ACIT, New Delhi V. M/s VMR Promoters P. Ltd., New Delhi

ITA 3112/DEL/2011

• Counselvise Citation: 311220114 RSA 2011
• Duration Of Justice: 2 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 12-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 10-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R S MEENA
• Keywords: Unexplained expenditure; Business income; Business expenditure; Search and seizure; Document seized; Speculation loss; Documents seized
• Section: 133A; 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI B.C. MEENA ITA NO. 3112/DEL/2011 ASSTT. YR: 2008-09 ACIT, CEN. CIRCLE-7, VS. M/S VMR PROMOTERS P. LTD. , NEW DELHI. 4/17B, MGF HOUSE, ASAF ALI ROAD, NEW DELHI. PAN: AACCV 2931 J ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI R.S. MEENA CIT (DR) RESPONDENT BY : SHRI G.C. SRIVASTAVA ADV. SHRI SAURABH SRIVASTAVA CA SHRI VIKRANT SURI CA O R D E R PER R.P. TOLANI, J.M: : THIS IS REVENUES APPEAL AGAINST CIT(A-1), NEW DEL HIS ORDER DATED 29-03-2011 PERTAINING TO A.Y. 2008-09. SOLE EFFECT IVE GROUND RAISED IS AS UNDER: WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS. 10,00,00,000/- MADE BY THE AO ON THE BASIS OF SURRENDER MADE DURIN G THE COURSE OF SEARCH. 2. BRIEF FACTS ARE: SEARCH AND SEIZURE OPERATIONS U/S 132 OF THE I.T. ACT, 1961 WERE CARRIED OUT AT THE BUSINESS PREMISES OF VARIOUS ENTITIES OF M/S EMAAR MGF GROUP. FROM THE SEIZED DOCUMENTS AO FOUND THAT SOME OF THEM PERTAINED TO THE ASSESSEE. BASED THEREON, A NOTICE U/S 153C WAS ISSUED ON THE ITA 3112/DEL/2011 M/S VMR PROMOTERS P. LTD. 2 ASSESSEE. IN RESPONSE TO THE NOTICE, ASSESSEE FILED A RETURN OF INCOME FOR A.Y. 2008-09 AT RS. 4,63,44,560/- ON 31-3-2009. 2.1. DURING THE COURSE OF SAID SEARCH AND SEIZURE O PERATIONS THE PREMISES OF THE CASHIER OF THE GROUP ONE SHRI N.D. MISHRA WA S ALSO COVERED. HIS STATEMENT ON OATH WAS RECORDED ON 12-9-2007 IN W HICH SHRI MISHRA CONFIRMED THAT ON TELEPHONIC DIRECTIONS OF SHRI RAJ EEV GUPTA AND SHRI PAWAN GUWAS RECEIVED, WHICH WAS USED TO BE DISBURS ED AS PER THE DIRECTIONS OF SHRI JEEWAN DHINGRA, WHO IS PART OF T HIS GROUP. IT WAS ALSO DEPOSED THAT IN RESPECT OF THESE CASH TRANSACTION S, NO BOOKS WERE WRITTEN BY HIM. FROM THE DOCUMENTS SEIZED, IT WAS FOUND THAT T HE ASSESSEE HAD SOLD MANY SHOPS IN SHALIMAR BAGH MALL AND THE PAPERS SEI ZED INCLUDED SHOP- WISE ON MONEY RECEIPT DETAILS WHICH WERE WRITTEN IN HAND ALONG WITH DATES AND CASH RECEIVED. SUBSEQUENTLY, THERE WAS A FIRE I N INCOME-TAX DEPARTMENTS PREMISES AND SOME PAPERS WERE DESTROYE D. THEREFORE, THE STATEMENT OF SHRI N.D. MISHRA WAS RE-RECORDED U/S 1 31 WHERE HE RATIFIED THE ABOVE STATEMENT MADE ON 12-9-2007 AND CONFIRMED THE PHOTO COPIES OF THESE SEIZED PAPERS. THE SAID SHOP-WISE LIST OF ON MONEY CASH RECEIVED IS REPRODUCED BY THE AO IN HIS ORDER. THEREAFTER THE G ROUP OFFERED DISCHARGE ADDITIONAL INCOME OF RS. 10 CRORES IN THE HANDS OF THE ASSESSEE VMR PROMOTERS. FROM THE SEIZED DOCUMENTS IT WAS FOUND T HAT THE ON MONEY CASH WAS USED FOR VARIOUS OUTGOINGS/ EXPENSES/ PAYMENTS AMOUNTING TO RS. 94,06,51,000/-. SOME OF THE RELEVANT FINDINGS RECOR DED BY THE AO ARE AS UNDER: THE EXAMINATION OF THE ABOVE STATEMENTS WILL LEAD ANY REASONABLE MIND TO AN INESCAPABLE CONCLUSION THAT C ASH RECEIPT IS A REGULAR FEATURE IN THE BUSINESS OF THE ASSESSE E. THE ABOVE VIEW HAS BEEN RE-CONFIRMED BY THE STATEMENT OF SH. SHARVAN ITA 3112/DEL/2011 M/S VMR PROMOTERS P. LTD. 3 GUPTA. MANAGING DIRECTOR, EMAAR MGF GROUP IN HIS ST ATEMENT RECORDED DURING AND AFTER THE DATE OF SEARCH. THE I NABILITY OF THE ASSESSEE TO GIVE PROPER EXPLANATION FOR THE DOC UMENTS FOUND AND SEIZED FROM NONE OTHER THAN THE CASHIER OF THE GROUP LEAD THE MANAGING DIRECTOR TO SURRENDER AN AMOUNT OF RS. L 0 CRORE ADDITIONAL INCOMES IN THE HANDS OF THE ASSESSEE COM PANY. IN THIS RESPECT, REFERENCE IS MADE TO THE STATEMENTS O F SHRI SHARVAN GUPTA RECORDED ON 12.09.2007 [U/S. 132(4)], 16.10.2007 (U/S. 131) AND 07.11.2007 [U/S 132(4)] WHEREIN HE HAS GIVEN A BIFURCATION OF THE SURRENDER OFRS.225 CRORES FOR TH E ENTIRE GROUP. THE RELEVANT PORTION OF THE STATEMENT RECORD ED ON 16.10.2007 IS AS UNDER: I WOULD LIKE TO BIFURCATE OUR OVERALL INCOME OF RS.22 5 CRORES AS UNDER: RS.160 CRORE AS INCOME (NET OF BROUGHT FORWARD LOSS ES) FOR CURRENT FINANCIAL YEAR I.E. 2007-08 IN M/S. EMA AR MGF LAND LTD. WHICH HAS RESULTED FROM RECOGNITION OF REVENUE BY FOLLOWING PERCENTAGE COMPLETION METHOD OF ACCOUNTING. THE REMAINING RS.65 CRORES AS INCOME IN THE BOOKS O F OTHER EMAAR MGF GROUP OMPANIES/CONCERNS/INDIVIDUALS AND OTHER ENTITIES ON THE BASIS OF MATERIAL FOUND A ND SEIZED DURING THE SEARCH OPERATIONS AND CHANGE IN METHOD OF ACCOUNTING. THE DETAILS OF THE SAME SHALL BE PROVIDED AFTER VERIFICATION OF THE RECORDS THE DETAILS AS MENTIONED ABOVE IN THE STATEMENT WER E FURNISHED BEFORE THE DEPUTY DIRECTOR OF INCOME TAX (INTELLIGENCE)-I BY THE AUTHORISED REPRESENTATIVE O F EMAAR MGF LAND PVT. LTD. ON 07.11.2007. THE BIFURCATION OF THE SURRENDER HAS BEEN ANNEXED TO TH E ABOVE LETTER AS ANNEXURE-L WHICH IS AS UNDER: NAME OF THE ASSESSEE AMOUNT (RS.)IN CRORES ITA 3112/DEL/2011 M/S VMR PROMOTERS P. LTD. 4 MGF DEVELOPMENTS LIMITED 20 COLUMBIA HOLDINGS PRIVATE LIMITED 10 MOONLIGHT CONTINENTAL PRIVATE LIMITED 10 VMR PROMOTERS PRIVATE LIMITED 10 OTHERS INCLUDING ASSOCIATE COMPANIES, SUBSIDIARIES, FIRMS, INDIVIDUALS ETC. SINCE COPIES OF THE DOCUMEN TS ETC. SEIZED/ IMPOUNDED BY THE INCOME TAX DEPARTMENT UNDER SECTION 132 AND 133A OF THE INCOME TAX ACT, 1961 HAVE NTO BEEN RECEIVED BY US. 15 TOTAL 65 7. THE PRESENCE OF DOCUMENTS AND THE CONSEQUENT AUTHENTICATION OF THE SAME BY THE CASHIER OF THE EM AAR MGF GROUP WHICH ULTIMATELY RESULTED IN ADMISSION OF RS. 10 CRORE ADDITIONAL INCOME IN THE HANDS OF THE ASSE SSEE IS CONCLUSIVE OF THE PRESUMPTION THAT CASH/ON-MONEY HA S BEEN RECEIVED IN RESPECT OF SALE OF SHOPS IN SHALIM AR BAGH MALL AND THE ABOVE CASH HAS NOT BEEN RECORDED IN THE BOOKS OF THE ASSESSEE. THE TREATMENT OF THE ABO VE CASH AS ADVANCE FROM CUSTOMERS BY THE ASSESSEE IN I TS RETURN OF INCOME RAISES A MOOT QUESTION RELATING TO THE TREATMENT OF ON-MONEY IN THE BOOKS OF THE ASSESSEE AND ITS TAXABILITY. 7.1 BEFORE THE CENTRAL QUESTION IS ADDRESSED IT SHA LL NOT BE OUT OF PLACE TO THROW SOME LIGHT ON THE PREVAILING BUSI NESS PRACTICES ON RECEIVING/GIVING OF CASH AS CONSIDERAT ION IN ADDITION/CONTRADISTINCTION TO CHEQUE/DRAFT AS PAYME NTS. ON MONEY PAYMENT IN COMMERCIAL PROJECTS IS ALL PERVASI VE. IN FACT, IT IS CONSIDERED AS ONE OF THE MODES WHERE BLACK MO NEY GENERATED BY NOT PAYING PROPER TAXES TO THE GOVERNM ENT IS ABSOLVED. GENERAL UNWRITTEN/INFORMAL PRACTICES PREV AILING IN THE SALE/PURCHASE OF COMMERCIAL PROPERTIES INDICATE THAT THE PROPORTION OF CASH PAYMENT IN THE TOTAL SALE CONSID ERATION IS DECIDED AT THE TIME WHEN THE FIRST ADVANCE IS GIVEN . IN MOST OF THE CASES, THE CASH COMPONENT OF THE TOTAL CONSIDER ATION IS RECEIVED ALONG WITH THE FIRST ADVANCE THOUGH, THE A CTUAL PROPORTION OF CASH IN THE TOTAL SALE CONSIDERATION MAY VARY FROM BUILDER TO BUILDER. THE FACT THAT THE CASH COM PONENT IS ITA 3112/DEL/2011 M/S VMR PROMOTERS P. LTD. 5 ALWAYS OUT OF THE BOOKS NO EXPENSE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS CAN BE SAID TO HAVE BEEN INCURRED OUT OF THE CASH RECEIPTS. IN OTHER WORDS, ANY ATTEMPT BY ANY ASSESSEE TO ADJUST BUSINESS EXPENSES OUT OF THE CASH RECEIPTS, BY SHOWING THE CASH AS ADVANCE FROM CUSTO MERS, NEEDS TO BE DISCOURAGED IN THE INTEREST OF REVENUE. 7.2 IT IS A WELL ESTABLISHED PRESUMPTION THAT ANY C ASH FOUND DURING SEARCH, FOR WHICH SUPPORTIVE DOCUMENTS WERE ALSO FOUND, IS WITHOUT ANY ENCUMBRANCE MEANING THEREBY T HE CASH HAS TO BE TAXED IN ITS ENTIRETY. IN THE CASE AT HAN D, THE TYPED SHEET THAT WAS FOUND IN THE CABIN OF SH. N.D. MISHR A, CASHIER OF THE ASSESSEE GROUP, HAVING NEARLY 30 YEARS OF WORK EXPERIENCE IN THE GROUP, HAD THE DETAILS INCLUDING THE DATES O F RECEIPT, SHOP NO, RESPECTIVE AMOUNTS ETC. THE IMPUGNED AMOUNTS AR E NOT REFLECTED IN THE BOOKS OF THE ASSESSEE. NO OTHER DO CUMENTARY EVIDENCE COULD BE PRODUCED AT THE TIME OF SEARCH WH ICH COULD HAVE THROWN LIGHT ON THE FACT THAT THE RESPECTIVE A MOUNTS MENTIONED IN THE TYPED SHEET IS REALLY ACCOUNTABLE. IT NEED NOT BE EMPHASIZED THAT ALL UNACCOUNTED RECEIPTS ARE TO BE TAXED IN ITS ENTIRETY. IN THE LIGHT OF THE ABOVE DISCUSSION, ASSESSEE'S CONTENTION THAT IT HAS RECEIVED ADVANCE FROM CUSTOM ERS DESERVES TO BE REJECTED BEING DEVOID OF ANY MERIT A ND AN AFTER- THOUGHT. 8. DURING THE YEAR THE ASSESSEE HAS RECEIVED AN AMO UNT OF RS.27.21 CRORE FROM ANOTHER COMPANY UNDER THE SAME MANAGEMENT I.E. MIS. MGF DEVELOPMENT LTD. AS CONSIDERATION FOR SALE OF CERTAIN PART OF THE PROJE CT CALLED MGF MARKET PLACE. IF THE CONTENTION OF THE ASSESSEE IS CONSIDERED AS TRUE REGARDING CASH RECEIPT AS ADVANCE FROM CUSTOME RS THEN THERE SHALL BE APPARENT DISCREPANCY BETWEEN PER SQU ARE FEET RATE FOR A CUSTOMER AND FOR MGF DEVELOPMENT LTD. TH E ABOVE FACT SHALL INDICATE THAT EITHER CASH HAS BEEN RECEI VED OUT OF BOOKS OR UNDUE ADVANTAGE HAS BEEN PASSED TO THE SIS TER CONCERN OF THE ASSESSEE. EVIDENCE WAS FOUND DURING THE SEARCH REGARDING THE FIRST PART OF THE PROPOSITION CASH BEING RECEIVED OUT OF BOOKS THE SAME HOLDS GOOD. 9. THE STATEMENT OF SHRI SHARVAN GUPTA WAS RECORDED U/S. ITA 3112/DEL/2011 M/S VMR PROMOTERS P. LTD. 6 132(4) OF THE INCOME TAX ACT. THE EVIDENTIARY VALUE OF A STATEMENT RECORDED ON OATH CAN ONLY BE REBUTTED BY BRINGING INTO RECORD COMPELLING DOCUMENTS, OTHERWISE THE PRE SUMPTION OF TRUTH IN FAVOUR OF AVERMENTS MADE IN THE STATEME NTS STANDS. IN THE CASE AT HAND, NOTHING HAS BEEN BROUGHT ON RE CORD WHICH CAN COUNTER THE STATEMENT OF EITHER SH. N.D. MISHRA OR SH. SHARVAN GUPTA RELATING TO THE CONTENTS OF THE TYPED SHEET FOUND DURING THE SEARCH. 2.2. IT SHALL BE PERTINENT TO MENTION THAT IN THE R ETURN OF INCOME FILED U/S 153C, ASSESSEE DEVIATED FROM SURRENDER OF ADDITION AL INCOME OF RS. 10 CRORES. IT WAS CLAIMED THAT ASSESSEE WAS FOLLOWING PERCENTAGE COMPLETION METHOD AND SINCE 57.65% OF WORK WAS COMPLETED, THE ASSESSEE OFFERED ONLY 57.65% OF THE ON MONEY RECEIVED AS INCOME AMOUNTING TO RS. 4.605 CRORES. CURIOUSLY AT THE SAME TIME ASSESSEE ENTERED AN AMOU NT OF RS. 10 CRORES IN ITS BOOKS OF ACCOUNTS QUA THE SURRENDER. THUS, IN EFFE CT WHAT ASSESSEE DID WAS TO INTRODUCE CREDIT IN ITS BOOKS OF ACCOUNTS FOR R S. 10 CRORES AND WHILE WORKING OUT THE PROFIT ON THE BASIS OF PERCENTAGE C OMPLETION METHOD IT OFFERED AN AMOUNT OF RS. 4.605 CRORES AS INCOME IN ITS P&L A/C. AO FOUND THAT FACTUALLY THE ON MONEY RECEIVED FROM SALE OF S HOPS WAS ALREADY UTILIZED BY THE ASSESSEE IN THE UNEXPLAINED EXPENDITURE, WHI CH IS ACCEPTED BY ASSESSEE. ON THESE INCONSISTENCIES HE WAS OF THE VI EW THAT ENTIRE AMOUNT OF RS. 10 CRORES SURRENDERED BY THE ASSESSEE OUGHT TO BE TAXED IN THIS YEAR BY FOLLOWING OBSERVATIONS: 10.1 IT MAY BE MENTIONED HERE THAT ON MONEY RECEIVE D IN CASH CANNOT NEVER FROM PAN OF BUDGETED EXERCISE. MEANING THEREBY CASH COMPONENT CANNOT BE TAKEN TO THE CONTRACT SALE VALUE. SIMILARLY, ANY UNACCOUNTED EXPENSE INCURRED CAN ALS O NOT BEEN TAKEN TO THE COST OF PROJECT. IT NEEDS TO BE EMPHAS IZED HERE THAT PART OF THE PROJECT HAD BEEN SOLD FOR ONLY CHEQUE V ALUE OF CONSIDERATION TO THE SISTER CONCERN OF THE ASSESSEE M/S MGF DEVELOPMENT LIMITED GIVING UNDER ADVANTAGE TO THE S ISTER ITA 3112/DEL/2011 M/S VMR PROMOTERS P. LTD. 7 CONCERN. AS PER THE ACCOUNTING PRINCIPLE FOLLOWED, THE ENTIRE ON MONEY AMOUNTING TO RS. 94L.25 LACS. (SURRENDERED RS . 10 CRORES) IS REQUIRED TO BE SEPARATELY TAXED IN A.Y. 2008-09. 10.2 AS PER ANOTHER WORKING IF PROFITABILITY OF THE PROJECT IS COMPUTED (ANNEXURE -B) WITHOUT TAKING INTO ACCOUNT THE CASH COMPONENT, THE LOSS FROM THE PROJECT WORKS OUT TO B E RS. 79.85 LACS. WITH THE ABOVE OBSERVATION THE TAXABLE INCOME OF THE ASSESSEE IS COMPUTED AS BELOW: LOSS AS PER WORKING (RS. 79,85,102/-) IN (ANNEXURE B) ADD: ON MONEY RECEIVED IN CASH RS. 10,00,00,000/- RS. 9,20,14,898/- 2.3. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL, WH ERE CIT(A) DELETED THE ADDITION BY FOLLOWING OBSERVATIONS: I HAVE CAREFULLY GONE THROUGH THE SUBMISSION AND THE SEIZED PAPERS INCLUDING THE STATEMENTS OF MR. SHRAVAN GUPTA AND MR. N.D. MISHRA. BASED UPON THE DOCUMENTS AND THE ASSESSING OFFICER'S OBSERVATIONS AT DIFFERENT PLACES IN THE O RDER THAT HAVE BEEN QUOTED BY THE ASSESSEE IN ITS SUBMISSIONS, I AM OF THE VIEW THAT THE ASSESSEE IS RIGHT IN CONTENDING THAT NATURE OF CASH RECEIPTS / ON MONEY WAS IN NO WAY DIFFERENT FROM THE ACCOUNTED SALE CONSIDERATION OF SHOPS IN THE MALL. THE ASSESSING OFFICER HAS NOT DISPUTED THE SOURCE OF CA SH RECEIPTS. SINCE ADMITTEDLY, THE SOURCE OF CASH RECEIPTS / ON MONEY WAS SALE OF SHOPS, THEREFORE, NATURE OF CASH RECEIPTS IS NOTHING BUT CONSIDERATIO N RECEIVED ON SALE OF SHOPS, THOUGH THE SAME WAS NOT DISCLOSED. HAD THERE BEEN NO SALE OF SHOPS, THERE WOULD NOT HAVE BEEN ANY CASH RECEIPTS. THE DECISION IN THE CASE OF ITO V. DR. KOSHY GEORGE REFERRED TO IN THE SUBMISSIONS IS SQUARELY APPLICABLE TO THE FACTS OF PRESENT CASE. THE REASONS, SUCH AS, UNDUE ADVANTAGE ITA 3112/DEL/2011 M/S VMR PROMOTERS P. LTD. 8 TO GROUP COMPANY AND THAT THE CASH COMPONENT WAS NOT PART OF BUDGETED EXERCISE CANNOT IMPRINT DIFFERENT COLOUR TO THE NATURE OF CASH RECEIPT. ONCE THE SOURCE OF RECEIPTS IS TRACEABLE, THE SAME CANNOT BE IGNORED, SIMPLY FOR THE REASON THA THE CA SH RECEIPTS WERE SURRENDERED. ON SURRENDER OF ANY INCOME, THE NATURE OF INCOME DOES NOT CHANGE. THE ASSESSING OFFICER HAS GIVEN NO COGENT REASON TO BRI NG TO TAX TH4E AMOUNT SURRENDERED AS SUCH. SURRENDER O F RS. 10,00,00,000/- WAS AD HOC AND WAS MADE WITHOUT BEING ALIVE TO THE FACTUAL POSITION BASED ON SYSTEM OF ACCOUNTING. THEREFORE, SIMPLY ON THE BASIS OF SURRENDER, THE ENTIRE AMOUNT OF CASH RECEIPTS OF RS . 10 CR. CANNOT BE BROUGHT TO TAX AS INCOME FOR THE ASSESSMENT YEAR IN QUESTION AND THAT TOO AS INCOME FROM OTHER SOURCES, THOUGH THE HEAD OF INCOME HAS NOT BEEN SPECIFICALLY STATED BY THE ASSESSING OFFIC ER. THERE IS NOTHING IN THE ASSESSMENT ORDER TO COME TO THE CONCLUSION THAT THE AMOUNT OF SURRENDER OF RS. 10,00,00,000/- WAS TAXABLE FOR THE PRESENT ASSESSMENT YEAR. CASH RECEIPTS BEING RELATABLE TO BUSINESS OF PROPERTY DEALING CAN ONLY BE BROUGHT TO TAX AS BUSINESS INCOME. THE ASSESSING OFFICER HAS N OT DISPUTED THAT THE PROJECT WAS COMPLETE ONLY TO THE EXTENT OF RS. 57.65%. ACCORDINGLY, SURRENDER OF CAS H RECEIPTS MADE BY THE ASSESSEE BASED ON PERCENTAGE COMPLETION METHOD WAS CORRECT. RATIO OF DECISION OF DHANVARSHA BUILDERS & DEVELOPERS V. DCIT THAT INCOME IS TO BE COMPUTED AS METHOD OF ACCOUNTING IS APPLICABLE. THEREFORE, THE ACTION OF ASSESSING OFFI CER IN BRINGING TO TAX THE AMOUNT OF RS. 10 CRORE AS AGAINST RS. 4,60,51,254/- TAKEN INTO CONSIDERATION BY THE APPELLANT BASED ON SYSTEM OF ACCOUNTING CANNOT BE SUSTAINED. HENCE, ADDITION OF RS. 10,00,00,000/- MADE BY THEAO IS DELETED. 2.4. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. ITA 3112/DEL/2011 M/S VMR PROMOTERS P. LTD. 9 3. LD. DR VEHEMENTLY ARGUES THAT LD. CIT(A) HAS TOT ALLY MIS-CARRIED HIMSELF BY DELETING THE ADDITION. THE ORDER IS ASSA ILED ON VARIOUS GROUNDS: (I) IF THE ADDITION OF RS. 10 CRORES IS DELETED AND THE EFFECT THEREOF IS GIVEN TO THE COMPUTATION OF INCOME MADE BY AO, IN T HAT CASE WHAT REMAINS TO BE ASSESSED IS A LOSS OF RS. 79,85,102/- AS PER ANNEXURE B APPENDED BY THE ASSESSING OFFICER WITH HIS ORDE R, WHEREAS THE INCOME RETURNED BY THE ASSESSEE ITSELF IS RS. 4,63, 44,560/-. (II) CIT(A)S ORDER IS UNSUSTAINABLE AS HAVING BEEN PASS ED WITHOUT PROPER APPLICATION OF MIND. LD. CIT(A) HAS RELIED O N VARIOUS CASE LAWS INSTEAD OF APPRECIATING THE FACTS PROPERLY. IT IS ADMITTED BY THE ASSESSEE ITSELF THAT ON MONEY RECEIVED FROM SHALI MAR BAGH MALL AMOUNTED TO RS. 9,41,25,350/-; AS OUT OF WHICH A N AMOUNT OF RS. 9,40,65,000/- IS SPENT TOWARDS THE EXPENSES. THUS, ASSESSEE VIRTUALLY HAD SURPLUS CASH OF ONLY RS. 60,350/- (9, 41,25,350 9,40,65,000). ASSESSEE HAD NOT ONLY UNDISCLOSED INC OME MENTIONED ABOVE BUT UNDISCLOSED EXPENDITURE; WHICH DEMONSTRATES THAT THE ON MONEY CASH WAS UTILIZED BY THE ASSESSEE IN THE YEAR ITSELF. THE UNRECORDED EXPENDITURE HAS NOT BEEN CLAIMED BY THE ASSESSEE OUT OF ITS OWN VOLITION. IN THIS S CENARIO THE ASSESSEE HAD NO CASH AVAILABLE AND NO OCCASION TO C REDIT AN AMOUNT OF RS. 10 CRORES AS INCOME IN ITS BOOKS OF ACCOUNTS . IT CLEARLY OFFERED ONLY RS. 4.605 CRORES IN COMPUTATION OF INC OME ON PERCENTAGE COMPLETION METHOD. THUS, THE ASSESSEE OU GHT NOT TO HAVE CREDITED CASH OF RS. 10 CRORES IN BOOKS OF ACC OUNTS, AS THIS CASH WAS NEVER AVAILABLE WITH ASSESSEE. CIT(A) WITH OUT APPRECIATING THESE CRUCIAL FACTS AND BEING OBLIVIOU S OF THE IMPACT ITA 3112/DEL/2011 M/S VMR PROMOTERS P. LTD. 10 OF THE FACT OF UNJUSTIFIED CREDIT OF RS. 10 CRORES IN BOOKS OF ACCOUNTS WENT AHEAD TO GIVE THE RELIEF. (III) IT IS PLEADED THAT IT IS A WORKMANSHIP OF CLANDEST INE WORKING BY THE ASSESSEE TO CAMOUFLAGE THE TRANSACTION AND DERI VE UNDUE BENEFITS OF (A) CREDITING 10 CRORES IN BOOKS OF A CCOUNTS; AND (B) INSTEAD OF OFFERING RS. 10 CRORES AS ADDITIONAL INC OME DECLARED ONLY RS. 4,63,44,560/-. BESIDES, THERE IS NO AVAILA BLE CASH TO BE ENTERED IN THE ACCOUNTS BY BOOK ENTRIES. THUS, IN R EAL TERMS THE CASH WHICH WAS ALREADY SPENT COULD HAVE NEVER BEEN RECORDED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS. THUS, APART FROM THE INCOME OFFERED ON THE BASIS OF VOLUNTARY DECLARATION OF IN COME WHICH IS NOT DISPUTED BY THE ASSESSEE, THE CREDITED AMOUNT OF RS. 10 CROERS ENTERED IN ACCOUNTS ALSO DESERVES TO BE TAXED. 3.1. LD. CIT(DR) VEHEMENTLY ARGUES THAT HONBLE SUP REME COURT IN THE CASE OF KAPOOR CHAND SHRIMAL 131 ITR 451 HAS MANDAT ED THAT IT IS THE DUTY OF THE APPELLATE AUTHORITIES IN INCOME-TAX LAW TO E NSURE THAT A PROPER AND FAIR ASSESSMENT IS MADE BY THE ASSESSEE AND WHILE D OING SO THEY CAN CORRECT ALL THE ERRORS COMMITTED BY THE LOWER AUTHORITIES I N ASSESSMENT PROCEEDINGS. IT IS PLEADED THAT THE CIT(A) INSTEAD OF OBJECTIVEL Y DEALING WITH THE ISSUES OF APPEAL AND DISCHARGING HIS DUTIES OF EXERCISING CO- TERMINUS POWER OF AO; MERELY BY RELYING ON VARIOUS CASE LAWS ALLOWED THE RELIEF. 4. LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, PLEADS THAT THE LD. CIT(DR) IS MAKING OUT A NEW CASE AND RELIED ON HON BLE CALCUTTA HIGH COURT JUDGMENT IN THE CASE OF ITO VS. R.L. RAJGHORI A 119 ITR 872, HOLDING AS UNDER: THERE CAN BE NO DOUBT THAT THE TRIBUNAL HAS THE PO WER TO REMANDING A CASE TO THE AAC OR THE INCOME-TAX OFFIC ER, AS THE ITA 3112/DEL/2011 M/S VMR PROMOTERS P. LTD. 11 CASE MAY BE, REQUIRING HIM TO HOLD FURTHER ENQUIRY AND TO DISPOSE OF THE CASE ON THE BASIS OF SUCH ENQUIRY. B UT THE JURISDICTION OF THE TRIBUNAL IS CONFINED ONLY TO TH E SUBJECT- MATTER OF THE APPEAL. IN THE INSTANT CASE, THE QUESTION AS TO WHETHER THE LOSS WAS SPECULATIVE LOSS WAS THE ONLY QUESTION WHICH WAS SO UGHT TO BE AGITATED BEFORE THE TRIBUNAL. ADMITTEDLY, THE QUEST ION WHETHER THE LOSS WAS A CAPITAL LOSS W3AS NEITHER INCLUDED I N THE GROUNDS TAKEN BEFORE THE TRIBUNAL ORIGINALLY, NOR PERMITTED TO BE TAKEN SUBSEQUENTLY, BY THE TRIBUNAL. THE TRIBUNAL IN DECI DING THE CASE WENT OUT OF ITS WAY AND THOUGH THE QUESTION WH ETHER THE LOSS WAS A CAPITAL LOSS WAS NOT WITHIN THE SCOPE O F ITS AUTHORITY DID TAKE UP THAT QUESTION AND THE DETERMINATION OF THAT QUESTION NECESSITATED THE SENDING OF THE CASE ON REMAND TO T HE AAC. IN THE CIRCUMSTANCES AFORESAID, THE TRIBUNAL EXCEEDED ITS JURISDICTION IN REQUIRING THE AAC TO DECIDE THE QUE STION WHETHER THE LOSS WAS A CAPITAL LOSS OR A REVENUE LO SS. 4.1. THIS APPEAL WAS EARLIER HEARD AND THEREAFTER R EFIXED FOR CLARIFICATION OF RELEVANT QUERIES. DURING THE COURSE OF REFIXED HEAR ING, QUERIES WERE RAISED TO THE COUNSEL OF THE ASSESSEE WHO WAS ASSISTED BY CHARTERED ACCOUNTANTS OF THE ASSESSEE - WHEN THE ON MONEY RECEIVED FROM V ARIOUS SHOPS WAS ALREADY SPENT BY WAY OF UNRECORDED EXPENDITURE, THE RE WAS AVAILABILITY OF MEAGER CASH AMOUNTING TO RS. 60,350/-, A FACT WHICH IS NOT DISPUTED. WHEN ONLY THE CASH OF RS. 60,350/- WAS AVAILABLE, IN THA T SITUATION HOW THE ENTRY OF RS. 10 CRORES IS MADE IN THE BOOKS OF ACCOUNT? 4.2. IN REAL TERMS IT MEANS THAT THE ASSESSEE ON ON E HAND DECLARED THE INCOME OF RS. 4,63,44,560/- AGAINST THE DECLARED IN COME OF RS. 10 CRORES. BESIDES THE CASH OF RS. 10 CRORES BEING AVAILABLE, THE ASSESSEE HAS SOME ITA 3112/DEL/2011 M/S VMR PROMOTERS P. LTD. 12 HOW ENTERED IN THE BOOKS OF ACCOUNTS AN ENTRY OF RS . 10 CRORES. THE TEAM OF ASSESSEES REPRESENTATIVES, COULD NOT GIVE A SATISF ACTORY REPLY TO THESE PERTINENT QUERIES BEFORE US. THUS THE RELEVANT QUE STION AND QUERIES REMAIN UNANSWERED AT THE TIME OF HEARING. 4.3. ON MERITS, LD. COUNSEL FOR THE ASSESSEE CONTEN DS THAT IT IS NOT DISPUTED THAT ASSESSEE IS FOLLOWING PERCENTAGE COMPLETION ME THOD. IN THIS SITUATION ON MONEY EARNED BY THE ASSESSEE TOWARDS THE SALE PRICE IS TO BE LOGICALLY TAXED ON THE PERCENTAGE COMPLETION METHOD. SINCE TH E SALE PROCEEDS INCLUDING ON MONEY ARE TO BE TAXED ON THE PERCENTA GE COMPLETION METHOD I.E. TO THE EXTENT OF 57.65%, WHICH IS SHOWN BY THE ASSESSEE. THE ADDITION DELETED BY THE CIT(A) IS JUSTIFIED. IN SUPPORT, FUR THER RELIANCE IS PLACED ON THE ORDERS OF ITAT IN THE CASES OF ITO VS. DR. KOS HY GEORGE 190 TAXMAN 4 (COCH.)(MAG.); AND DHANVARSHA BUILDEERS & DEVELOP ERS (P) LTD. VS. DCIT 102 ITD 375 (PUNE). 5. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN OUR CONSIDERED OPINION, LD . CIT(A) HAS FAILED TO CONSIDER THE REAL ISSUES AND PECULARITIES OF SURREN DER AND BOOK ENTRIES INVOLVED IN THIS PECULIAR CASE. IN THESE FACTS AND CIRCUMSTANCES, ORDER OF LD. CIT(A) CANNOT BE SUSTAINED ON FOLLOWING GROUNDS: ITA 3112/DEL/2011 M/S VMR PROMOTERS P. LTD. 13 (I) THERE IS NO CASE OF DELETING THE ADDITION OF RS. 10 CRORES AS IF THE EFFECT IS GIVEN TO THE CIT(A)S ORDER, THEN ASSESSE D INCOME COMES TO A LOSS OF RS. 79,85,102/- AS AGAINST INCOME OF R S. 4,63,44,560/-. (II) WE FIND MERIT IN THE ARGUMENT OF LD. DR THAT EVEN I F THE ISSUE OF PERCENTAGE COMPLETION METHOD IS KEPT ASIDE, THERE I S ABSOLUTELY NO JUSTIFICATION IN THE ACT OF THE ASSESSEE CREDITING AN AMOUNT OF RS. 10 CRORES TOWARDS THE SURRENDER IN ITS BOOKS OF A/C S. THIS IS SO BECAUSE IT IS DEMONSTRATIVELY APPARENT OUT OF CASH ON MONEY OF RS. 9.41 CRORES APPEARING FROM SEIZED PAPERS AN AMO UNT OF RS. 9.40 CRORS STANDS UTILIZED LEAVING A MEAGER BALANC E OF RS. 60,350/- IN HAND AS ON 31-8-2007. THESE FIGURES ARE DEMONSTRATIVELY MENTIONED BY AO IN HIS ORDER. WHE N ASSESSEE HAD ONLY MEAGER CASH BALANCE, IT IS NOT UNDERSTANDA BLE AS TO HOW ASSESSEE CAN CREDIT RS. 10 CRORES IN HIS BOOKS. PRI MA FACIE WE SEE NO JUSTIFICATION IN THE ASSESSEES ACT OF CREDITING AN AMOUNT OF RS. 10 CRORES IN ITS BOOKS OF A/CS. IN OTHER WORDS IT M AY AMOUNT TO INCOME OF THE ASSESSEE AS UNEXPLAINED INCOME IN THE ABSENCE OF AVAILABILITY. 5.1. IN OUR CONSIDERED VIEW, THE ISSUES IN QUESTION HAVE NOT BEEN PROPERLY CONSIDERED BY THE LD. CIT(A). BESIDES OUR QUERY COU LD NOT BE SATISFACTORILY ITA 3112/DEL/2011 M/S VMR PROMOTERS P. LTD. 14 EXPLAINED BY THE REPRESENTATIVE TEAM OF THE ASSESSE E INCLUDING ITS CHARTERED ACCOUNTANT AT THE TIME OF HEARING. THE PERTINENT QUERIES WERE ASKED FROM THE ASSESSEES TEAM SPECIFICALLY. IN RESPONSE THER EOF THE TEAM OF CAS REPRESENTING BEFORE US COULD NOT EXPLAIN THESE FACT S. IN THESE FACTS AND CIRCUMSTANCES AND IN ORDER TO GIVE THE ASSESSEE A FAIR CHANCE OF HEARING, WE ARE INCLINED TO SET ASIDE THE MATTER BACK TO THE FI LE OF AO TO DECIDE THE ASSESSMENT AFRESH AFTER PROVIDING ADEQUATE OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE, IN ACCORDANCE WITH LAW. 5.2. APROPOS THE PLEA OF THE ASSESSEE THAT THE ITAT CANNOT ENHANCE THE INCOME, IN VIEW OF HONBLE CALCUTTA HIGH COURT JUDG MENT IN THE CASE OF R.L. RAJGHORIA (SUPRA), WE MAY MENTION THAT THE CAS E IS CLEARLY DISTINGUISHABLE. BENCH HAS GIVEN A FAIR AND ELABORA TE CHANCE TO THE TEAM OF CAS OF THE ASSESSEE TO EXPLAIN THESE FACTS AND INCO NSISTENCIES. THEY HAVE NOT BEEN ABLE TO OFFER ANY JUSTIFIABLE EXPLANATION ABOU T THE CREDIT OF RS. 10 CRORES. BESIDES, HONBLE SUPREME COURT IN THE CASE OF KAPOOR CHAND SHRIMAL (SUPRA) HAS HELD THAT THE APPELLATE AUTHORI TY HAS TO ENSURE THAT A FAIR AND PROPER ASSESSMENT IS MADE. BESIDES, THE APPELLA TE AUTHORITY CAN CORRECT THE MISTAKES COMMITTED BY LOWER AUTHORITIES. SINC E ASSESSEE COULD NOT EXPLAIN THE ENTRIES IN ITS OWN BOOKS DESPITE OPPORT UNITY AND IN OUR CONSIDERED VIEW THE CIT(A) HAS NOT APPRECIATED THE MATTER IN PROPER ITA 3112/DEL/2011 M/S VMR PROMOTERS P. LTD. 15 MANNER, TO REVERSE HIS ORDER WILL AMOUNT TO HARDSHI P TO THE ASSESSEE. LD. CIT(A) DOES NOT HAVE POWER OF SETTING ASIDE AND HAS AGAIN TO CALL FOR A REMAND REPORT FROM ASSESSING OFFICER WHICH ENTAILS IN PROLIFERATION OF PROCEEDINGS. IN THE INTEREST OF SUBSTANTIAL JUSTICE , WE DEEM IT FAIR AND PROPER TO RESTORE THE MATER BACK TO THE FILE OF ASSESSING OFFICER FOR DE NOVO ASSESSMENT AFTER GIVING ADEQUATE OPPORTUNITY OF HEA RING TO THE ASSESSEE AND KEEPING OUR OBSERVATIONS AND ABOVE ENTRIES IN MIND. THE ASSESSING OFFICER WILL ACT IN ACCORDANCE WITH LAW. SINCE WE HAVE MERE LY SET ASIDE THE ASSESSMENT IT CANNOT BE TERMED AS ENHANCEMENT OF IN COME. ALL THE FACTS MENTIONED ABOVE EMERGE FROM THE RECORD AND PAPER BO OK FILED BY THE ASSESSEE ITSELF. 6. IN THE RESULT, REVENUES APPEAL STANDS ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 27-2-2014. SD/- SD/- ( B.C. MEENA ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27-02-2014. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR ITA 3112/DEL/2011 M/S VMR PROMOTERS P. LTD. 16