Mansi Builders Ltd. v. Asstt. CIT

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The Tax Publishers2012 TaxPub(DT) 0867 (Ahd-Trib) : (2011) 012 ITR (Trib) 0358 INCOME TAX ACT, 1961 --Income--AdditionAssessee discharged burden of proof --One of the directors of assessee was subjected to search. Revenue alleged that assessee had sold land to certain party for 10.79 crores through document found to be executed between assessee and the said party. A statement of director recorded under section 131(1A) admitted that sum of Rs. 21 lakhs was stated to be received in terms of said document. Assessee contended that said land deal was concelled and the amount of Rs. 21 lakhs was also returned back. Revenue was not convinced with the explanation and brought a sum of Rs. 10.79 crores to tax as unaccounted income in the hands of assessee. Assessee contended that it was not an outright sale because the said document was not registered but to be accomplished on completion of certain conditions. It was argued that it was merely a memorandum to be carried out to get the said land deal finalised later on. Said property was attached by revenue department against assessee, which indicated that possession in fact vested with assessee or with one of the directors of assessee. *Held* Document alleged to evidence sale of land by assessee was not registered. Assessee had discharged the burden of proof that income had not accrued to or been chargeable to tax in its hands. Document executed between assessee and other party was not registered one. Through that document no title or ownership of said property had been transferred. Hence said document was merely a memorandum of understanding. Said transaction was not transfer under provisions of section 2(47) read with 53A of Transfer of Property Act because on the part of transferor procurement of clearance certificate was not tendered and possession was not handed over. Attachment order of revenue in course of recovery proceeding against assessee itself established that possession had in fact vested with assessee or with one of the directors of assessee. Further income-tax returns of alleged buyer had not recovered said transaction and also did not indicate that huge investment was ever made by him in the said property. There was also cancellation of transaction and return of advance. Since transfer of immovable property was doubtful. So income could not be chargeable to tax on accrual basis. Income Tax Act, 1961 Section 4 IN THE ITAT AHMEDABAD 'C' BENCH G. D. AGARWAL (V.P.) AND MUKUL KR. SHRAWAT (J.M.) Mansi Builders Ltd. v. Asstt. CIT ITA No. 914/Ahd/2009 A.Y. 2005-06 30 September 2011 Appellant by : G. C. Pipara, Respondent by : S. K. Gupta, ORDER *Mukul Kr. Shrawat (J.M.)* This is an appeal at the behest of the assessee which has emanated from the order of the learned Commissioner (Appeals)-I, Ahmedabad, dated 6-2-2009 passed for the assessment year 2005-06. The only ground raised by the appellant is reproduced below : The learned Commissioner (Appeals) has erred in law as well as on facts while confirming the addition of Rs. 10,79,00,000, being the unaccounted income/receipt from Kartik J. Patel for the sale of a land. In view of the facts of the case that only an amount of Rs. 21,00,000 has been received, that too having been repaid and the impugned deal having been cancelled, the addition made by the assessing officer has wrongly been confirmed by the Commissioner (Appeals) and thus, in view of the facts of the case, the addition of Rs. 10,79,00,000 requires to be deleted. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 0867 (Ahd-Trib) : (2011) 012 ITR (Trib) 0358

INCOME TAX ACT, 1961

--Income--AdditionAssessee discharged burden of proof --One of the directors of assessee was subjected to search. Revenue alleged that assessee had sold land to certain party for 10.79 crores through document found to be executed between assessee and the said party. A statement of director recorded under section 131(1A) admitted that sum of Rs. 21 lakhs was stated to be received in terms of said document. Assessee contended that said land deal was concelled and the amount of Rs. 21 lakhs was also returned back. Revenue was not convinced with the explanation and brought a sum of Rs. 10.79 crores to tax as unaccounted income in the hands of assessee. Assessee contended that it was not an outright sale because the said document was not registered but to be accomplished on completion of certain conditions. It was argued that it was merely a memorandum to be carried out to get the said land deal finalised later on. Said property was attached by revenue department against assessee, which indicated that possession in fact vested with assessee or with one of the directors of assessee. Held Document alleged to evidence sale of land by assessee was not registered. Assessee had discharged the burden of proof that income had not accrued to or been chargeable to tax in its hands.

Document executed between assessee and other party was not registered one. Through that document no title or ownership of said property had been transferred. Hence said document was merely a memorandum of understanding. Said transaction was not transfer under provisions of section 2(47) read with 53A of Transfer of Property Act because on the part of transferor procurement of clearance certificate was not tendered and possession was not handed over. Attachment order of revenue in course of recovery proceeding against assessee itself established that possession had in fact vested with assessee or with one of the directors of assessee. Further income-tax returns of alleged buyer had not recovered said transaction and also did not indicate that huge investment was ever made by him in the said property. There was also cancellation of transaction and return of advance. Since transfer of immovable property was doubtful. So income could not be chargeable to tax on accrual basis.

Income Tax Act, 1961 Section 4

IN THE ITAT AHMEDABAD 'C' BENCH

G. D. AGARWAL (V.P.) AND MUKUL KR. SHRAWAT (J.M.)

Mansi Builders Ltd. v. Asstt. CIT

ITA No. 914/Ahd/2009

A.Y. 2005-06

30 September 2011

Appellant by : G. C. Pipara,

Respondent by : S. K. Gupta,

ORDER

Mukul Kr. Shrawat (J.M.)

This is an appeal at the behest of the assessee which has emanated from the order of the learned Commissioner (Appeals)-I, Ahmedabad, dated 6-2-2009 passed for the assessment year 2005-06. The only ground raised by the appellant is reproduced below :

The learned Commissioner (Appeals) has erred in law as well as on facts while confirming the addition of Rs. 10,79,00,000, being the unaccounted income/receipt from Kartik J. Patel for the sale of a land. In view of the facts of the case that only an amount of Rs. 21,00,000 has been received, that too having been repaid and the impugned deal having been cancelled, the addition made by the assessing officer has wrongly been confirmed by the Commissioner (Appeals) and thus, in view of the facts of the case, the addition of Rs. 10,79,00,000 requires to be deleted.