/-. We do not find any infirmity in the order of CIT(A) for confirming this addition.
23. In the result, ground raised by the assessee in the assessment year 2006-07 is dismissed.
This order has been pronounced in the open court on 31st January, 2012.
(JOGINDER SINGH) ( R.C.SHARMA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated :31st January, 2012.
CPU*
30.1
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