Vijay Mittal, Kolkata vs ITO | ITAT Kolkata 2021

Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH, KOLKATA

Before: Sri J. Sudhakar Reddy, Hon’ble & Sri S.S. Godara, Hon’ble

order : February 17th, 2021 ORDER Per J. Sudhakar Reddy, AM :- This appeal filed by the assessee is directed against the order of the Learned Pr. Commissioner of Income Tax – 19, Kolkata, (hereinafter the “ld. Pr. CIT”), passed u/s. 250 of the Income Tax Act, 1961 (the ‘Act’), dt. 09/01/2018, for the Assessment Year 2005-06.

2. The assessee is an individual and derived income from house property, income from partnership firm, interest income and income from capital gains. For the Assessment Year 2005-06, he filed his return of income on 30/10/2005, declaring total income of Rs. 18,50,776/-. The Assessing Officer issued notice u/s 143(2) of the Act on 05/09/2006 and thereafter completed best judgment assessment, u/s 144 of the Act on 17/12/2007, determining the total income of the assessee at Rs.1,95,16,090/- interalia making addition on account of unexplained cash credit of Rs.73,34,520/- and reworking the long term capital gains on sale of land by disallowing the assessee’s claim of, payment of commission on sale of land and also adding liabilities shown by the assessee, in the balance sheet. 2.1. The assessee carried the matter in appeal. Before the ld. CIT(A), he made various submissions on merits. The ld. CIT(A), called for a remand report. The Assessing Officer furnished the remand report on 02/09/2011. The assessee filed his reply to the remand report. The ld. CIT(A) called for a second remand report from the Assessing Officer. The Assessment Year: 2005-06 Vijay Mittal Assessing Officer furnished the second remand report on 04/12/2013. Assessing Officer furnished the second remand report on 04/12/2013. Assessing Officer furnished the second remand report on 04/12/2013. A third remand report was called for by the ld. CIT(A) and the Assessing Officer gave report was called for by the ld. CIT(A) and the Assessing Officer gave report was called for by the ld. CIT(A) and the Assessing Officer gave his third remand report on 28/01/2015. The ld. CIT(A) passed his order u/s 250 of the Act partly report on 28/01/2015. The ld. CIT(A) passed his order u/s 250 of the Act partly report on 28/01/2015. The ld. CIT(A) passed his order u/s 250 of the Act partly allowing the appeal of the assessee. He confirmed the addition of Rs.15,20,000/ allowing the appeal of the assessee. He confirmed the addition of Rs.15,20,000/ allowing the appeal of the assessee. He confirmed the addition of Rs.15,20,000/- as unexplained cash deposits in bank and disallowed the claim of the assessee of payment deposits in bank and disallowed the claim of the assessee of payment deposits in bank and disallowed the claim of the assessee of payment of development charges and commission on sale of of development charges and commission on sale of land while computing long term while computing long term capital gains on sale of land. capital gains on sale of land.

Aggrieved, the assessee is in appeal before us. Aggrieved, the assessee is in appeal before us.

The ld. Counsel for the assessee, submitted that the Assessing Officer in his The ld. Counsel for the assessee, submitted that the Assessing Officer in his The ld. Counsel for the assessee, submitted that the Assessing Officer in his remand report dt. 28/01/2015 stated that rt dt. 28/01/2015 stated that, the assessee could not explain the cash the assessee could not explain the cash deposits made in IDBI Bank and whereas in his remand report dt. 04/12/2013 deposits made in IDBI Bank and whereas in his remand report dt. 04/12/2013 deposits made in IDBI Bank and whereas in his remand report dt. 04/12/2013, in the last para had held that the amount of Rs.20,000/ last para had held that the amount of Rs.20,000/- is advance taken from Shri N.V. Rama is advance taken from Shri N.V. Rama Raju from Kapulappada – Land and Land and that the corroborative evidence in this regard was corroborative evidence in this regard was found to be genuine. On the amount of Rs.10,94,286/ found to be genuine. On the amount of Rs.10,94,286/-, the finding , the finding of the Assessing Officer was that the amount was in the name of the assessee’s mother and consequent was that the amount was in the name of the assessee’s mother and consequent was that the amount was in the name of the assessee’s mother and consequent to her death, final disbursement is pending and that all these deposits in Global Trust disbursement is pending and that all these deposits in Global Trust disbursement is pending and that all these deposits in Global Trust Bank A/c and IDBI A/c were made through cheques Bank A/c and IDBI A/c were made through cheques and bank transfers and bank transfers, the details of which were furnished by the assessee. the assessee. He pointed out that the ITO was in fact satisfied e ITO was in fact satisfied that the sources were explained. Thus, he submits that the question of not accepting the were explained. Thus, he submits that the question of not accepting the were explained. Thus, he submits that the question of not accepting the liability of Rs.15,00,000/-, as payable to Shri N.V. Rama Raju and making addition on , as payable to Shri N.V. Rama Raju and making addition on , as payable to Shri N.V. Rama Raju and making addition on this account, is not tenable. On the issue of development of land, the ld. Counsel for the this account, is not tenable. On the issue of development of land, the ld. Counsel for the this account, is not tenable. On the issue of development of land, the ld. Counsel for the assessee, submitted that the assessee has furnished a copy of the agreement entered the assessee has furnished a copy of the agreement entered the assessee has furnished a copy of the agreement entered into with the contractor Mr. U. Prabhakar Rao for development of land and also the duly into with the contractor Mr. U. Prabhakar Rao for development of land and also the duly into with the contractor Mr. U. Prabhakar Rao for development of land and also the duly filled confirmations, in this regard. He filled confirmations, in this regard. He relied on the submissions made before relied on the submissions made before the Assessing Officer during the remand proceedings during the remand proceedings and disputed the additions as and disputed the additions as confirmed by the ld. CIT(A).

The ld. D/R, on the other hand, submitted that the ld. CIT(A) at page 5 para 1, The ld. D/R, on the other hand, submitted that the ld. CIT(A) at page 5 para 1, The ld. D/R, on the other hand, submitted that the ld. CIT(A) at page 5 para 1, stated that during the course of ted that during the course of appellate proceedings, the assessee had filed details of appellate proceedings, the assessee had filed details of copy of agreements etc., but had not furnished the bank statements of IDBI and hence copy of agreements etc., but had not furnished the bank statements of IDBI and hence copy of agreements etc., but had not furnished the bank statements of IDBI and hence no specific comment was given by the Assessing Officer in the remand report. no specific comment was given by the Assessing Officer in the remand report. no specific comment was given by the Assessing Officer in the remand report. He submitted that as there was no com s there was no compliance from the assessee during the assessment pliance from the assessee during the assessment Assessment Year: 2005-06 Vijay Mittal stage, the addition was confirmed. He submitted that the issue may be sent back stage, the addition was confirmed. He submitted that the issue may be sent back stage, the addition was confirmed. He submitted that the issue may be sent back to the Assessing Officer for fresh adjudication as it appears that there are violations of for fresh adjudication as it appears that there are violations of for fresh adjudication as it appears that there are violations of principles of natural justice. As reg principles of natural justice. As regards payment of development charges, he submitted ards payment of development charges, he submitted that it was paid to one Smt. Geeta Devi that it was paid to one Smt. Geeta Devi, for development of land at Vadlapudi. He of land at Vadlapudi. He submitted that, as compared with compared with percentage of the sale price of land percentage of the sale price of land, the development charges are very high and that this p charges are very high and that this proves that the claim is not genuine. He further roves that the claim is not genuine. He further submitted that notice u/s 133(6) of the Act, was issued but the person was not found at submitted that notice u/s 133(6) of the Act, was issued but the person was not found at submitted that notice u/s 133(6) of the Act, was issued but the person was not found at her address. Thus, he submits that the disallowance/addition has to be confirmed. her address. Thus, he submits that the disallowance/addition has to be confirmed. her address. Thus, he submits that the disallowance/addition has to be confirmed. 5.1. The ld. Counsel for the assessee, The ld. Counsel for the assessee, in reply, submitted that the notice u/s 133(6) of in reply, submitted that the notice u/s 133(6) of the Act, was given after 10 years the Act, was given after 10 years at the address mentioned in the agreement and under the address mentioned in the agreement and under these circumstances, adverse inference cannot be drawn if the person is not found in these circumstances, adverse inference cannot be drawn if the person is not found in these circumstances, adverse inference cannot be drawn if the person is not found in the address. He relied on the judg the address. He relied on the judgment of the Hon’ble Jurisdictional High Court in the ment of the Hon’ble Jurisdictional High Court in the case of Diagnostics vs. CIT reported in tics vs. CIT reported in [2012] 20 taxmann.com 692 (Calcutta) [2012] 20 taxmann.com 692 (Calcutta), for the proposition that, just because the person could not be found at the given address after , just because the person could not be found at the given address after , just because the person could not be found at the given address after three (3) years of the transaction, it cannot be inferred that the party does not exist or transaction, it cannot be inferred that the party does not exist or transaction, it cannot be inferred that the party does not exist or the transaction is not genuine. the transaction is not genuine.

We have heard rival contentions. On careful consideration of the facts and We have heard rival contentions. On careful consideration of the facts and We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the auth circumstances of the case, perusal of the papers on record, orders of the auth circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows: below as well as case law cited, we hold as follows:-

On the first issue, the ld. CIT(A) at page 4 & 5 held as follows: On the first issue, the ld. CIT(A) at page 4 & 5 held as follows:- “This ground has been preferred against A. This ground has been preferred against A.O.'s action to treat the deposit of Rs. 's action to treat the deposit of Rs. 15,20,000/- in IDBI Ltd as unexplained in IDBI Ltd as unexplained. Details of such deposits are as under . Details of such deposits are as under- Date Amount (Rs.) Remarks 27/07/2004 27/07/2004 10,000 A/ c open (contra) 04/08/2004 04/08/2004 10,000 Recd. From Samudra Cement Ltd. Recd. From Samudra Cement Ltd. 24/03/2005 24/03/2005 15,00,000 Recd. From N.V.Rama Raju for Recd. From N.V.Rama Raju for Kapulappada - Land Land Total 15,20,000 The action of Ld. A. O. is not maintainable for reasons explained below. The action of Ld. A. O. is not maintainable for reasons explained below. The action of Ld. A. O. is not maintainable for reasons explained below. 1. The addition has been made without allowing reasonable opportunity as The addition has been made without allowing reasonable opportunity as The addition has been made without allowing reasonable opportunity as explained while narrating the background of framing assessment u/ s. 144. explained while narrating the background of framing assessment u/ s. 144. explained while narrating the background of framing assessment u/ s. 144.

Assessment Year: 2005-06 Vijay Mittal 2. Without prejudice to the above, the deposits in Without prejudice to the above, the deposits in IDBI Bank as detailed above are DBI Bank as detailed above are explained hereunder : explained hereunder :-

(a) The deposit of Rs. 10,000/ deposit of Rs. 10,000/- on 27/07/2004 was made in cash and to open on 27/07/2004 was made in cash and to open account with this Bank for the first time. account with this Bank for the first time. (b) The deposit of Rs. 10,000/ The deposit of Rs. 10,000/- on 04/08/2004 represented receipt from M/s. on 04/08/2004 represented receipt from M/s. Samudra Cement Ltd. It is submitted that the Balance Sheet as on 31/03/2 Samudra Cement Ltd. It is submitted that the Balance Sheet as on 31/03/2 Samudra Cement Ltd. It is submitted that the Balance Sheet as on 31/03/2005 showed amount receivable from this company at Rs. 79,28,000/ showed amount receivable from this company at Rs. 79,28,000/ showed amount receivable from this company at Rs. 79,28,000/- as against opening balance on 01/04/2004 of Rs. 82,50,000/ opening balance on 01/04/2004 of Rs. 82,50,000/-. Confirmation of the party . Confirmation of the party enclosed herewith will corroborate receipt of Rs. 10,000/ enclosed herewith will corroborate receipt of Rs. 10,000/ enclosed herewith will corroborate receipt of Rs. 10,000/- on 04/08/2004 through this Bank A/ c. through this Bank A/ c.

(c) The sum of Rs. 15,00,000/ sum of Rs. 15,00,000/- deposited on 24/03/2005 represented amount deposited on 24/03/2005 represented amount received from N. V. Rama Raju towards advance payment for sale of Land at received from N. V. Rama Raju towards advance payment for sale of Land at received from N. V. Rama Raju towards advance payment for sale of Land at Kapulappada. This sum along with Rs. 5,00,000/ Kapulappada. This sum along with Rs. 5,00,000/- received from the same party received from the same party is appearing in the liability side of is appearing in the liability side of appellant's Balance Sheet on 31/03/2005 appellant's Balance Sheet on 31/03/2005 since the ultimate sale of land did not materialize because of controversy. The since the ultimate sale of land did not materialize because of controversy. The since the ultimate sale of land did not materialize because of controversy. The party has also filed suit before the Court. This point has been elaborately party has also filed suit before the Court. This point has been elaborately party has also filed suit before the Court. This point has been elaborately explained in ground No. 5. explained in ground No.

5. Since these were additional doc Since these were additional documents / evidences the matter was sent for remand uments / evidences the matter was sent for remand to the A.O. An incomplete remand report was received on 30.08.2011. Therefore, a to the A.O. An incomplete remand report was received on 30.08.2011. Therefore, a to the A.O. An incomplete remand report was received on 30.08.2011. Therefore, a further remand report was called for which was further remand report was called for which was sent on 04.12.2013. The A.O. after sent on 04.12.2013. The A.O. after examining the details filed by the appellant in course of appellate proceedings has examining the details filed by the appellant in course of appellate proceedings has examining the details filed by the appellant in course of appellate proceedings has observed that the appellant has filed details of these deposits & along with copy of observed that the appellant has filed details of these deposits & along with copy of observed that the appellant has filed details of these deposits & along with copy of agreement etc. However the bank statement of IDBI wa agreement etc. However the bank statement of IDBI was not furnished. Therefore s not furnished. Therefore no specific comment was given by the A.O. in such remand report. The A/R has filed no specific comment was given by the A.O. in such remand report. The A/R has filed no specific comment was given by the A.O. in such remand report. The A/R has filed the ledger ef c of IDBI Bank A/c which was again forwarded to A.O. for his the ledger ef c of IDBI Bank A/c which was again forwarded to A.O. for his the ledger ef c of IDBI Bank A/c which was again forwarded to A.O. for his comments the AO. The A.O. vide letter dated 28.01.2015 has stated that comments the AO. The A.O. vide letter dated 28.01.2015 has stated that comments the AO. The A.O. vide letter dated 28.01.2015 has stated that the assessee did not comply at the remand stage & therefore the source of cash deposits of Rs. did not comply at the remand stage & therefore the source of cash deposits of Rs. did not comply at the remand stage & therefore the source of cash deposits of Rs. 15,20,000/- remained unexplained. I find that since the appellant has failed to remained unexplained. I find that since the appellant has failed to remained unexplained. I find that since the appellant has failed to explain the source of cash deposits before the A.O. in course of original assessm explain the source of cash deposits before the A.O. in course of original assessm explain the source of cash deposits before the A.O. in course of original assessment as well as remand stage, the addition of Rs. 15,20,000/ as well as remand stage, the addition of Rs. 15,20,000/- is upheld. This ground is is upheld. This ground is dismissed.” 7.1. A perusal of the same demonstrates that the addition was sustained by the ld. A perusal of the same demonstrates that the addition was sustained by the ld. A perusal of the same demonstrates that the addition was sustained by the ld. CIT(A) for the reason that CIT(A) for the reason that compliance was not made during the original as compliance was not made during the original assessment proceedings and at remand stage proceedings and at remand stage. This cannot be a ground of making addition for the . This cannot be a ground of making addition for the reasons that the Assessing Officer had made the addition on the ground that the reasons that the Assessing Officer had made the addition on the ground that the reasons that the Assessing Officer had made the addition on the ground that the deposits in bank accounts are not explained. W deposits in bank accounts are not explained. Without a copy of the bank account, th ithout a copy of the bank account, the Assessing Officer cannot come to a conclusion that the deposits made Assessing Officer cannot come to a conclusion that the deposits made Assessing Officer cannot come to a conclusion that the deposits made in a bank account Assessment Year: 2005-06 Vijay Mittal are unexplained. All details including copies of bank accounts were furnished by the are unexplained. All details including copies of bank accounts were furnished by the are unexplained. All details including copies of bank accounts were furnished by the assessee. Moreover, the Assessing Officer had in the remand report dt. 04/12/2013, . Moreover, the Assessing Officer had in the remand report dt. 04/12/2013, . Moreover, the Assessing Officer had in the remand report dt. 04/12/2013, had held as follows:- “Rs. 5,00,000/- received from Mr. N.V.Rama Raju for Kapulappada land. The remaining received from Mr. N.V.Rama Raju for Kapulappada land. The remaining received from Mr. N.V.Rama Raju for Kapulappada land. The remaining credit of Rs.20,000/- was for opening of was for opening of Bank A/c. (Rs.10,000/-) and ) and receipt from Samudra Cement Ltd. (Rs.10,000 ent Ltd. (Rs.10,000/-).' In support of this claim, copy of the 'Complaint ).' In support of this claim, copy of the 'Complaint filed under Order VII Rule I read with Section 26 of filed under Order VII Rule I read with Section 26 of C.P.C. in the Hon'ble Court of .P.C. in the Hon'ble Court of District Judge at Visakhapatnam against the assessee by Sri N. V. District Judge at Visakhapatnam against the assessee by Sri N. V. Rama Raju and Smt. Rama Raju and Smt. Saloni Varma (Rep. by power of at arma (Rep. by power of attorney holder Sri N.V.Rama Raju) is furnish holder Sri N.V.Rama Raju) is furnished. In the said complaint, it is mentioned that said complaint, it is mentioned that - "At the time of execution of agreement, dtd. "At the time of execution of agreement, dtd. 10.09.2004, the 1st Defendant had received cash of Rs.15, 10.09.2004, the 1st Defendant had received cash of Rs.15,00,000/- and cheque for Rs.5,00,000/- bearing no. 033682, dtd - bearing no. 033682, dtd.10.09.2004 drawn on Central Bank .09.2004 drawn on Central Bank of India, Visakhapatnam ... .". The copy of relevant 'Agreement for sale' is furnished. However, Visakhapatnam ... .". The copy of relevant 'Agreement for sale' is furnished. However, Visakhapatnam ... .". The copy of relevant 'Agreement for sale' is furnished. However, bank statement of IDBI A/c IDBI A/c. was not furnished. The third addition made in the assessment order relates to Rs. 30,94,286/ The third addition made in the assessment order relates to Rs. 30,94,286/ The third addition made in the assessment order relates to Rs. 30,94,286/- as liabilities not substantiated. This amount contained Rs.20,00,000/ not substantiated. This amount contained Rs.20,00,000/- claimed to be advance taken claimed to be advance taken from Sri N.V. Rama Raju for Kapulappada land and Rs.10,94,286/ from Sri N.V. Rama Raju for Kapulappada land and Rs.10,94,286/- from S.D. Mittal. from S.D. Mittal. Corroborative evidence with regard to the first issue is found to be genuine. Corroborative evidence with regard to the first issue is found to be genuine. Corroborative evidence with regard to the first issue is found to be genuine. In respect of amount of Rs.10,94,286 10,94,286/-, A/R of the assessee explained that – “ “The liability of Rs.10,94,286/- stands in the name of stands in the name of S.D. Mittal, who is in fact mother of the assessee. fact mother of the assessee. Consequent to death of Consequent to death of S.D. Mittal, amount received from PPF, LIC and P C and Post Office in respect of S.D. Mittal since deceased pending final disbursement amount her legal since deceased pending final disbursement amount her legal since deceased pending final disbursement amount her legal heirs." Assessee claimed that all these amounts were deposited by cheques into heirs." Assessee claimed that all these amounts were deposited by cheques into heirs." Assessee claimed that all these amounts were deposited by cheques into assessee's Global Trust Bank A l Trust Bank A/c. and IDBI A/c. Details of cheques no. and date o BI A/c. Details of cheques no. and date of deposit are furnished. From the examination of evidences provided on behalf of the deposit are furnished. From the examination of evidences provided on behalf of the deposit are furnished. From the examination of evidences provided on behalf of the assessee, it can be said that sources of these liabilities are explained.” assessee, it can be said that sources of these liabilities are explained.

The evidence given by the assessee is not disputed by the revenue. The addition The evidence given by the assessee is not disputed by the revenue. The addition The evidence given by the assessee is not disputed by the revenue. The addition was confirmed in a summary manner, without reference to the facts. d in a summary manner, without reference to the facts. d in a summary manner, without reference to the facts. In view of the above discussion and finding of the Assessing Officer in the remand report extracted above discussion and finding of the Assessing Officer in the remand report extracted above discussion and finding of the Assessing Officer in the remand report extracted above, the addition in question, is hereby deleted. above, the addition in question, is hereby deleted.

On the second issue of disallowance of commiss On the second issue of disallowance of commission and development charges, ion and development charges, the Assessing Officer in his remand report dt. 04/12/2013 the Assessing Officer in his remand report dt. 04/12/2013, at para 2 of page 20 para 2 of page 20, held as under:- “With regard to disallowance of commission and development charges to the tune of “With regard to disallowance of commission and development charges to the tune of “With regard to disallowance of commission and development charges to the tune of Rs.66,09,875/-, it is to state that assessee , it is to state that assessee could not come up with sufficient could not come up with sufficient corroborative evidence of payments other than furnishing a copy of agreement. Out of corroborative evidence of payments other than furnishing a copy of agreement. Out of corroborative evidence of payments other than furnishing a copy of agreement. Out of Rs.66,09,875/-, Rs.65,62,475/ , Rs.65,62,475/- is shown as development charges, and Rs.47,000/ is shown as development charges, and Rs.47,000/- as commission on sales. Assessee claimed that development commission on sales. Assessee claimed that development charges were paid to Mrs. charges were paid to Mrs. Geetha Kumari as per agreement between parties for the development of the dry land Geetha Kumari as per agreement between parties for the development of the dry land Geetha Kumari as per agreement between parties for the development of the dry land at Vadlapudi. Moreover, percentage of commission and development charges is too at Vadlapudi. Moreover, percentage of commission and development charges is too at Vadlapudi. Moreover, percentage of commission and development charges is too high as compared to sale price of Rs.85,60,100/ high as compared to sale price of Rs.85,60,100/-. In absence of sufficient corroborative fficient corroborative Assessment Year: 2005-06 Vijay Mittal evidence, cost of development charges and commission expenses cannot be allowed as evidence, cost of development charges and commission expenses cannot be allowed as evidence, cost of development charges and commission expenses cannot be allowed as admissible.”

11.

The Assessing Officer in his remand report dt. 28/01/2015, stated as follows: he Assessing Officer in his remand report dt. 28/01/2015, stated as follows: he Assessing Officer in his remand report dt. 28/01/2015, stated as follows:- “1. Disallowance of Rs. 66, 09,875/ “1. Disallowance of Rs. 66, 09,875/-on account of land: Out of the total amount of Rs. d: Out of the total amount of Rs. 66,09,875/- Rs. 6562475/ Rs. 6562475/- was claimed by the assessee to have paid to Smt. Dantuluri was claimed by the assessee to have paid to Smt. Dantuluri Gita Kumari and Rs. 47000/ Gita Kumari and Rs. 47000/- is shown as commission paid .During remand report is shown as commission paid .During remand report stage notice u/s. 133 (6) of the Act, was issued to Smt. Da stage notice u/s. 133 (6) of the Act, was issued to Smt. Dantuluri Gita Kumari to whom ntuluri Gita Kumari to whom the assessee claimed to have paid Rs. 65, 62,475/ the assessee claimed to have paid Rs. 65, 62,475/- as development charges. The letter as development charges. The letter was returned unserved. Assessee could not furnish any proof for commission paid of was returned unserved. Assessee could not furnish any proof for commission paid of was returned unserved. Assessee could not furnish any proof for commission paid of Rs.47000/- These facts further substantiate addition of Rs. These facts further substantiate addition of Rs. 66,09,875/ 66,09,875/- on account of land. During hearing at the assessment stage as well as appeal stage the assessee could land. During hearing at the assessment stage as well as appeal stage the assessee could land. During hearing at the assessment stage as well as appeal stage the assessee could not furnish any evidence to support his claim. Regarding this issue, I stand by the view not furnish any evidence to support his claim. Regarding this issue, I stand by the view not furnish any evidence to support his claim. Regarding this issue, I stand by the view and observation of the A. 0., as reflected in remand and observation of the A. 0., as reflected in remand report vide this office letter bearing report vide this office letter bearing 14/1057 dated 04.12.2013.” No. ITO / Wd. 1 (1) / Kol, / Remand Report /2013 No. ITO / Wd. 1 (1) / Kol, / Remand Report /2013 - 14/1057 dated 04.12.2013.”

11.1. The ld. CIT(A) had confirmed the addition on the ground that the assessee was The ld. CIT(A) had confirmed the addition on the ground that the assessee was The ld. CIT(A) had confirmed the addition on the ground that the assessee was not able to justify the payments made towards develop not able to justify the payments made towards development charges ment charges as the payments made were not supported with were not supported with evidence. We find that the assessee has furnished an agreement dt. 15/06/2003 with one We find that the assessee has furnished an agreement dt. 15/06/2003 with one We find that the assessee has furnished an agreement dt. 15/06/2003 with one Smt. Dantuluri Gita Kumari, for the development of the above land, copy of which is Smt. Dantuluri Gita Kumari, for the development of the above land, copy of which is Smt. Dantuluri Gita Kumari, for the development of the above land, copy of which is placed before us. The land was to be developed into plots by laying roads, drainages, was to be developed into plots by laying roads, drainages, common areas, greenery etc., and only after such development, the land was required to common areas, greenery etc., and only after such development, the land was required to common areas, greenery etc., and only after such development, the land was required to be sold at a minimum rate of Rs.600/ be sold at a minimum rate of Rs.600/- per sq.ft. The developer had to strictly abide by per sq.ft. The developer had to strictly abide by the ruler of the Urban Development Authority n Development Authority for layout development for layout development and also obtain all permissions etc. The payments were made through cheques and relevant details all permissions etc. The payments were made through cheques and relevant details all permissions etc. The payments were made through cheques and relevant details were filed before the Assessing Officer. The Assessing Officer issued notice u/s 133(6) were filed before the Assessing Officer. The Assessing Officer issued notice u/s 133(6) were filed before the Assessing Officer. The Assessing Officer issued notice u/s 133(6) of the Act, to Smt. Dantuluri Gita Kumari, who is the managing partner of Shivaji Estates uluri Gita Kumari, who is the managing partner of Shivaji Estates uluri Gita Kumari, who is the managing partner of Shivaji Estates & Constructions. But the notice was returned. We find that the notice was issued & Constructions. But the notice was returned. We find that the notice was issued & Constructions. But the notice was returned. We find that the notice was issued to an address mentioned in the agreement, address mentioned in the agreement, 10 years after the event event. Applying the propositions of law laid dow propositions of law laid down in the case of Diagnostics vs. CIT (supra) Diagnostics vs. CIT (supra), we hold that no adverse inference can be drawn. We also find that the capital gains in question on the adverse inference can be drawn. We also find that the capital gains in question on the adverse inference can be drawn. We also find that the capital gains in question on the land is on account of sale of various plots as recorded by the Assessing Officer at page 2 land is on account of sale of various plots as recorded by the Assessing Officer at page 2 land is on account of sale of various plots as recorded by the Assessing Officer at page 2 of his remand report dt. 04/12/2013. A total of 43 sale deeds were executed and copies port dt. 04/12/2013. A total of 43 sale deeds were executed and copies port dt. 04/12/2013. A total of 43 sale deeds were executed and copies of the same were filed. When the land is converted into plots by laying roads, building of the same were filed. When the land is converted into plots by laying roads, building of the same were filed. When the land is converted into plots by laying roads, building drains, developing common areas etc., as per the norms of the Urban Development drains, developing common areas etc., as per the norms of the Urban Development drains, developing common areas etc., as per the norms of the Urban Development Authority, and when plots are sold only after such development en plots are sold only after such development expenditure is bound to expenditure is bound to Assessment Year: 2005-06 Vijay Mittal be incurred. It cannot be said that dry land of 10.69 acres can be sub be incurred. It cannot be said that dry land of 10.69 acres can be sub-divided into house divided into house plots after development and sold plots after development and sold as house plots without incurring any expenditure. The without incurring any expenditure. The evidence in the form of development agreement dt. 15/06/2003, evidence in the form of development agreement dt. 15/06/2003, and and payments made through account payee cheques through account payee cheques and the fact of the development of the land into plots and the fact of the development of the land into plots is sufficient evidence to prove the incurring of exp sufficient evidence to prove the incurring of expenditure. Except for disbelieving the enditure. Except for disbelieving the claim of the assessee, there is no adverse material collected by the assessing authorities. claim of the assessee, there is no adverse material collected by the assessing authorities. claim of the assessee, there is no adverse material collected by the assessing authorities. Confirmation letters from Shivaji Estates & Constructions by Smt. Dantuluri Gita Confirmation letters from Shivaji Estates & Constructions by Smt. Dantuluri Gita Confirmation letters from Shivaji Estates & Constructions by Smt. Dantuluri Gita Kumari, wherein she had stated that the amoun Kumari, wherein she had stated that the amount in question was offered to tax in her t in question was offered to tax in her Income Tax Return and confirmation letters from one Mr. U. Prabhakar Rao Income Tax Return and confirmation letters from one Mr. U. Prabhakar Rao Income Tax Return and confirmation letters from one Mr. U. Prabhakar Rao, on the commission of Rs.47,400/-, received/receivable by him, support of the contentions of , received/receivable by him, support of the contentions of , received/receivable by him, support of the contentions of the assessee. Thus, we uphold the contention of th the assessee. Thus, we uphold the contention of the assessee and allow the claim of the e assessee and allow the claim of the assessee of having been incurred development expenditure to the tune of assessee of having been incurred development expenditure to the tune of assessee of having been incurred development expenditure to the tune of Rs.65,62,475/- and Rs.47,400/ and Rs.47,400/-, respectively. These additions are hereby deleted. Thus, These additions are hereby deleted. Thus, these grounds are allowed.

In the result, appeal of the assessee is allowed. 12. In the result, appeal of t Kolkata, the Kolkata, the 17th day of February, 2021. Sd/- Sd/- J. Sudhakar Reddy] [S. S. Godara] [J. Sudhakar Reddy Judicial Member Judicial Member Accountant Member Accountant Member Dated : 17.02.2021 {SC SPS} Assessment Year: 2005-06 Vijay Mittal Copy of the order forwarded to: 1. Vijay Mittal C/o. S. Jaykishan Suite No. 2D, E & F 12, Ho-Chi Minh Sarani Kolkata – 700 071

Income Tax Officer, Ward – – 1(1), Kolkata 3. CIT(A)- 4. CIT- , 5. CIT(DR), Kolkata Benches, Kolkata. 5. CIT(DR), Kolkata Benches, Kolkata.

VIJAY MITTAL ,KOLKATA vs. ITO, WARD - 1(1), KOLKATA , KOLKATA

Cases cited in this judgment