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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA & SHRI AMARJIT SINGH
O R D E R
PER AMARJIT SINGH, JM:
The revenue has filed the present appeal against the order dated 28/02/2019 passed by the Commissioner of Income Tax (Appeals) -11, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2013- 14.
The revenue has raised the following grounds: - 1. "On the facts and circumstances of the case and in law CIT(A) erred in deleting the addition of Rs.8,17,50/- made on account of unaccounted sales of car parking area, not included in the sale of agreements of the flats. A.Y.2013-14 ii) On the facts and circumstances of the case and in law CIT(A) erred in deleting the addition of Rs.,50,000/- made on account of unaccounted income on F.S.I sale, without appreciating the fact, that the assessee has failed to prove, the sale consideration mentioned in the seized unsigned agreement is not true.
3. The brief facts of the case are that the search & seizure action u/s 132 of the I.T.Act, 1961 was carried out in the case of the assessee on 12/09/2012. The assessee filed the return of income on 27/09/2013 declaring total income to the tune of Rs. 7,88,92,810/-. During the year under consideration, the assessee derived net profit at Rs.8,14,95,460/-, income from house property of Rs.21,85,533/- and interest in sum of Rs.29,55,904/-. after claiming the deduction of Rs.7,6,99,089/- u/s 80IB(10) and Rs.45,000/- u/s 80G. The assessee firm has declared the total income to the tune of Rs.7,88,92,809/-. The assessment was completed u/s 143(3) of the Act assessing the income of Rs.15,86,85,240/-, after making additions on account of sale of parking of Rs.8,17,500/- and sale of FSI in cash of Rs.7,50,00,000/.The assessee was not satisfied on account of addition raised by the AO. The assessee filed an appeal before the Ld.CIT(A) who allowed the claim of the assessee. Therefore, the revenue has filed the present appeal before us.
ISSUES NO.1: 4. Under this issue, the revenue challanged the deletion of the addition of Rs.8,17,500/- made on account of unaccounted sales of car parking area. The Ld. DR has argued that the Ld.CIT(A) has wrongly deleted the addition of Rs.8,17,500/- made on account of unaccounted sale of car parking area which was not included in the sale of agreements of the flats, A.Y.2013-14 therefore, the finding of the Ld.CIT(A) is not justifiable, hence liable to be set aside. However, the Ld. AR has strongly relied upon the order passed by CIT(A) in question. Before going further, we deem it necessary to advert the finding of the Ld.CIT(A) on record.
The third and fourth grounds of appeal
relates to rejection of books of account and the addition of Rs. 8,17,500/- made on account undisclosed sale proceeds from Parking. It is claimed that the AO erred in rejecting the books of account u/s 145 without considering the facts that parking is an amenity of the project and the amount received against the amenities are already accounted in books of account and offered as income. It is claimed that, the books of account cannot be rejected when nil the transactions are duly recorded in books of accounts. On the basis of seized material, the AO has noted that the firm sold parking slots/garages to buyers of Flats in Golden Nest Phase XV. As per the allotment letters found during the course of search, it was held by the AO that the assessee firm had charged Rs. 3,50,000/- for each parking. The AO confronted the assessee with the booking/allotment letter indicating sale of parking to different Flat owners. It is stated that as per the decision of the Hon. Supreme Court of India in civil appeal no. 2544 of 2010 in the case of Nahal Chand Lalchand Pvt. Ltd. v Panchal cooperative housing society Ltd. civil appeal no. 2545 to 2549 of 2010, the selling of parking/garage by the assessee firm (builder) to flat owners is illegal. The assessee contended that the selling price of parking was included in the sale of the assesse. However, the AO noted that the documents seized during the search notably the hard disk showed that several parking are not mentioned in the agreement to sell. The AO made addition with respect to parking areas which were shown as 'not included' as 'income from other sources'. Based upon the seized document, the AO held that the sale of parking has not been mentioned in the agreement and yet the amounts have been received by the assessee. He also held that there has been no legal sale of parking but the amounts received have to be held as income from other sources in light of the transfer of property Act. As the assessee had not included the sale of parking in his regular books of account, the AO held that the books are not reliable and liable to be rejected. It is held by him that the receipts from sale of parking are not included in the agreement and also not shown in the regular books, the AO rejected the assessee's argument that the amenities offered by the assessee and shown in the books are A.Y.2013-14 same as parking and rejected the books of accounts of the assessee u/s 145(3) of the Act
11. Further, the AO made additions on account of sale of parking slots/garages of phase XV, Golden Nest by stating as under; assessee's contention is not accepted and the sale of parking slots/garages of phase XV, Golden nest, Bhayander is disallowed and added to the total income of the assessee. The income is held to be income from other sources. Despite the fact that the assessee has denied any sale of parking it deserves the credit for the amounts which has been shown to be included in the agreement as seen from the scanned documents placed in the order. Hence out of the total credit of Rs.2.5 crores proportionate of Rs.2,50,000/- (as per flat sale) is being credited against such unaccounted sale. Balance is added as its unaccounted income. This office has already obtained details of plans passed by the Mira Bhayander Municipal Corporation (MBMC) and also from the assessee which shows the number of parking for the flat owners net of that for visitors at 305. The working of sale of parking/garage is as under: Total No. of Parkings/slots as per 305 Nos. approved plan Amount chared for each Rs.3,50,000/- parking/garage Total amount receipt of amount on Rs.10,67,50,000/- account of sale of parking/garage(305x350000) However, it is seen that the 99% (10,56,82,500) of flat sale in Phase XV has occurred in the A. Y 2012-13 and only 1% (10,67,500) in the current A, Y. 2013-14. Hence proportionate addition is being made at Rs. 8,17,500/- (10,67,500-2,50,000). Penalty proceedings u/s 271AAB of the IT Act is separately initiated, as assessee has furnished inaccurate particulars of income."
12. The issue of rejection of the books of accounts and addition made by the AO on account of the alleged sale of Parking have been dealt in detail in the appeal order in case of the appellant for the A.Y. 2012-13 by the order dated 21/08/2017 of my learned predecessor. During assessment year 2012-13, 99% of the total estimated sales of Parking was added by the AO and only 1% was added in A.Y. 2013-14 which is under consideration. C1T(A) in his order dated 21/08/2017 for A.Y. 2012-13 on this issue has held that the entire additions made by the AO was based on his surmises and conjectures. The CIT(A) has held as under: A.Y.2013-14 "9.6 It is apparent that the entire addition made by the AO is based on his surmises and conjectures. The relevant seized material does not show that the appellant had sold 305 parking slots or that each parking was sold @ 3,50,000/-. There is nothing in the appellant's submissions or in the seized material that the. Sale of parking happened in this asst year. There is absolutely no evidence that anybody had paid cash to the appellant against purchase of parking or the flat 9.7 The seized, chart shows that an amount of Rs. 2.50 cr on sale of parking was duly included in the sale price of the flats. The AO has also accepted this. There is no visible cause why the AO did not accept the rest of the contents of the same seized material which shows that total parking slots sold independent of the flat sales were about 126 slots against which the appellant had actually received an amount of Rs. 50.36 lacs tilt the date of the search and balance to be received was Rs. 2,80 cr. Thus total amount received separately for sale of parking slots would come to Rs. 3.35 crs. The appellant has included an amount of Rs. 3,13,30,000/- on account of sale of parking in the sales account in the asst year 2013-14. Thus viz a viz the contents of the seized material, there is nothing to hold that the appellant had collected cash outside the books of accounts against sale of parking area. The calculations done by the AO to make the addition are not based on any satisfactory evidence. The addition made by the AO is therefore directed to be deleted. 9.8 The appellant's alternate argument is that income from sale of parking area would also be income from the eligible project. This contention is also acceptable in view of the case laws cited by the appellant. As the receipts are eligible for deduction u/s 80IB (10), it become irrelevant as to in which year the appellant has credited these receipts."
13. Relying on the above decision of my learned predecessor the claim of the appellant as per ground no. 3 and 4 are allowed.
5. On appraisal of the above mentioned finding, we noticed that the Ld.CIT(A) has allowed the claim of the assessee on the basis of the finding given by his predecessor while completing the assessment for the AY 2012- 13 by virtue of order dated 21/08/2017 in which 99% of the total estimated ITA No. 2926/M/2019 A.Y.2013-14 sale of parking area was added by the AO and only 1% added in the AY 2013-14 i.e in the present Assessment year. The Ld.CIT(A) has reproduced the finding for the AY 2012-13 in his order in question which need not to be repeated again. Nothing came into the notice that there is any change or variation in the order passed by the Ld.CIT(A) for the AY 2012-13. in which the claim of the assessee regarding sale of parking was allowed to the extent of 99%. Needless to say that in the present assessment year, the claim of 1% is only in question. The facts are not distinguishable at this stage. Moreover, the claim of the assessee has been confirmed by the Hon’ble ITAT, Mumbai in for the AY 2012-13 vide order dated 19/12/2018. Taking into account all these facts and circumstances, we are of the view that the Ld.CIT(A) has decided the matter of controversy, judiciously and correctly, which is not liable to be interfere with at this appellate stage. Accordingly, this issue is decided in favour of the assessee and against the revenue. ISSUE No.2 6. Under this issues, the revenue has challenged the deletion of the addition in sum of Rs.7,50,00,000/- made on account of unaccounted income on FSI sale. The Ld. DR has argued that the Ld.CIT(A) has wrongly deleted the addition whereas the document on record fully supported the claim of the revenue, therefore, the finding of the CIT(A) is not justifiable, hence, is liable to be set aside. However, on the other hand, the Ld. Representative of the assessee has placed reliance upon the finding of the CIT(A) in question. Before going further, we deem it necessary to advert the finding of the Ld.CIT(A) on record. The CIT(A) has decided the ITA No. 2926/M/2019 A.Y.2013-14 matter of controversy in para No. 17, 18, 19 & 20, which are hereby reproduced below:-
17. I have considered the facts of the case and also examined the seized documents in bundle no. 38 pages 1 to 19. It is seen that the Agreement for Sale as per page 1 to 15 of the seized bundle no. 38 is an unsigned document. The agreement is a draft for a transaction in June, 2012 between the assessee firm and M/s Jainam Developers, a partnership firm. On page 20 of the said draft agreement, the total consideration mentioned is 21.5 cr. and the manner in which it is to be paid is also mentioned. As per this draft agreement, 2.5 Cr. has been admitted to have been received. Rs.7.5 Cr. was to be paid by 30th August, 2012 and the balance was to be paid in eight equal monthly installments from the date of execution. The search and seizure operation took place on 12/09/2012. As per page 18 of the seized document, a ledger account of Jainam Developers is also found and seized. It is interesting to see that the sale consideration of land has been shown at Rs. 14 Cr. and this is a Journal entry dated 20/05/2012 in the ledger account of Jainam Developers in the books of the appellant firm. From page 16 and 17 of the seized bundle no. 38; a summary of advance tax calculation for the A.Y. 2013-14, as on 15/09/2012, has been computed. In these advance tax calculations, the consideration amount for sale of land/FSI is again shown at Rs. 14 Crs. it is possible to imagine that the actual sale consideration may have different than what is shown in the books of the appellant, but, the documents consistently support the claim of the appellant made ire the AO that after detailed negotiation the transaction was actually computed for a consideration of Rs. 14 Cr. only. There is no evidence available (other than the draft unsigned agreement) from the seized material which could corroborate the claim of the AO that the difference amount of Rs. 7.5 Cr, was actually paid in cash. The agreement of sale found during the course of search is an unsigned document and that it was merely a draft, as claimed by the appellant, is difficult to ignore and in the absence of any evidence either found during the course of post search enquiries or brought on record by the AO during the course of assessment proceedings, it is difficult to accept that the total sale consideration was higher than Rs. 14 Cr. In fact, the seized documents corroborate the assessee's version that the sale consideration was Rs. 14 Crs only.
18. Further, during the course of search, statement u/s 132(4) of the Act was recorded in the case of Shri Bharat Mithalal Jain, partner in the appellant firm, on 14/09/2012. He was confronted with these documents during the course of search, by question no. 13 of the statement. The question and his answer as per his statement u/s 132(4) dated 14/09/2012 is as under:- A.Y.2013-14 Q. 13 During the course of search proceedings, documents related with sale of FSI of old survey no. 321, new Sur no. 36, Hissa no. 8 admeasuring 630 sq.mts, old survey no. 321, new Sur no. 36, Hissa no. 9 admeasuring 480 sq.mts, old survey no. 321, new Sur no. 36, Hissa no. 12 admeasuring 730 sq.mts, old survey no. 330, new Sur no. 37, Hissa no. 2 admeasuring 1900 sq.mts and old survey no. 317, new Sur no. 39, Hissa no. 1 admeasuring 990 sq.mts and area admeasuring 200 sq.mts forming the portion of the said land bearing old survey no. 321, new survey no.36, Hissa no. 13 at village Goddev, Bhayander, Tal And Dist. Thane to Jainam Developers are found. These documents are grouped and seized as bundle no. containing 1 to 19 pages. On perusal of these documents, it is noticed that FSI sold to Jainam Developers for Rs. 21.50 crores as a lump sum consideration. Further, the Developer has to pay Rs. 11,000/-per flat to M/s Sonam Builders as cost of Infrastructure developed by M/s Sonam Builders. However, in your books of accounts, only Rs. 14.00 crores are booked against the sale of FSI, Why the remaining amount of Rs. 7.50 crores should not be considered as your unaccounted receipts which are not reflected in your regular books of accounts. Ans. I would like to state that we have received Rs. 4,50 crores as advance from M/s jainam Developers and the document mentioned in above question by you is an unsigned draft copy of agreement. The deal is not yet finalized; hence tentatively we have booked the receipt of Rs. 14.00 crores in our regular books for the purpose of working of advance tax installment, 19. As can be inferred from the statement, the partner of the appellant firm in his statement on oath during the course of search reiterated that the document found was only an unsigned draft copy of agreement and that the deal was yet to be finalized. It was also stated by him that they had tentatively booked the receipt of Rs. 14 Cr. in regular books for the purpose of working of advance tax installment. 20. In view of the seized documents as indicated above and the statement u/s 132(4) recorded during the course of search, I am of the view that there is no evidence to support the inference made by the AO that a sum of Rs. 7.5 Cr. has been accepted in cash by the assessee. As this inference is without any evidence and could not be corroborated even during the assessment proceedings, I arn of the view that there is no basis for the AO to make this addition in the case of the appellant firm and therefore the AO is directed to delete the addition made on this account.
ITA No. 2926/M/2019 A.Y.2013-14 7. On appraisal of the above mentioned finding, we find that the addition was raised on account of unsigned agreement. The claim of the assessee was for the sale consideration of Rs. 14 crores only. Seized material nowhere speaks that the cash transaction was of Rs. 7.5 crores. Comparison of documents nowhere speaks about the difference of Rs. 7.5 crores alleged to be paid in cash. The Appellant prepared the draft agreement with Jainam Developers to initiate the business deal which was not signed by the assessee as well as Jainam Developers. The sale amount was shown to the tune of Rs. 21.50 crores and the deal nowhere seems finalized being not corroborated by any other document on record. After a long time, the deal was finalized to the extent of Rs.40 crores which was offered to tax. At this time authority determined the market value of the property to the tune of Rs. 13,08,92,000/-. The payment of Rs. 14 crores mentioned at page 150 - 153 of the paper book. The Ld. AO issued notice to the Jainam Developers who confirmed the deal to the tune of Rs. 14 crores. The Ld. AO raised the addition of Rs. 7.5 crores on the basis of assumption as well as difference between signed and unsigned documents. Addition cannot be raised on the basis of unsigned agreement specifically when the transaction is not corroborated by any other evidence on record. In this regard, we also finds support of the decision of ITAT Mumbai Bench in the case of ACIT vs. M/s Layer Exports Pvt.Ltd. in 2985 & 2986/Mum/2011 and Bharat Singh vs ACIT ITA No.2001,3256/Del/2017 and CIT vs AKME Projects Ltd. [2014] 42 taxmann.com 379 (Delhi High Court). Moreover loose papers are also not liable to be taken into cosideration to raise the addition except corroborated by any other piece of evidence on record and in this regard, we also find the support of ITA No. 2926/M/2019 A.Y.2013-14 decision of Gujrath High Court in the case of CIT vs Dharmdev Finance Pvt. Ltd [2014] 43 taxmann.com 395 and Pradeep Amrutlal Runwal vs TRO [2014] 47 taxmann.com 293 (Pune.Trib) etc. Number of decisions have been relied by the Ld. AR of the assessee to support his contention which need not required to be discussed. When sufficient evidence is not with the revenue then no addition can be raised on the basis in view of the decision in the case of CIT vs Roman and company 67 ITR 11(SC) and CIT-IV vs Shri Rama Multi Tech Ltd. [2013] 34 taxmann.com 32(Guj.). Taking into consideration of all these facts and circumstances, we are of the view that the Ld.CIT(A) ) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, we affirm the finding of the CIT(A) on this issue and decided the issue in favour of the assessee and against the revenue.
In the result appeal filed by the revenue is hereby dismissed.