M/s.Damac holding P.Ltd, Ernakulam V. DCIT, Ernakulam

ITA 231/COCH/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77455 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 14-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: C B M WARRIER
• Keywords: Document seized; Reasonable cause; Competent authority; Assessment record; Documents seized
• Section: 40A(3); 153A; 132

Judgement Text

1 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 224 & 225/COCH/2012 (ASSESSMENT YEARS 2007-08 & 2008-09) DY.CIT, CENT.CIR.1 VS M/S DAMAC HOLDINGS PVT LT D ERNAKULAM 33/2241A, CIVIL LANE ROAD PALARIVATTOM, ERNAKULAM-35 PAN : AACCD4495R (APPELLANT) (RESPONDENT) I.T.A NO. 230/COCH/2012 (ASSESSMENT YEAR 2008-09) M/S RIGHT HAND DEVELOPERS INDIA (P) LTD VS THE DY. CIT, CENT.CIR.1 CIVIL LANE ROAD KOCHI PALARIVATTOM, ERNAKULAM PAN : AADCR3942G (APPELLANT) (RESPONDENT) I.T.A NO. 231/COCH/2012 (ASSESSMENT YEAR 2008-09) M/S DAMAC HOLDINGS (P) LTD VS THE DY.CIT, CENT.C IR.1 32/2241A, CIVIL LANE ROAD KOCHI PALARIVATTOM, ERNAKULAM PAN : AACCD4495R (APPELLANT) (RESPONDENT) ASSESSEESS BY : SHRI CBM WARRIER REVENUE BY : SHRI K.K. JOHN, SR.DR 2 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 DATE OF HEARING : 05-02-2014 DATE OF PRONOUNCEMENT : 06-06-2014 O R D E R PER N.R.S. GANESAN (JM) ALL THE APPEALS RELATE TO TWO INDEPENDENT ASSESSEE SS FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09. SINCE COMMON ISSUES ARISE FOR CONSIDERATION IN ALL THE FOUR APPEALS, FOR THE SAKE OF CONVENIENCE, THEY WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COM MON ORDER. 2. LET US FIRST TAKE APPEAL IN ITA NO.230/COCH/2012 IN THE CASE OF RIGHT HAND DEVELOPERS INDIA (P) LTD. 3. SHRI CBM WARRIER, THE LD.REPRESENTATIVE FOR THE ASSESSEES SUBMITTED THAT THERE WAS A SEARCH IN THE PREMISES OF THE ASSE SSEES U/S 132 OF THE ACT ON 26-03-2008 AND INCRIMINATING DOCUMENTS MARK ED AS MKG A(39) TO A(45) WAS SEIZED. ACCORDING TO THE LD.RPERESENTATI VE, THE SEARCH WAS CONDUCTED IN THE CASE OF THE ASSESSEES, THEREFORE, THE ASSESSMENT HAS TO BE FRAMED U/S 153A. IN THIS CASE, ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSMENT WAS FRAMED U/S 153C OF THE ACT. THEREFO RE, THE ASSESSMENT ORDER IS NULL AND VOID. ACCORDING TO THE LD.REPRES ENTATIVE, DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEES COMPANY PURCHASE D LAND AND INCURRED 3 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 EXPENDITURE FOR FILLING UP THE LAND WITH SOIL. THE EXPENSES FOR FILLING UP THE LAND WAS CLAIMED AS DEDUCTION. ACCORDING TO THE LD .REPRESENTATIVE, THE CLAIM OF THE ASSESSEES IS SUPPORTED BY PLAN, VOUCHE R, ESTIMATE, ETC. THE SEIZED DOCUMENT INCLUDES THE VOUCHERS FOR PAYMENT F OR FILING UP THE LAND. ACCORDING TO THE LD.REPRESENTATIVE, THE TOTAL EXPEN DITURE WAS RS.3,46,60,990; HOWEVER, THE ASSESSING OFFICER DISA LLOWED RS.3,13,56,840. THE ONLY REASON FOR DISALLOWING THE CLAIM IS THAT T HE VENDORS OF THE LAND ALSO CLAIMED EXPENDITURE FOR FILLING UP THE LAND, T HEREFORE, THE ASSESSEES COULD NOT HAVE SPENT SO MUCH OF MONEY FOR FILLING U P THE LAND. ACCORDING TO THE LD.REPRESENTATIVE, IT IS NOT THE CASE OF THE REVENUE THAT NO EXPENDITURE WAS INCURRED BY THE ASSESSEES FOR FILLI NG UP THE LAND. REFERRING TO THE REPLY GIVEN TO THE CIT(A), THE COP Y OF WHICH IS AVAILABLE AT PAGE 185 OF THE PAPER BOOK, THE LD.REPRESENTATIVE S UBMITTED THAT THE LOWER AUTHORITIES IGNORING THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION OBSERVED THAT THE CLAIM OF LAND FILLING E XPENSES IS BOGUS. ACCORDING TO THE LD.REPRESENTATIVE, THE CLAIM OF TH E ASSESSEES TO THE EXTENT OF RS.3,46,60,990 IS IN FACT INCURRED BY THE ASSESS EES. THEREFORE, THE ASSESSING OFFICER IS NOT CORRECT IN DISALLOWING THE CLAIM OF THE ASSESSEES TO THE EXTENT OF RS.3,13,56,840. 4 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 3. ACCORDING TO THE LD.REPRESENTATIVE, THE EXPENDIT URE TO THE EXTENT OF RS. 2,21,91,340 WAS PAID THROUGH BANK. THE ASSESSEE S HAS ALSO INCURRED EXPENDITURE TO THE EXTENT OF RS.1,23,44,050 WHICH W AS SUPPORTED BY VOUCHERS FOUND DURING THE COURSE OF SEARCH OPERATIO N. REFERRING TO PAGE 13 OF THE PAPER BOOK, WHICH IS THE COPY OF THE REPO RT OF THE DIGITAL LAND SURVEYORS ESTIMATED THE VOLUME OF EARTH REQUIRED TO BE FILLED UP WAS 141306.450 CUBIC METRE AND AVERAGE DEPTH OF FILLING IS 3.73 METRE (APPROXIMATELY). REFERRING TO MK-4-A-16, COPY OF W HICH IS AVAILABLE AT PAGE 63 OF THE PAPER BOOK, THE LD.REPRESENTATIVE SU BMITTED THAT THIS IS THE DETAILS FOR INCURRING THE EXPENDITURE ON DAY TO DAY BASIS. EVEN THOUGH THESE DOCUMENTS WERE SEIZED DURING THE COURSE OF SE ARCH OPERATION, ACCORDING TO THE LD.REPRESENTATIVE, THE LOWER AUTHO RITIES CONVENIENTLY OMITTED TO CONSIDER THESE MATERIALS. 4. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE S PURCHASED 943.47 CENTS OF LAND FOR A TOTAL CONSIDERATION OF RS.6,20, 28,281. SINCE THE LAND WAS LOW LYING, THE ASSESSEES INCURRED EXPENDITURE T O THE EXTENT OF RS.3,46,60,990 FOR FILING THE LOW LYING PROPERTY. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT DURING THE COURSE OF SEARCH OPERATION, VOUCHERS FOR THE EXPENDITURE UPTO 01-04-2008 WAS FOUND DISCLOSIN G THE EXPENDITURE OF RS.1,23,44,050. SUBSEQUENT TO 31-03-2008 A SUM OF RS.1,25,600 WAS 5 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 SPENT. REFERRING TO ANNEXURE A AND THE ARGUMENT NO TE, COPY OF WHICH IS AVAILABLE AT PAGE 139, THE LD.REPRESENTATIVE SUBMIT TED THAT THE ASSESSEES HAS INCURRED ANOTHER EXPENDITURE OF RS. 78,13,400. REFERRING TO THE AGREEMENT DATED 25-09-2007, THE COPY OF WHICH IS AV AILABLE AT PAGE 106 OF THE PAPER BOOK, THE LD.REPRESENTATIVE SUBMITTED THA T AS PER CLAUSE 3.1, THE ASSESSEES HAS TO CARRY OUT THE WORK OF FILLING UP A ND LEVELING OF THE PROPERTY AND THE WORK HAD TO BE COMPLETED WITHIN A PERIOD OF SIX MONTHS. IF THE PROPERTY WAS ALREADY FILLED UP BY THE VENDOR S BEFORE PURCHASE, ACCORDING TO THE LD.REPRESENTATIVE, THERE IS NO NEE D FOR MENTIONING THIS CLAUSE FOR FILLING UP THE LAND BY THE ASSESSEES IN THE AGREEMENT TO SELL. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEES HAS ALSO FILE D A DETAILED REPORT OF SURVEY OF THE PROPERTY ESTIMATING THE FILLING REQUI REMENTS FROM LAN-DEC ENGINEERS THE COPY OF WHICH IS AVAILABLE AT PAGE 13 OF THE PAPER BOOK. ACCORDING TO THE LD.REPRESENTATIVE, BOTH THE AUTHOR ITIES BELOW FAILED TO MAKE ANY REFERENCE TO THIS DOCUMENT. THE LD.REPRES ENTATIVE FURTHER SUBMITTED THAT A PHOTOGRAPH WAS TAKEN BEFORE FILLIN G UP THE LAND AND AFTER FILLING UP THE LAND. THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAS NOT CONSIDERED THESE DOCUMENTS WHILE REJECTING THE CLAI M OF THE ASSESSEES. 6 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 5. IN THE POST SEARCH ENQUIRY, THE PERSONS, WHO WER E ENGAGED FOR LAND FILLING WERE EXAMINED AND STATEMENTS WERE RECORDED FROM THEM. ACCORDING TO THE LD.REPRESENTATIVE, THE PERSONS ENGAGED FOR T HE LAND FILLING HAVE PRODUCED THEIR RESPECTIVE BANK ACCOUNT SHOWING THE RECEIPTS FROM THE ASSESSEES FOR LAND FILLING AND CONFIRMED THAT THE E XPENDITURE WAS INCURRED BY THE ASSESSEES. EVEN THOUGH THESE EVIDENCE WERE AVAILABLE WITH THE INVESTIGATION WING OF THE DEPARTMENT, THE LOWER AUT HORITIES HAVE CONVENIENTLY OMITTED TO CONSIDER THE SAME. 6. SHRI CBM WARRIER, THE LD.REPRESENTATIVE FOR THE ASSESSEES SUBMITTED THAT THE ASSESSING OFFICER RESTRICTED THE CLAIM OF THE ASSESSEES FOR EXPENDITURE AT RS. 33,04,150 WITHOUT ANY REASON. T HE LD.REPRESENTATIVE SUBMITTED THAT IF THE VENDOR OF THE LAND FILLED UP THE LAND WITH SOIL, THEN THERE IS NO OCCASION FOR THE ASSESSEES TO FILL UP T HE SAME AGAIN. THE VERY FACT THAT THE SEIZED MATERIAL DISCLOSES THE EXPENDI TURE INCURRED BY THE ASSESSEES FOR FILLING UP THE LAND SHOWS THAT THE VE NDOR OF THE LAND HAS NOT DONE ANYTHING FOR FILLING UP THE LAND. ACCORDING T O THE LD.REPRESENTATIVE, MKG-A-39 IS PART OF THE SEIZED DOCUMENTS WHICH DISC LOSES THE EXPENDITURE INCURRED BY THE ASSESSEES. EVEN THOUGH THESE DOCUMENTS DISCLOSE THE EXPENDITURE INCURRED BY THE ASSESSEES THIS WAS NOT TAKEN INTO CONSIDERATION BY THE LOWER AUTHORITIES. REFERRING TO THE REMAND REPORT SAID 7 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 TO BE FILED BY THE ASSESSING OFFICER, THE LD.REPRES ENTATIVE SUBMITTED THAT THE ASSESSING OFFICER AT PARAGRAPH 3 OF THE REMAND REPO RT DISALLOWED PART OF THE EXPENDITURE ON THE GROUND THAT SUPPORTING EVIDE NCE WAS NOT AVAILABLE. ACCORDING TO THE LD.REPRESENTATIVE, THE INVESTIGATI ON WING OF THE DEPARTMENT VERIFIED THE EXPENDITURE. WHEN THE EVID ENCE IS AVAILABLE FOR INCURRING THE EXPENDITURE TO THE EXTENT OF RS.78,13 ,000, ACCORDING TO THE LD.REPRESENTATIVE, MERELY BECAUSE SUPPORTING VOUCHE RS ARE NOT AVAILABLE, THERE CANNOT BE ANY REASON FOR DISALLOWANCE. ACCOR DING TO THE LD.REPRESENTATIVE, THE DEPARTMENT HAS NO MATERIAL T O SHOW THAT THE ASSESSEES HAS NOT INCURRED ANY EXPENDITURE FOR LAND FILLING EXPENSES. ACCORDING TO THE LD.REPRESENTATIVE, THE VOUCHERS SE IZED BY THE DEPARTMENT DURING THE COURSE OF SEARCH OPERATION WERE AVAILABL E IN THE PAPER BOOK. ACCORDING TO THE LD.REPRESENTATIVE, NOTHING IS UNRE LIABLE ABOUT THE PAYMENTS MADE BY THE ASSESSEES. PURCHASE OF RED SO IL IS EVIDENCED BY THE SEIZED RECORD. THEREFORE, THE PRESUMPTION U/S 132(4A) OF THE ACT IS AVAILABLE TO THE ASSESSEES. REFERRING TO THE PROVI SIONS OF SECTION 132(4A) OF THE ACT, THE LD.REPRESENTATIVE SUBMITTED THAT WH EN THE DOCUMENTS ARE FOUND AND SEIZED DURING THE COURSE OF SEARCH OPERAT ION, THE CONTENTS OF SUCH DOCUMENTS ARE PRESUMED TO BE TRUE UNLESS IT IS ESTABLISHED OTHERWISE BY ANY OF THE PARTIES. IN THIS CASE, ACCORDING TO THE LD.REPRESENTATIVE, THE EXPENDITURE INCURRED BY THE ASSESSEES FOR PURCHASE OF THE RED SOIL AND THE 8 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 PAYMENTS MADE TO THE CONTRACTOR IS AVAILABLE ON THE SEARCH MATERIAL, THEREFORE, THERE IS A PRESUMPTION THAT THE ASSESSEE S HAS INCURRED THE EXPENDITURE. IT IS FOR THE REVENUE TO REBUT THE PR ESUMPTION IF AT ALL THEY HAVE ANY MATERIAL TO SUGGEST THAT THE ASSESSEES HAS NOT INCURRED SUCH EXPENDITURE. ACCORDING TO THE LD.REPRESENTATIVE, W HEN THERE IS AN AGREEMENT BETWEEN THE ASSESSEES AND THE VENDOR OF T HE LAND WHICH CLEARLY SHOWS THAT THE ASSESSEES HAS TO FILL UP THE LAND WITHIN A SPECIFIED PERIOD, THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN SAYING THAT THE COST WAS INCURRED BY THE ERSTWHILE OWNER BEFORE THE ASSESSEE S PURCHASED THE LAND. REFERRING TO THE COPY OF THE REMAND REPORT, MORE PA RTICULARLY PARAGRAPH 10, THE LD.REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER IS NOT CORRECT IN SAYING THAT THE SEARCH WAS CONDUCTED BEFORE PURCHAS E OF THE PROPERTY BY THE ASSESSEES. ACCORDING TO THE LD.REPRESETNATIVE, THE VERY PURPOSE OF CONDUCTING THE SEARCH IS TO FIND OUT THE CORRECTNES S OF THE CLAIM OF EXPENDITURE FOR LAND FILLING. ACCORDING TO THE LD.R EPRESENTATIVE, ONLY AFTER ASCERTAINING THE APPROXIMATE EXPENDITURE FOR FILLIN G, THE PURCHASE PRICE WAS DECIDED BY THE PARTIES. THEREFORE, ACCORDING TO TH E LD.REPRESENTATIVE, THE ASSESSING OFFICER IS NOT JUSTIFIED IN SAYING THAT S URVEY REPORT HAS NO RELEVANCE. ACCORDING TO THE LD.REPRESENTATIVE, SUR VEY REPORT CLEARLY SAYS THAT THE EXPENDITURE FOR SOIL FILLING WAS REQUIRED FOR MAKING THE LAND SALEABLE CONDITION. THEREFORE, THE ASSESSEES PURCH ASED THE LAND AS IT IS 9 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 SUBSEQUENTLY INCURRED THE EXPENDITURE TO MAKE IT SA LEABLE. THEREFORE, THE ASSESSING OFFICER AND THE CIT(A) ARE NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEES. 7. REFERRING TO THE APPEAL BY M/S DAMAC HOLDINGS (P ) LTD IN ITA NO.231/COCH/2012, THE LD.REPRESENTATIVE SUBMITTED T HAT THIS COMPANY WAS ORIGINALLY ASSESSED AT BANGALORE. BY AN ORDER U/S 127 OF THE INCOME-TAX ACT, THE ASSESSMENT WAS TRANSFERRED TO ERNAKULAM. ACCORDING TO THE LD.REPRESENTATIVE, THE PROCEDURE PRESCRIBED FOR TRA NSFERRING THE JURISDICTION FROM BANGALORE TO ERNAKULAM WAS NOT FOLLOWED. THER EFORE, THE ASSESSMENT COMPLETED BY THE ASSESSING OFFICER AT ER NAKULAM HAS NO LEG TO STAND. 8. ACCORDING TO THE LD.REPRESETNATIVE, A SEARCH WAS SAID TO BE CONDUCTED U/S 132 OF THE ACT IN THE CASE OF SHRI M. A. MOHIYUDDIN, THE DIRECTOR OF THE ASSESSEE COMPANY ON 26-03-2008. AC CORDING TO THE LD.REPRESETNATIVE, SHRI M.A. MOHIYUDDIN WAS NOT THE MANAGING DIRECTOR OF THE COMPANY. IN FACT, SHRI. MOHIYUDDIN IS THE DIRE CTOR OF THE COMPANY AND THE OTHER DIRECTOR SHRI MATHEW JOSEPH. THE LD.REPR ESENTATIVE FURTHER SUBMITTED THAT NO QUESTION WAS ASKED DURING THE COU RSE OF EXAMINATION U/S 132(4) WITH REGARD TO INCRIMINATING DOCUMENT FOUND DURING THE COURSE OF 10 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 SEARCH OPERATION. REFERRING TO SECTION 153C OF THE ACT, THE LD.REPRESENTATIVE SUBMITTED THAT WHEN THE SEARCH TO OK PLACE ON 26-03- 2008, THE JURISDICTION TO ASSESS THE ASSESSEES COMP ANY WAS WITH THE INCOME-TAX OFFICER, BANGALORE. THEREFORE, ACCORDIN G TO THE LD.REPRESENTATIVE, ALL THE DOCUMENTS FOUND DURING T HE COURSE OF SEARCH OPERATION RELATES TO THE PRESENT ASSESSEES HAS TO B E HANDED OVER TO THE ASSESSING OFFICER AT BANGALORE TO INITIATE PROCEEDI NGS U/S 153C OF THE ACT. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSING O FFICER AT BANGALORE HAS TO RECORD HIS SATISFACTION WITH REGARD TO MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. IN THIS CASE, ACCORDING TO THE L D.REPRESENTATIVE, NO SATISFACTION WAS RECORDED BY THE ASSESSING OFFICER. 9. SHRI CBM WARRIER, THE LD.REPRESENTATIVE FOR THE ASSESSEES SUBMITTED THAT AS PER THE COPY OF THE ORDER SERVED ON THE ASS ESSEES, THE ASSESSMENT ORDER WAS SAID TO BE MADE U/S 153C R.W.S. 153A OF T HE ACT. HOWEVER, WHEN THE ASSESSEES CONTENDED THAT NO ORDER COULD BE PASSED U/S 153A, THE DEPARTMENT HAS PRODUCED ANOTHER COPY OF THE ORD ER SAID TO BE PASSED U/S 153C OF THE ACT. ACCORDING TO THE LD.REPRESENT ATIVE, INTER-CHANGING OF SECTION AND ISSUE OF NOTICE UNDER WRONG SECTION ARE NOT CURABLE DEFECT U/S 292B OF THE ACT. 11 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 10. REFERRING TO THE PANCHANAMA AND THE ASSESSMENT ORDER, THE LD.REPRESENTATIVE SUBMITTED THAT PANCHANAMA CLEARLY INDICATES THAT THE WARRANT WAS IN THE CASE OF DAMAC HOLDINGS PVT LTD. HOWEVER, AS PER THE ASSESSMENT ORDER, THE SEARCH WARRANT WAS IN RESPECT OF MOHIYUDDIN AND SEARCHED PLACE IS THE ASSESSEE COMPANY. THEREFORE, ACCORDING TO THE LD.REPRESENTATIVE, IT IS NOT CLEAR IN WHOSE HAND TH E SEARCH WAS INITIATED. 11. COMING TO THE LAND DEVELOPMENT EXPENDITURE, THE LD.REPRESENTATIVE FOR THE ASSESSEES SUBMITTED THAT THE ASSESSING OFFI CER REJECTED THE CLAIM OF THE ASSESSEES TO THE EXTENT OF RS. 6,34,79,700 ON T HE GROUND THAT THE VENDOR OF THE LAND ALSO CLAIMED EXPENDITURE TO THE EXTENT OF RS.18,000 PER CENT. ACCORDING TO THE LD.REPRESENTATIVE, THE VEND OR OF THE LAND CLAIMED WRONG INDEXATION FOR THE PURPOSE OF CLAIMING CAPITA L GAIN. ACCORDING TO THE LD.REPRESENTATIVE, ONE OF THE VENDORS, SHRI A.K. NI ZAR CLAIMED THAT HE HAS SPENT RS.6,30,000 @18,000 PER CENT IN LAND FILLING. HOWEVER, THE LOWER AUTHORITIES HAVE NOT EXAMINED THE SOURCE OF SHRI A. K. NIZAR FOR INCURRING THE EXPENDITURE OF RS.6,30,000 AND THE APPLICABILIT Y OF PROVISIONS OF SECTION 40A(3) FOR MAKING CASH PAYMENT. ACCORDING TO THE L D.REPRESENTATIVE, MERELY BECAUSE THE LAND OWNERS CLAIMED EXPENDITURE FOR FILLING UP THE LAND, THAT ALONE, CANNOT BE A REASON FOR DISALLOWING THE CLAIM OF THE ASSESSEES. ACCORDING TO THE LD.REPRESENTATIVE, IT IS THE DUTY OF THE ASSESSING OFFICER TO 12 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 FIND OUT WHO ACTUALLY FILLED UP THE LAND ON THE BAS IS OF THE MATERIAL AVAILABLE ON RECORD. A MERE CLAIM WITHOUT ANY SOURCE FOR MAKI NG THE PAYMENT AND WITHOUT ANY MATERIAL FOR INCURRING THE EXPENDITURE CANNOT BE A REASON TO DISALLOW THE RIGHTLY CLAIM OF THE ASSESSEES. REFER RING TO PARAGRAPH 5 OF THE ASSESSMENT ORDER, THE LD.REPRESENTATIVE SUBMITTED T HAT THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY TO FIND OUT THE CO RRECTNESS OF THE CLAIM OF THE RESPECTIVE VENDORS WITH REGARD TO THEIR EXPENDI TURE FOR FILLING UP OF THE LAND. IN THE ABSENCE OF ANY ATTEMPT ON THE PART OF THE ASSESSING OFFICER TO FIND OUT THE CORRECTNESS OF THE CLAIM OF THE VENDOR , ACCORDING TO THE LD.REPRESENTATIVE, THE CLAIM OF THE ASSESSEES CANNO T BE DISALLOWED. 12. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT TH E VENDOR OF THE PROPERTY CLAIMED EXPENDITURE ONLY IN RESPECT OF RAJ AGIRI PROPERTY. IN RESPECT OF OTHER PROPERTY, NO SUCH CLAIM WAS MADE. THEREFORE, THE FINDING OF THE ASSESSING OFFICER TO DISALLOW THE TOTAL EXPE NDITURE OF RS.6,34,79,700 IS WITHOUT ANY BASIS. EVEN WITH REGARD TO RAJAGIRI PROPERTY, THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION CLEARLY SHOWS THAT THE EXPENDITURE WAS INCURRED BY THE ASSESSEES. 13. REFERRING TO THE AGREEMENT FOR PURCHASE OF PROP ERTY AT RAJAGIRI, THE LD.REPRESENTATIVE SUBMITTED THAT THE AGREEMENT WAS ENTERED INTO BETWEEN 13 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 SHRI MOHIYUDDIN, SHRI MATHEW JOSEPH AND OTHERS FROM THE RESPECTIVE VENDORS ON 10-09-2005 ONWARDS. THEREFORE, THE INDI VIDUAL DIRECTORS ENTERED INTO AGREEMENT TO PURCHASE THE PROPERTY BEF ORE INCORPORATION OF THE COMPANY. THE COMPANY IN FACT WAS INCORPORATED ON 18-12-2006. HOWEVER, THE RESPECTIVE DIRECTORS HAVE TAKEN A DECI SION TO ACQUIRE THE LAND BEFORE FORMATION OF THE COMPANY. ACCORDING TO THE LD.REPRESENTATIVE, THE EXPENDITURE INCURRED BY THE ASSESSEES IS ONLY A FTER THE AGREEMENT ENTERED INTO FOR PURCHASE OF THE PROPERTY BY THE RE SPECTIVE DIRECTORS. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEES C OMPANY HAS ALSO ENTERED INTO AGREEMENT ON 16-02-2007, 14-03-2007 AN D 25-09-2007 FOR PURCHASE OF PROPERTY WITH M/S NEPTUNE AND BLUE LAGO ON REAL ESTATES PVT LTD. ACCORDING TO THE LD.REPRESENTATIVE, THE COMPA NY, AFTER ITS FORMATION INCURRED THE EXPENDITURE TO MAKE THE LAND SALEABLE CONDITION. THE ASSESSEES HAS EXPLAINED THE DETAILS OF PAYMENT AND THE EXPENDITURE INCURRED TO THE EXTENT OF RS.6,81,57,390. REFERRIN G TO THE REMAND REPORT SAID TO BE FILED BY THE ASSESSING OFFICER, THE LD.R EPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER HAS NOT CONSIDERED THE M ATERIAL AVAILABLE ON RECORD. THE VOUCHERS FOR PAYMENT OF THE MONEY, THE DETAILS OF EXPENDITURE ON DAY TO DAY BASIS ARE FOUND DURING THE COURSE OF SEARCH OPERATION. ACCORDING TO THE LD.REPRESENTATIVE, THE LOWER AUTHO RITY FAILED TO CONSIDER THE 14 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 SAME. THEREFORE, THE DISALLOWANCE MADE BY THE ASSE SSING OFFICER IS NOT JUSTIFIED. 14. ON THE CONTRARY, SHRI K.K. JOHN, THE LD.DR SUBM ITTED THAT AS PER THE AGREEMENT BETWEEN THE ASSESSEES AND THE SELLER OF T HE LAND, THERE WAS A CONDITION THAT THE SELLER HAD TO FILL UP THE LAND A ND MAKE IT SALEABLE WITHIN THE SPECIFIED TIME. HOWEVER, THE VENDORS OF THE RE SPECTIVE LAND TO THE ASSESSEES HAS ALSO CLAIMED EXPENDITURE @RS.18,000 P ER CENT. IF THE VENDORS OF THE LAND INCURRED RS.18,000 PER CENT TO FILL UP THE LAND, ACCORDING TO THE LD.DR, THERE IS NO OCCASION FOR TH E ASSESSEES TO INCUR SUCH A HUGE EXPENDITURE FOR FILLING UP THE LAND. R EFERRING TO THE REMAND REPORT FILED BY THE ASSESSING OFFICER IN THE CASE O F RIGHT HAND DEVELOPERS, THE LD.DR SUIBMITTED THAT THE ASSESSING OFFICER DIS ALLOWED THE EXPENDITURE TO THE EXTENT OF RS.3,30,66,840. THE ASSESSEES CLA IMS THAT VOUCHER IN SUPPORT OF LAND DEVELOPMENT TO THE EXTENT OF RS.1,2 3,44,050 WAS SEIZED. THE ASSESSING OFFICER FOUND THAT THE EXPENDITURE FO R THE PERIOD 01-04-2007 TO 04-01-2008 TO THE EXTENT OF RS.1,23,44,050 WAS C ORRECT. ACCORDING TO THE LD.DR, THE ASSESSING OFFICER FOUND THAT THE VOU CHERS LAGGED CREDIBILITY. THESE ARE SELF MADE VOUCHERS PREPARED BY THE ASSESS EES. THE PARTICULARS OF PAYEE WERE NOT MENTIONED. THE PAYMENTS ARE INVA RIABLY MADE IN CASH BELOW RS.20,000. THEREFORE, THE ASSESSING OFFICER REJECTED THE CLAIM OF THE 15 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 ASSESSEES. THE ASSESSEES CLAIMS TO HAVE PAID HUGE EXPENSES TO THE CONTRACTOR FOR LAND FILLING. ACCORDING TO THE LD.D R, WHEN THE INDIVIDUAL PAYMENT EXCEEDS RS.20,000 THE ASSESSEES IS LIABLE T O DEDUCT TAX AT THE TIME OF PAYMENT. ACCORDING TO THE LD.DR, THE ASSES SING OFFICER RECOGNIZED THE GENUINE PAYMENT TO THE EXTENT OF RS.56 LAKHS. IN RESPECT OF OTHER PAYMENT WHAT WAS FOUND DURING THE COURSE OF SEARCH OPERATION IS ONLY SELF MADE VOUCHERS. ACCORDING TO THE LD.DR, AS PER THE AGREEMENT DATED 25- 09-2007 THE ASSESSEES HAD TO FILL UP THE LAND IN RE SPECT OF THE LAND SOLD TO NEPTUE REAL ESTATE. HOWEVER, THE LAND WAS SOLD BEF ORE THE AGREEMENT, I.E. 25-08-2007. THEREFORE, WHEN THE LAND WAS SOLD ONE MONTH BEFORE THE AGREEMENT, NO ONE WOULD UNDERTAKE THE DEVELOPMENT I N RESPECT OF THE LAND SOLD. REFERRING TO MKG-A-39, THE SEIZED DOCUM ENT, THE LD.DR SUBMITTED THAT THE LAND FILLING CHARGES ARE PAID TO VARIOUS PEOPLE AS REFERRED AT PARAGRAPH 9 OF THE REMAND REPORT. ACCO RDING TO THE LD.DR, THE NAMES APPEARED IN THE VOUCHERS DIFFER FROM THE DETA ILS OF PAYMENT MADE TO SEVERAL PERSONS WHICH WAS FOUND IN OTHER DOCUMEN TS. 15. REFERRING TO THE OBJECTION OF THE ASSESSEES ON THE ASSESSMENT ORDER IN THE CASE OF DAMAC HOLDINGS (P) LTD, THE LD.DR SU BMITTED THAT ORIGINALLY, THE ASSESSEES COMPANY WAS ASSESSED AT BANGALORE AND SUBSEQUENTLY, BY AN ORDER U/S 127 FOR CONSOLIDATED ENQUIRY THE JURIS DICTION WAS TRANSFERRED TO 16 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 ERNAKULAM. ACCORDING TO THE LD.DR, THE ORDER PASSE D U/S 127 IS NOT SUBJECTED TO APPEAL BEFORE THIS TRIBUNAL. THEREFOR E, THE TRANSFER OF JURISDICTION FROM BANGALORE TO ERNAKULAM CANNOT BE CHALLENGED BEFORE THIS TRIBUNAL. ACCORDING TO THE LD.DR, THE TRANSFER OF JURISDICTION WAS MADE AFTER GIVING NECESSARY NOTICE TO THE ASSESSEES. TH EREFORE, IT IS NOT CORRECT TO SAY THAT THE TRANSFER WAS MADE WITHOUT FOLLOWING THE PROCEDURE. 16. ACCORDING TO THE LD.DR, THE SEARCH WAS CONDUCTE D ON 26-03-2008 IN THE CASE OF MOHIYUDDIN, WHO WAS THE DIRECTOR OF THE COMPANY ON THE DATE OF SEARCH. MERELY BECAUSE THE DESIGNATION WAS REFE RRED AS MANAGING DIRECTOR INSTEAD OF DIRECTOR, THAT WILL NOT VITIATE THE ASSESSMENT PROCEEDINGS. IT IS ONLY A RECTIFIABLE ERROR. AFTE R CHANGE OF JURISDICTION FROM BANGALORE TO ERNAKULAM, THE ASSESSMENT HAS TO BE MA DE BY ONE OFFICER AT ERNAKULAM, BOTH IN THE CASE OF SEARCHED PERSON AND PERSON OTHER THAN SEARCHED. IN THIS CASE, ACCORDING TO THE LD.DR, BO TH THE ASSESSMENTS WERE MADE I.E. ON THE SEARCHED PERSON AND THE ASSESSEES BY THE VERY SAME ASSESSING OFFICER. WHEN BOTH THE ASSESSMENTS WERE MADE BY THE VERY SAME OFFICER, ACCORDING TO THE LD.DR, THERE IS NO N ECESSITY FOR RECORDING THE SATISFACTION. REFERRING TO PROVISIONS OF SECTION 1 53A AND 153C, THE LD.DR SUBMITTED THAT THE ASSESSMENTS WERE MADE U/S 153C R .W.S. 153A OF THE ACT. DURING THE COURSE OF SEARCH OPERATION IN THE CASE OF MOHIYUDDIN, 17 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 MATERIALS WERE FOUND IN THE HANDS OF THE ABOVE TWO ASSESSEESS. THEREFORE, THE ASSESSING OFFICER ISSUED NOTICE U/S 153C AND THE ASSESSMENT WAS COMPLETED U/S 153A AS PER THE STATUT ORY PROVISIONS. ACCORDING TO THE LD.DR, THE PROCEDURE FOR COMPLETIO N OF ASSESSMENT IS PROVIDED IN SECTION 153A OF THE ACT IN RESPECT OF SEARCHED PERSON AND THE PERSON OTHER THAN THE SEARCHED PERSON REFERRED TO I N SECTION 153C. THEREFORE, MERELY BECAUSE WRONG PROVISION WAS QUOTE D IN THE ASSESSMENT ORDER, THAT WILL NOT VITIATE THE ENTIRE PROCEEDINGS . ACCORDING TO THE LD.DR;, IT IS A RECTIFIABLE ERROR U/S 292B OF THE ACT. 17. REFERRING TO THE LAND DEVELOPMENT EXPENDITURE I N THE CASE OF DAMAC HOLDINGS (P) LTD, THE LD.DR SUBMITTED THAT THE LAND OWNERS FROM WHOM THE ASSESSEES PURCHASED THE PROPERTY CLAIMED LAND DEVEL OPMENT EXPENDITURE TO THE EXTENT OF RS.18,000 PER CENT. IF THE LAND O WNERS HAS INCURRED RS.18,000 PER CENT, ACCORDING TO THE LD.DR, THERE C ANNOT BE ANY OCCASION FOR THE ASSESSEES TO INCUR ANY SUCH EXPENDITURE. A CCORDING TO THE LD.DR, THE ASSESSEES IS NOT MAINTAINING ANY BOOK OF ACCOUN T, NOT EVEN A LEDGER FOLIO FOR LAND DEVELOPMENT EXPENDITURE. ACCORDING TO THE LD.DR, THE ONLY DOCUMENT AVAILABLE IS THE REPORT OF LAND SURVEYOR. THE LAND SURVEYOR PREPARED THE REPORT ON 10-08-2006. AS PER THIS REP ORT, THE EXPECTED COST WAS RS.8.90 CRORES. AT THE TIME OF THE REPORT, THE ASSESSEES HAS NOT EVEN 18 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 PURCHASED THE LAND. THEREFORE, THE SURVEY REPORT H AS NO RELEVANCE FOR DECIDING THE EXPENDITURE INCURRED BY THE ASSESSEES FOR LAND DEVELOPMENT. ACCORDING TO THE LD.DR, THE ASSESSEES COMPANY PURCH ASED 734.64 CENTS OF LAND FROM NAZIR ABBAS AND HIS FAMILY MEMBERS AND FRIENDS. IN COMPUTATION OF CAPITAL GAIN, THE SELLER OF THE LAND CLAIMED LAND DEVELOPMENT EXPENDITURE AT RS.18,000 PER CENT. THE TOTAL EXPENDITURE CLAIMED BY THE ORIGINAL OWNER IS RS.1,32,24,240. T HE ASSESSEES NOW CLAIMS EXPENDITURE OF RS.6,29,39,746. REFERRING TO THE AGREEMENT SAID TO BE ENTERED INTO BETWEEN NAZIR ABBAS AND SHRI MATHEW JOPSEPH, THE LD.DR SUBMITTED THAT THE VENDOR SHRI NAZIR ABBAS AGREED T O LEVEL THE PROPERTY FILLED IN WATER WITH RED SOIL AND CLEAN THE LAND MA KING IT SUITABLE FOR MEASURING. IN THIS CASE, SHRI NAZIR ABBAS, THE VEN DOR CLAIMED RS.18,000 PER CENT. THEREFORE, THERE IS NO JUSTIFICATION FOR CLAIMING ANY FURTHER EXPENDITURE. ACCORDING TO THE LD.DR, THE ASSESSEES HAS CLAIMED RS.6,12,21,269 IN RESPECT OF RAJAGIRI PROPERTY TOWA RDS DEVELOPMENT CHARGES. ACCORDING TO THE LD.DR, AT RJAGIRI, THE A SSESSEES ACQUIRED 12.29 ACRES OF LAND. OUT OF THIS, 7.95 ACRES OF LAND WAS SOLD TO TWO COMPANIES. THE LD.DR SUBMITTED THAT PRIOR TO ACQUISITION OF LA ND AT RAJAGIRI, THE ASSESSEES HAS ALREADY CLAIMED RS.1,05,73,857 AS DE VELOPMENT EXPENSES. THE ASSESSEES CLAIMS THAT THE DEVELOPMEN T CHARGES WERE INCURRED AFTER PAYMENT OF ADVANCE FOR PURCHASE OF T HE PROPERTY. ACCORDING 19 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 TO THE LD.DR, NOBODY WILL INCUR AN EXPENDITURE BEFO RE COMPLETING THE REGISTRATION FORMALITIES. THE CLAIM OF THE ASSESSE ES THAT THEY INCURRED THE EXPENDITURE AFTER PAYING THE ADVANCE AMOUNT FOR PUR CHASE OF THE PROPERTY IS NOT RELIABLE ONE. ACCORDING TO THE LD.DR, THE C ASH PAYMENT MADE FOR FILLING UP THE AMOUNT DOES NOT EXCEED RS.20,000. W HEN THE PAYMENT DOES NOT EXCEED RS.20,000, ACCORDING TO THE LD.DR, THERE CANNOT BE ANY QUESTION OF DISALLOWANCE AND DEDUCTION OF TAX. ACC ORDING TO THE LD.DR, THE PAYMENTS REFERRED TO AT PARAGRAPH 12 OF THE REMAND REPORT SHOWS THAT THE ASSESSEES HAS NOT DEDUCTED ANY TAX WITH REGARD TO T HE PAYMENT MADE TO CONTRACTORS. THEREFORE, THE ASSESSEES CANNOT CLAIM THE SAME AS AN EXPENDITURE. ACCORDING TO THE LD.DR, THE ASSESSING OFFICER FOUND THAT AS PER THE SEIZED RECORD RS.1,17,21,392 IS THE LAND EX PENDITURE FOR THE ASSESSMENT YEAR 2007-08. HOWEVER, OUT OF THIS ONLY RS.1,16,738 IS SUPPORTED BY MATERIAL. THEREFORE, ACCORDING TO THE LD.DR, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS RIGHTLY CONFIRMED BY THE ASSESSING OFFICER. 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FIRS T OBJECTION OF THE ASSESSEES IS THAT THE ASSESSMENT FRAMED U/S 153C HA S NO LEG TO STAND. ADMITTEDLY, THE SEARCH WAS CONDUCTED IN THE PREMISE S OF MOHIYUDDIN IS NONE OTHER THAN THE DIRECTOR OF BOTH THE COMPANIES. NO DOUBT, SHRI 20 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 MOHIYUDDIN WAS DESCRIBED AS MANAGING DIRECTOR IN TH E ASSESSMENT ORDER. A MERE WRONG DESCRIPTION OF THE DESIGNATION CANNOT BE A REASON TO FRUSTRATE THE ORDER OF ASSESSMENT. THIS TRIBUNAL I S OF THE CONSIDERED OPINION THAT THESE ARE RECTIFIABLE U/S 292B OF THE ACT. THEREFORE, THE ASSESSEES CANNOT TAKE ADVANTAGE ON THIS KIND OF MIS TAKES. 19. THE NEXT CONTENTION OF THE ASSESSEESS IS THAT T HE PRESENT ASSESSING OFFICER HAS NO JURISDICTION TO COMPLETE THE ASSESSM ENT IN THE CASE OF DAMAC HOLDINGS PVT LTD. ADMITTEDLY, THERE WAS A SE ARCH IN THE PREMISES OF ONE SHRI MOHIYUDDIN, WHO IS THE DIRECTOR IN THE COMPANY. DURING THE COURSE OF SEARCH OPERATION, MATERIAL DOCUMENTS RELA TING TO THE ASSESSEES WAS FOUND AND SEIZED. THEREFORE, FOR CONSOLIDATED ENQUIRY / INVESTIGATION, THE ASSESSMENTS OF THE ASSESSEESS WERE TRANSFERRED FROM BANGALORE TO ERNAKULAM. THE ASSESSEESS HAVE NOT CHALLENGED THE ORDER PASSED BY THE CONCERNED AUTHORITY TRANSFERRING THE CASE FROM BANG ALORE TO ERNAKULAM. ONLY BEFORE THE TRIBUNAL AT THE SECOND APPELLATE LE VEL, THE ASSESSEESS CONTEND THAT THE TRANSFER IS NOT MADE IN ACCORDANCE WITH LAW. THE FACT REMAINS IS THAT THE TRANSFER WAS MADE AFTER GIVING DUE NOTICE TO THE ASSESSEESS AS REQUIRED U/S 127 OF THE INCOME-TAX AC T FOR CONSOLIDATING ENQUIRY / INVESTIGATION. ONCE THE AUTHORITIES FOLL OWED THE DUE PROCESS FOR TRANSFERRING THE CASE FROM ONE CITY TO ANOTHER FOR THE PURPOSE OF EFFECTIVE 21 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 INVESTIGATION AND COMPLETION OF THE ASSESSMENTS BY ONE ASSESSING OFFICER, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CONTENTION OF THE ASSESSEESS HAS NO MERIT AT ALL. THEREFORE, THE PRE SENT ASSESSING OFFICER, WHO COMPLETED THE ASSESSMENT ORDER HAS JURISDICTION IN PURSUANCE TO THE ORDER PASSED BY THE CONCERNED AUTHORITY TRANSFERRIN G THE CASE U/S 127 OF THE INCOME-TAX ACT. 20. THE NEXT CONTENTION OF THE ASSESSEESS IS THAT T HE ORIGINAL ASSESSMENTS WERE MADE U/S 153C R.W.S. 153A OF THE A CT AND NO ORDER WAS PASSED U/S 153A OF THE ACT. ACCORDING TO THE LD.RE PRESENTATIVE, ASSESSMENTS SHOULD BE MADE ONLY U/S 153A OF THE ACT . THE ASSESSEES HAVE PRODUCED ANOTHER COPY OF THE ORDER SAID TO BE PASSED U/S 153C OF THE ACT IN THE COURSE OF THE PROCEEDINGS BEFORE THE TRIBUNAL. THE FACT REMAINS IS THAT THE SEARCH WAS IN THE CASE OF SHRI MOHIYUDDIN U/S 132A OF THE ACT AND MATERIAL WAS FOUND WITH REGARD TO THE P RESENT ASSESSEES. THEREFORE, THE PRESENT ASSESSEES ARE PERSONS OTHER THAN SEARCHED PERSON. THEREFORE, THE PROCEEDINGS HAD TO BE INITI ATED U/S 153C OF THE ACT. AFTER INITIATING PROCEEDINGS U/S 153C OF THE ACT, T HE ASSESSMENT PROCEEDINGS HAVE TO BE COMPLETED ONLY AS PER THE PR OCEDURE LAID DOWN IN SECTION 153A OF THE ACT. THEREFORE, MERELY BECAUSE THERE WAS AN OMISSION TO MENTION THE RELEVANT PROVISION OF LAW O R WRONG MENTIONING OF 22 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 THE PROVISIONS OF LAW THAT CANNOT BE A REASON TO IN VALIDATE THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY JUSTIFICATION IN THE CONTENTION OF THE LD.REPRE SENTATIVE FOR THE ASSESSEES. 21. THE NEXT CONTENTION OF THE ASSESSEES IS THAT TH E ASSESSING OFFICER HAS NOT RECORDED ANY SATISFACTION BEFORE TRANSFERRI NG THE FILE TO THE CONCERNED ASSESSING OFFICER IN INITIATING PROCEEDIN GS U/S 153C OF THE ACT. THE NON RECORDING OF THE SATISFACTION, ACCORDING TO THE LD.REPRESENTATIVE, VITIATE THE ASSESSMENT PROCEEDINGS. ADMITTEDLY, TH E CASES OF THE ASSESSEES WERE TRANSFERRED TO ERNAKULAM FOR CONSOLI DATED ENQUIRY BY ONE OFFICER. THEREFORE, THE ASSESSING OFFICER FOR THE PERSON SEARCHED, VIZ. SHRI MOHIYUDDIN AND THE ASSESSEES IS ONE AND THE SAME. THE KERALA HIGH COURT, AFTER REFERRING TO THE JUDGMENT OF THE APEX COURT IN MANISH MAHESHWARI VS ASSIST.COMMISSIONER OF INCOME-TAX & ANR (2007) 289 ITR 341 (SC) HELD THAT WHEN THE ASSESSING OFFICER IS SA ME FOR THE PERSON SEARCHED AND PERSON OTHER THAN SEARCHED RECORDING O F SATISFACTION MAY NOT BE NECESSARY SINCE THERE IS NO NECESSITY FOR HA NDING OVER THE ASSESSMENT RECORDS TO THE OTHER OFFICER. IN VIEW O F THE JUDGMENT OF THE KERALA HIGH COURT HOLDING THAT RECORDING OF SATISFA CTION MAY NOT BE NECESSARY IN CASE THE ASSESSING OFFICER IS ONE AND THE SAME FOR THE PERSON 23 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 SEARCHED AND THE PERSON OTHER THAN SEARCHED THERE I S NO NECESSITY FOR HANDING OVER THE ASSESSMENT RECORDS TO THE OTHER OF FICER.. IN THIS CASE, THE SAME ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT IN THE CASE OF SHRI MOHIYUDDIN AND ALSO IN THE CASE OF THE PRESENT ASSE SSEES. THEREFORE, THERE IS NO NECESSITY FOR THE ASSESSING OFFICER TO HANDOVER THE DOCUMENT TO ANOTHER ASSESSING OFFICER. IN SUCH CIRCUMSTANCES, AS HELD BY THE KERALA HIGH COURT, RECORDING OF SATISFACTION MAY NOT BE NE CESSARY. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY MERIT IN THE CONTENTI ON OF THE LD.REPRESENTATIVE FOR THE ASSESSEES. 22. NOW COMING TO DEVELOPMENT EXPENDITURE INCURRED BY BOTH THE ASSESSEESS FOR FILLING UP THE LAND, THE ASSESSING O FFICER REJECTED THE CLAIM OF THE ASSESSEESS MAINLY ON THE GROUND THAT THE VEN DOR HAS ALREADY CLAIMED A SIMILAR EXPENDITURE FOR FILLING UP THE LA ND @18,000 PER CENT. THE CONTENTION OF THE ASSESSEES IS THAT SEIZED MATERIAL FOUND IN THE COURSE OF SEARCH OPERATION DISCLOSES THE EXPENDITURE INCURRED BY BOTH THE ASSESSEES AND THE ASSESSING OFFICER HAS IGNORED THE SEIZED DO CUMENT WHILE REJECTING THE CLAIM OF THE ASSESSEES. THE ASSESSING OFFICER MAINLY PLACED HIS RELIANCE ON THE AGREEMENT SAID TO BE EXECUTED BY ON E SHRI NASEER ABBAS AND THE VENDORS. 24 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 23. WE HAVE CAREFULLY GONE THROUGH THE SAID AGREEME NT DATED 07-02- 2006, THE COPY OF WHICH IS AVAILABLE AT PAGE 17 OF THE PAPER BOOK. CLAUSE 6 OF THE SAID AGREEMENT READS AS FOLLOWS: 6. THE SCHEDULE PROPERTIES SHALL BE MEASURED BY TH E PARTIES WITH COMPETENT AUTHORITY BEFORE EXECUTION O F THE SALE DEED AS PER THE RE-SURVEY RECORDS AND A SKETCH OF T HE PROPERTIES SHALL BE GOT PREPARED, WHICH SHALL FORM PART OF THE SALE DEED TO BE EXECUTED BY THE VENDORS IN FAVOUR O F THE PURCHASER OR ITS NOMINEES. THE FIRST PARTY ALSO AG REES TO LEVEL THE PROPERTIES WHICH IS FILLED WITH WATER, TO BE LEVELED WITH RED EARTH AND CLEAN THE LAND TO MAKE IT SUITABLE FO R MEASURING ETC. 24. THE ABOVE AGREEMENT CLEARLY SAYS THAT THE VENDO R HAS TO FILL UP THE LAND WITH RED EARTH AND MAKE IT CLEAN SO AS TO SUIT ABLE FOR MEASUREMENT, ETC. THEREFORE, THE OBLIGATION OF THE VENDOR IS TO MAKE THE LAND SUITABLE FOR MEASUREMENT BY THE SURVEYOR. IT IS NOTHING MORE TH AN THAT. THE VENDOR CLAIMED RS.18,000 PER CENT FOR FILLING UP THE LAND WITH RED EARTH. THE ASSESSING OFFICER HAS NOT EXAMINED THE CORRECTNESS OF THE CLAIM MADE BY THE VENDOR. THE ASSESSEES CLAIM THAT THE VENDOR HA S NO SOURCE FOR MAKING SUCH INVESTMENT IN THE LAND. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THE ASSESSEES CLAIM THAT THE LAND WAS FILLED UP WITH RED EARTH AND MADE READY SO AS TO MAKE IT SALEABLE ONE, THE CLAIM OF THE 25 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 ASSESSEE HAS TO BE EXAMINED ON MERIT. THE OBLIGATI ON OF THE VENDOR IS TO MAKE THE LAND SUITABLE FOR MEASURING. THEREFORE, T HERE IS A LOT OF DISTINCTION BETWEEN THE OBLIGATION OF THE VENDORS A ND THE PRESENT ASSESSEES. MERELY BECAUSE THE VENDORS CLAIMED MUCH EXPENDITURE FOR FILLING UP THE LAND THAT CANNOT BE A REASON TO DISA LLOW THE CLAIM OF THE ASSESSEES ESPECIALLY WHEN DOCUMENTARY EVIDENCES ARE AVAILABLE WHICH WERE FOUND DURING THE COURSE OF SEARCH OPERATION. 25. WE HAVE ALSO CAREFULLY GONE THROUGH THE COPY OF THE AGREEMENT BETWEEN SHRI K.M SALIM AND NASEER ABBAS, ETC. AND T HE PRESENT ASSESSEES, THE COPY OF WHICH IS AVAILABLE AT PAGE 5 7 OF THE PAPER BOOK. THIS AGREEMENT WAS EXECUTED ON 25-11-2006. THE TER MS AND CONDITIONS OF THE AGREEMENT READ AS FOLLOWS: FIRST PARTY AGREED AND ASSURES THE SECOND PARTY T HAT THEY WILL PROVIDE RIGHT OF WAY TO THE SECOND PARTY FOR THE PURPOSE OF FILLING THE LAND WITH RED EARTH AND FOR THE FUTURE ENTRY TO THE PROPERTY TO THE SECOND PARTY OR THEIR NOMINEES. THE SECOND PARTY HAS AGREED TO PURCHASE THE NECESSA RY LAND FOR THE APPROACH ROAD AND THE CONSIDERATION PAID TO THE FIRST PARTY SHALL BE INCLUSIVE FOR THE CONSIDERATION FOR THE ESSENTIAL LAND TO BE TRANSFERRED FOR THE PURPOSE OF ROAD. 26 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 FROM THIS AGREEMENT IT IS OBVIOUS THAT THE ASSESSEE S HAVE TO ONLY FILL UP THE LAND AND THE VENDOR HAS TO PROVIDE RIGHT OF WAY ON THE BASIS OF THE AGREEMENT TO PURCHASE THE LAND FOR THE PURPOSE OF F ILING UP WITH RED EARTH. A SIMILAR AGREEMENT HAS ALSO BEEN ENTERED INTO WHIC H DISCLOSES THAT THE ASSESSEES HAVE TO FILL UP THE LAND. THEREFORE, IT IS OBVIOUS FROM THE AGREEMENT BETWEEN THE PARTIES, THE VENDOR HAS TO FI LL UP THE LAND SO AS TO MAKE THE LAND SUITABLE FOR MEASUREMENT BY THE SURVE YOR. HOWEVER, THE ASSESSEES HAD TO FILL UP THE LAND AND MAKE IT SUITA BLE FOR SALE. IN VIEW OF THIS, THIS TRIBUNAL IS OF THE CONSIDERED OPINION TH AT MERELY BECAUSE THE VENDORS CLAIMED RS.18,000 PER CENT FOR FILLING UP T HE LAND IT CANNOT BE A SUFFICIENT AND REASONABLE CAUSE TO DISALLOW ANY CLA IM IN THE HANDS OF THE PRESENT ASSESSEES. 26. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E ASSESSEESS HAVE FILED ESTIMATE FROM THE CONTRACTORS FOR FILLING UP THE LAND. THE CONTRACTORS ESTIMATED THE QUANTITY OF RED EARTH REQUIRED TO FIL L UP THE LAND AT 185604.025 CUBIC METRE. THE ASSESSEES HAVE ALSO PL OTTED THE LAND SUBSEQUENTLY. THE COPIES OF THE BANK STATEMENT AVA ILABLE ON PAPER BOOK AND THE LEDGER ACCOUNT CLEARLY ESTABLISHES THE PAYM ENT MADE BY THE ASSESSEES FOR FILLING UP THE LAND. THE SEIZED MATE RIAL DISCLOSES THE PAYMENT ON DAILY BASIS. THE PAYMENT MADE WAS OF LE SS THAN RS.20,000 TO 27 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 EACH PERSON, THEREFORE, THE PAYMENT DOES NOT REQUIR E ANY DEDUCTION OF TAX. EVEN THOUGH THE PAYMENT WAS MADE BY CASH, THE FACT REMAINS IS THAT THESE DOCUMENTS WERE SEIZED DURING THE COURSE OF SE ARCH OPERATION, THEREFORE, THE PRESUMPTION PROVIDED IN SECTION 132A (4) OF THE ACT IS VERY MUCH APPLICABLE. THEREFORE, THIS TRIBUNAL IS OF TH E CONSIDERED OPINION THAT IT IS FOR THE REVENUE TO REBUT THAT THE MATERIAL FO UND DURING THE COURSE OF SEARCH OPERATION DOES NOT RELATE TO THE EXPENDITURE INCURRED BY THE ASSESSEES. AS RIGHTLY SUBMITTED BY THE LD.REPRESEN TATIVE FOR THE ASSESSEES, THE CLAIM OF THE VENDORS WAS ACCEPTED WI THOUT ANY VERIFICATION WITH REGARD TO SOURCE FOR INVESTMENT AND GENUINENES S OF THE EXPENDITURE. THEREFORE, AS OBSERVED EARLIER, MERELY BECAUSE THE VENDORS CLAIMED EXPENDITURE @18,000 PER CENT FOR FILING UP THE LAND THAT ALONE CANNOT BE A REASON FOR DISALLOWING THE CLAIM OF THE ASSESSEES. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE EXPENDITURE FOR FILLING UP THE LAND TO MAKE IT SALEABLE CONDITION WAS INCURRED BY THE ASSESSEES, T HEREFORE, THE EXPENDITURE HAS TO BE ALLOWED IN THE HANDS OF THE P RESENT ASSESSEES. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY JUSTIFICAT ION ON THE PART OF THE ASSESSING OFFICER IN DISALLOWING THE CLAIM OF THE A SSESSEES. IN VIEW OF THE MATERIAL EVIDENCES WHICH WERE FOUND DURING THE COUR SE OF SEARCH OPERATION, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT BOTH THE ASSESSEES HAVE INCURRED THE EXPENDITURE FOR FILLING UP THE LAND WITH RED 28 ITA NO. 224 & 225/COCH/2012 ITA NO.230 & 231/COCH/2012 EARTH SO AS TO MAKE IT SALEABLE. THEREFORE, THE AS SESSING OFFICER IS NOT JUSTIFIED IN DISALLOWING THE CLAIM OF THE ASSESSEES . THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) OUGHT TO HAVE AL LOWED THE ENTIRE EXPENDITURE INSTEAD OF RESTRICTING THE SAME. ACCOR DINGLY, THE ORDERS OF LOWER AUTHORITIES ARE MODIFIED AND THE ASSESSING OF FICER IS DIRECTED TO DELETE THE ENTIRE ADDITION ON ACCOUNT OF DEVELOPMEN T EXPENDITURE CLAIMED IN THE HANDS OF BOTH THE ASSESSEES. 27. IN THE RESULT, DEPARTMENTAL APPEALS IN ITA NO.2 24 & 225/COCH/2012 ARE DISMISSED AND THE ASSESSEESS APPEALS IN ITA NO .230 & 231/COCH/2012 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 06 TH JUNE, 2014. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 06 TH JUNE, 2014 PK/- COPY TO: 1. M/S DAMAC HOLDINGS (P) LTD / M/S RIGHT HAND DEVE LOPERS INDIA (P) LTD, 32 & 33 / 2241A, CIVIL LANE ROAD, PALARIVATTOM, ERN AKULAM 2. THE DY.CIT, CENT.CIR.1, ERNAKULAM 3. THE COMMISSIONER OF INCOME-TAX, CENTRAL-KERALA, KOCHI 4. THE COMMISSIONER OF INCOME-TAX(A)-I, 2 ND FLOOR, SAN JUAN TOWERS, OLD RAILWAY STATION ROAD, ERNAKULAM NORTH, KOCHI-682 01 8 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH