Shred Garuda Promoters Private Limited, CHENNAI V. DCIT, Coimbatore

ITA 367/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7805 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 18-02-2016
• Court: TRIBUNAL
• Department Lawyers: H HABILA JT
• Assessee Lawyers: S SATHIYANAR AYANAN
• Keywords: Gift; Business income; Onus to prove; Retraction; Revised return
• Section: 143(3); 133A; 131; 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A, CHENNAI , . , ! ' BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ITA NO.367/MDS/2016 ! # $# / ASSESSMENT YEAR : 2011-12 SHREE GARUDA PROMOTERS PVT. LTD., NO.1, VELMURUGAN APARTMENTS, 1 ST FLOOR, SWARNAMBIKAI LAYOUT, RAM NAGAR, COIMBATORE 641 009. [PAN: AAOCS 0973K] ( %& /APPELLANT) VS. DY. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2, COIMBATORE. ( '(%& /RESPONDENT) %& ) * /APPELLANT BY : SHRI S.SATHIYANARAYANAN, ADV OCATE '(%& ) * /RESPONDENT BY : SHRI H.HABILA, JT. CIT ) + /DATE OF HEARING : 30.11.2016 ,$ ) + /DATE OF PRONOUNCEMENT : 27.02.2017 /O R D E R PER SANJAY ARORA, AM : THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-1, COIMBATORE (CIT(A) FOR SHORT) DATED 16.11.2015, DISMISSING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREI NAFTER) DATED 31.03.2014 FOR ASSESSMENT YEAR (AY) 2011-12. 2 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT 2. IT WOULD BE RELEVANT TO RECOUNT THE BACKGROUND F ACTS OF THE CASE. THE ASSESSEE COMPANY, INCORPORATED ON 21.3.2010, IN REA L ESTATE BUSINESS, WAS SUBJECT TO SURVEY PROCEEDINGS U/S. 133A OF THE ACT AT ITS PREMISES ON 12.4.2011. NO PROPER BOOKS OF ACCOUNTS, VIZ. CASH BOOK, JOURNA L, STOCK REGISTERS, LEDGER/S, ETC., WERE FOUND TO BE MAINTAINED. MATERIAL IN THE FORM OF LOOSE SHEETS, DAIRIES, RECEIPT BOOKS AND REGISTERS (WITHOUT CHARACTER) AS WELL AS SALE AGREEMENTS, POWER OF ATTORNEYS, ETC., WERE FOUND AND IMPOUNDED THEREAT. ON THE BASIS OF THE SAID DOCUMENTS, AS WELL AS THE STATEMENTS RECORDED DURING SURVEY PROCEEDINGS, THE ASSESSEE WAS FOUND TO HAVE UNDERTAKEN FOUR PROJ ECTS, DETAILS OF WHICH ARE AS UNDER: SR. NO. NAME OF THE PROJECT OWNER OF THE LAND NO. OF SITES DEVELOPED NO. OF SITES SOLD REMARKS 1. SHREE GARUDA AVENUE, ARAKULA, PALLADAM MRS. B.KANAGU 90 50 PROJECT-1 (P-1) 2. SHREE GARUDA MEGA VENUE, SUKKAMPALAYAM MR. AYYASAMY & MR. SENTHIVEL 1072 500 PROJECT-2 (P-2) 3. SHREE GARUDA AVENUE, K.AYYAMPALAYAM SRI. A.SHANMUGAM & SRI. K.M.NACHIMUTHU 600 300 PROJECT-3 (P-3) 4. S R ADITYA GARDENS, NADUPPALAYAM MR. ADITYA 83 63 PROJECT-4 (P-4) BESIDES, THE COMPANY WAS ALSO FOUND TO HAVE UNDERT AKEN CONSTRUCTION OF HOUSES AT SHREE GARUDA MEGA AVENUE AND S R ADITYA G ARDENS. WHILE IN THE FORMER, CONSTRUCTION WAS BEING CARRIED OUT AT 7 SIT ES, IN THE LATTER, IT WAS BEING AT ABOUT 20 SITES. SWORN STATEMENTS OF SHRI P.KRISHNAK UMAR, MANAGING DIRECTOR (MD) (SINCE EXPIRED IN 2014), AS WELL AS SHRI R. SU RESH, DIRECTOR, COPIES OF WHICH ARE PLACED AT PAGES 01-10 AND 11-14 RESPECTIV ELY OF THE PAPER-BOOK (PB), 3 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT WERE TAKEN, CONFIRMING THE INFORMATION AFORE-STATED . REFERENCE IN THIS REGARD IS MADE TO ANSWERS TO QUESTIONS NOS. 6 TO 20 OF THE ST ATEMENT OF SHRI P. KRISHNAKUMAR (PK), WHO CONCLUDES HIS DEPOSITION IN ANSWER TO THE LAST QUESTION (NO. 26) BY ADMITTING . 278.17 LACS AS UNACCOUNTED ASSETS OF THE ASSESSEE - COMPANY, WHICH HE UNDERTAKES TO RETURN AS INCOME FO R THE YEAR, AND PAY TAX THEREON. FURTHER, SHRI SURESH IN HIS STATEMENT ALSO CONFIRMS THAT IN RESPECT OF ALL THE PROJECTS (OTHER THAN THE PARUVAI PROJECT), THE COMPANY DID THE LAYOUT, DEVELOPMENT, ADVERTISING AND MARKETING IN RESPECT O F SALE OF INDIVIDUAL PLOTS, AND THAT THE OWNER OF THE LAND WOULD DIRECTLY TRANS FER THE TITLE THEREIN TO THE PURCHASERS OF PLOTS, REGISTERING THE SAME AT THE SU B-REGISTRARS OFFICE/S. IT WAS ALSO STATED THAT IN ANSWER TO Q. 11 THAT THE SWORN STATEMENT GIVEN BY THE MD, SHRI P. KRISHNAKUMAR, AT THE TIME OF SURVEY IS BIND ING ON HIM (SHRI R. SURESH) (REFER PARAS 2-8 OF THE ASSESSMENT ORDER). PER ITS RETURN OF INCOME, FILED ON 08.12.2011 (PB PAGES 56-59), THE COMPANY HOWEVER ADMITTED AN INCOME OF .35,95,440/- ONLY. DURING THE ASSESSMENT PROCEEDINGS, THE COMPANY MAINTAINED TO H AVE ENTERED INTO PURCHASE AND SALE TRANSACTIONS OF LAND AT PARUVAI PROJECT ON LY AND THE OTHER PROJECTS, IT WAS STATED, WERE DEALT WITH ON COMMISSION BASIS. TH IS WAS FOUND UNACCEPTABLE BY THE ASSESSING OFFICER (AO) IN VIEW OF THE CATEGO RICAL ADMISSION BY THE DIRECTORS AND, THEREFORE, DISREGARDING THE SAME, AS SESSED THE APPELLANT COMPANY AT . 288.99 LACS, INCLUDING A DISALLOWANCE FOR . 10 LA CS U/S. 40(A)(IA), BY WORKING OUT OF PROFITS OF EACH OF THE FOUR PROJECTS AS UNDER: PROJECT AMOUNT ( ) PARUVAI 3355000 SUKKUMPALAYAM 15120000 AYYAMPALAYAM 5454000 NANDUPALAYAM 3970000 DISALLOWANCE U/S 40A(IA) 1000000 TOTAL INCOME 28899000 4 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT THE SAME STOOD CONFIRMED IN APPEAL IN THE ABSENCE O F THE ASSESSEE EFFECTING ANY IMPROVEMENT IN ITS CASE BEFORE THE LD . CIT(A); IN FACT, FAILING TO MAKE ANY REPRESENTATION DESPITE THE HEARING OF THE ASSESSEES APPEAL BEING FIXED FOR FIVE DIFFERENT DATES (SPREAD OVER 8 MONTHS) (RE FER PARAS 4 & 5 OF THE APPELLATE ORDER). AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL . 3.1 BEFORE US, IT WAS CLAIMED FOR AND ON BEHALF OF THE APPELLANT-COMPANY, BY THE LD. AUTHORIZED REPRESENTATIVE (AR), ITS COUNSE L, THAT THE COMPANY IS IN THE BUSINESS OF DEVELOPMENT OF REAL ESTATE ON COMMISSIO N BASIS, ALSO PROVIDING MARKETING SERVICES FOR THE SALE OF PLOTS. THE PLOTT ING, DEVELOPMENT AND MARKETING EXPENSES ARE BORNE BY THE OWNERS, ON WHOS E ACCOUNT THE PLOTS ARE SOLD. THE COMPANY DOES NOT PURCHASE AND SALE THE PR OPERTY, SAVE EXCEPTIONALLY, AS IN THE CASE PARUVAI PROJECT. IT HAD ACCORDINGLY DISCLOSED THE INCOME THERE- FROM, I.E., APART FROM THE COMMISSION INCOME. IN SU PPORT, REFERENCE WAS MADE BY HIM TO THE FOLLOWING EXCERPTS FROM THE STATEMENT OF SHRI P.KRISHNAKUMAR, MD, AND WHICH IS EMPHASIZED BY US BY REPRODUCING TH E RELEVANT ANSWER (TO THE PARTICULAR QUESTION): ANS. (TO Q. 4): M/S. SHREE GARUDA PROMOTERS INDIA PRIVATE LIMITED HAS PURCHASED 4 ACRES OF LAND DURING THE YEAR 2010 . WE HAVE PURCHASED ONLY THIS ONE PROPERTY IN THE NAME OF THE COMPANY . ANS. (TO Q. 6): THE COMPANY WAS STARTED DURING APRI L 2010. THIS COMPANY HAS DONE FOUR PROJECTS SHOWN. 1.. 2. 3.. 4.. I WISH TO STATE THAT WE DO NOT PURCHASE THE LAND AN D DO DEVELOPMENT ACTIVITIES. WE ONLY WORK AS COMMISSION AGENTS . BEFORE 2010, I WAS ONE OF THE PARTNERS IN M/S. PYRA MID PROPERTY DEVELOPERS. ANS (TO Q. 25): ABOUT 5% TO 10% DEPENDING ON THE NATURE OF SITES . 5 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT CONTINUING FURTHER, DRAWING OUR ATTENTION TO THE RELEVANT SALE AGREEMENTS (I.E., FOR THE PURCHASE OF LAND), PLACED AT PB PAGE S 15-18, 22-28 AND 46-49 (WITH CORRESPONDING ENGLISH TRANSLATIONS AT PB PAGES 19-2 1, 29-33 AND 50-55), THAT THE AGREEMENTS WERE ENTERED INTO BY SHRI P.KRISHNAKUMAR (WITH THE RESPECTIVE LAND OWNERS), IN HIS CAPACITY AS PARTNER, M/S. GARUDA PR OMOTERS. THE SAME, THUS, IS NOT APPLICABLE TO THE ASSESSEE-COMPANY, SO THAT THE CONTENTS OF HIS STATEMENT, BEING RELIED UPON, WOULD HAVE NO BEARING IN THE MAT TER. THE STATEMENT IS EVEN OTHERWISE NOT BINDING IN-AS-MUCH AS IT IS RECORDED U/S. 133A AND, AS IS WELL SETTLED, IT HAS NO EVIDENTIARY VALUE. FURTHER, THE DIRECTORS HAVE FILED THEIR RESPECTIVE RETURNS, EVEN AS NOTED BY THE AO AT PAGE 5 OF THE ASSESSMENT ORDER, WHO HAVE THUS RETURNED THE ENTIRE INCOME ON THE PRO JECTS AND SALE OF THE PROPERTY, RETURNING AN AGGREGATE SUM OF . 183.73 LACS FOR THE RELEVANT YEAR. 3.2 THE LD. DR WOULD, ON THE OTHER HAND, SUBMIT THA T THERE IS NO RETRACTION (OF THE STATEMENTS BY THE DIRECTORS AT ANY STAGE). EVEN IF THE LOWER RETURNED INCOME IS REGARDED AS A RETRACTION BY THE ASSESSEE-COMPANY , THE SAME IS WITHOUT THE INGREDIENTS (OF RETRACTION) BEING SATISFIED IN-AS-M UCH AS IT IS NOT SHOWN THAT THE SAME WERE RENDERED UNDER DURESS OR INFLUENCE OR BY USE OF COERCION OR ARE IN ANY MANNER NOT VOLUNTARY. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 4.1 WE SHALL PROCEED IN THE MATTER, CONSIDERING THE MERITS OF EACH OF THE VARIOUS ARGUMENTS ASSUMED BEFORE US. THE ASSESSEES FIRST CONTENTION IS THAT THE STATEMENTS OF TWO DIRECTORS, BEING RECORDED DURING THE COURSE OF SURVEY, I.E., U/S. 133A PROCEEDINGS, HAVE NO EVIDENTIARY VALUE. THOUGH THE STATEMENTS WERE PROCEEDED WITH AFTER ADMINISTERING OATH (TO THE DEP ONENTS), AND ARE REFERRED TO AS SWORN STATEMENTS TIME AND AGAIN IN THEIR ORDERS BY THE REVENUE AUTHORITIES; THE AO REGARDING THEM AS U/S. 131 OF THE ACT (REFER PARA 8 OF THE ASSESSMENT ORDER), THE SAME CANNOT BE REGARDED AS SO, I.E., AS SWORN STATEMENTS, INASMUCH AS, POINTED OUT BY HON'BLE COURTS, THE INCOME TAX A UTHORITY ACTING U/S. 133A 6 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT HAS NO POWER TO EXAMINE ON OATH (REFER, INTER ALIA, CIT V. P. BALASUBRAMANIAM [2013] 354 ITR 116 (MAD)). SEC. 133A(3)(III) AUTHOR IZES ANY INCOME TAX AUTHORITY, ACTING THERE-UNDER, TO RECORD A STATEMEN T OF ANY PERSON THAT MAY BE USEFUL FOR, OR RELEVANT TO, ANY PROCEEDINGS UNDER T HE ACT. THE IMPORT OF SUCH A STATEMENT IS THEREFORE VAST AND NOT LIMITED TO THE ASSESSMENT OF THE PERSON WHOSE STATEMENT IS RECORDED OR IN RESPECT OF WHOM THE STA TEMENT IS RECORDED, ONLY. NOW, IT NOBODYS CASE THAT THE SAID STATEMENTS WERE GIVEN UNDER DURESS OR WERE NOT VOLUNTARY; THERE BEING A COMPLETE ABSENCE OF AN Y SUCH CHARGE. RATHER, THE STATEMENTS ARE VALIDATED BY A DECLARATION AVERRING THAT IT IS VOLUNTARY, WITHOUT ANY THREAT OR FORCE, AND IN A SOUND STATE OF MIND, AND TO THE BEST OF THE KNOWLEDGE OF THE EXAMINEE. THE STATEMENTS BY THE DI RECTORS MUST THEREFORE BE REGARDED AS JUST THAT, I.E., AS MATERIAL WHICH MAY BE RELEVANT OR USEFUL FOR THE ENSUING ASSESSMENT PROCEEDINGS, AS A PRESENT ONE. T HIS IS AS THESE ARE GIVEN BY THE EXAMINEES IN THEIR CAPACITY AS THE DIRECTORS OF THE ASSESSEE-COMPANY, I.E., ACTING FOR AND ON ITS BEHALF. AS EXPLAINED BY THE HONBLE APEX COURT IN POORAN MAL V. DIT (INV.) [1974] 93 ITR 505 (SC), THE TEST OF ADMISSIBILITY OF EVIDENCE LIES IN ITS RELEVANCY, UNLESS OF COURSE TH ERE IS EXPRESS OR IMPLIED PROHIBITION IN LAW. BEING THUS LEGALLY VALID STATEMENTS, WHAT WOULD DET ERMINE THEIR VALUE, IN THE CONTEXT OF THE PRESENT PROCEEDI NGS, IS THEIR RELEVANCY . THIS, THEN, WOULD BE THE PARADIGM OR THE PERSPECTIVE FOR CONSIDERING THESE STATEMENTS, RATHER THAN IN THE STRICT SENSE OF THEIR EVIDENTIAR Y VALUE; THE RULES OF EVIDENCE BEING EVEN OTHERWISE NOT APPLICABLE TO THE PROCEEDI NGS UNDER THE ACT. WHERE FOUND RELEVANT, THE SAME QUALIFY TO BE REGARDED AS MATERIALS, TO BE CONSIDERED ALONG WITH OTHER MATERIALS FOUND DURING SURVEY, IN ARRIVING AT FINDINGS OF FACT. WE MAY, HOWEVER, BEFORE WE PROCEED TO EXAMINE THE S AME, ADVERT TO THE GENERAL PRINCIPLES GOVERNING ADMISSION OR THE BURDE N OF PROOF IN THE INCOME-TAX PROCEEDINGS, IF ONLY TO COMPLETE THE DISCUSSION IN THE MATTER IN-AS-MUCH AS THEY PROVIDE OVERARCHING RULES TO BE BORNE IN MIND. THE BURDEN OF PROOF IN INCOME- TAX MATTERS ON QUESTIONS OF FACT LIES ON THE TAXPAY ER SINCE HE ALONE HAS ACCESS TO 7 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT THE INFORMATION RELEVANT TO HIS ASSESSMENT . THE GENERAL PRINCIPLE THEREFORE IS THAT A STATEMENT OR ADMISSION DURING SURVEY OR SEAR CH OR EVEN OTHERWISE IS BINDING. THE SAME HOWEVER CANNOT BE REGARDED AS INC APABLE OF RETRACTION, WHICH AGAIN WOULD DEPEND ON THE MERITS THEREOF. THE INITI AL BURDEN TO LEAD MATERIAL, HOWEVER SLIGHT, TO SUPPORT THE FINDING OF CONCEALED INCOME, IS ON THE REVENUE. WE MAY NEXT PROCEED TO EXAMINE THE STATEMENTS IN T HE CONTEXT OF AND IN CONJUNCTION WITH OTHER MATERIALS FOUND AND IMPOUNDE D DURING SURVEY, VIZ., THE SALE AGREEMENTS, GENERAL POWER OF ATTORNEY (GPAS), RECEIPT BOOKS, LOOSE SHEETS AND REGISTERS, RECORDING RECEIPTS AND PAYMENTS. WE BEGIN BY REPRODUCING STATEMENT OF PK; THAT BY SHRI R. SURESH, THE OTHER DIRECTOR, BEING IN VERNACULAR LANGUAGE THE ENGLISH TRANSLATION OF WHICH HAS NOT BEEN SUPPLIED AND, BESIDES, IS EVEN OTHERWISE SUPPORTIVE, WITH HE ADMITTING TO THAT BY PK, MD, BEING BINDING OF HIM (PARA 8 OF THE ASSESSMENT ORDER). T HE STATEMENT OF PK RUNS THUS (Q.NO.4 ONWARDS): Q.4. PLEASE GIVE THE DETAILS OF IMMOVABLE ASSETS M AINTAINED BY THE COMPANY, YOURSELF AND YOUR FAMILY MEMBERS? ANS. M/S. SHREE GARUDA PROMOTERS INDIA PRIVATE LIMITED HAS PURCHASED 4 ACRES OF LAND DURING THE YEAR 2010 AT AYYAMPALAYAM FOR RS. 8,00,000/-. THE PAYMENT OF RS. 8,00,000/- WAS MADE BY ME IN CASH. WE HAVE PURCHASED ONLY THIS ONE PROPERTY IN THE NAME OF THE COMPANY. IN MY NAME :- 1. 500 SQ.FT HOME IN 2 CENTS LAND AT SIDDHPAN, PURCHAS ED 8 YEARS BEFORE IN THE JOINT NAMES OF MYSELF AND MY WIFE. 2. PRESENTLY RESIDING HOME OF 1800 SQ.FT IN 3 CENTS LAND AT GANAPATHY WAS INHERITED BY ME FROM MY MOTHER FOUR YEARS BEFORE. 3. 450 SQ.FT HOME IS 3 CENTS LAND IN THE HOUSING BOARD AT SIVANANDA COLONY WAS PURCHASED BY ME 11 YEARS BEFORE. 4. 21 CENTS LAND AT ANAIKATTI WAS PURCHASED BY ME DURI NG 2006-07 FOR RS. 2 LAKHS. 5. 45 CENTS LAND WAS PURCHASED BY ME IN KALANGAL, SULU R DURING 2006-07 FOR RS. 2,000/- PER CENT. 6. 7 ACRES 35 CENTS OF LAND WAS PURCHASED IN JOINT NAM E OF MYSELF, MR. SURESH AND MRS. JAYAPRAKASH AT ANAIKKATTI FOR A REG ISTERED VALUE OF RS. 3 LAKHS PER ACRE DURING 2008-09. 8 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT 7. 4 CENTS LAND WAS INHERITED BY ME BY MY UNCLE IN P UDUKKAD, THRISSUR TWO YEARS BEFORE. MYSELF, MY FAMILY MEMBERS AND THE COMPANY HAS NO OT HER IMMOVABLE PROPERTIES OTHER THAN THOSE MENTIONED ABOVE. Q.5. PLEASE GIVE THE DETAILS OF MOVABLE ASSETS OWNE D BY THE COMPANY, YOURSELF AND YOUR FAMILY MEMBERS? ANS. COMPANY OWNS NO VEHICLE. MY WIFE OWNS A MARUT HI EECO PURCHASED DURING MARCH 2011 BY TAKING A LOAN OF RS. 2,00,000/ - FROM M/S. KOTAK MAHINDRA. Q.6. PLEASE GIVE THE DETAILS OF THE PROJECTS UNDERT AKEN BY M/S. GARUDA PROMOTERS INDIA PVT. LTD .? ANS. THE COMPANY WAS STARTED DURING APRIL 2010. THI S COMPANY HAS DONE FOUR PROJECTS SHOWN. 1. SHREE GARUDA AVENUE , ARAKKULAM, PALLADAM: MRS. KANAGN IS THE OWNER OF THE SITE. THERE ARE 90 SITES IN TOTAL. ON LY ABOUT 55 SIES ARE SOLD TILL DATE. 2. SHREE GARUDA MEGA AVENUE , SUKKUAMPALAYAM: MR. AYYASAMY AND MR. SENTHELVEL ARE THE OWNERS OF THE SITE. THERE A RE ABOUT 1072 SITES IN TOTAL TILL DATE WE HAVE SOLD ONLY ABOUT 500 SITE S. APART FROM THIS WE HAVE ALSO STARTED CONSTRUCTION ACTIVITIES . ABOUT 7 HOMES ARE UNDER CONSTRUCTION. 3. SHREE GARUDA AVENUE , K.AYYMPALAYAM; MR DURAI PONNUSAMY ARE THE OWNERS. THERE ARE 600 SITES IN TOTAL AND W E HAVE SOLD ABOUT 300 SITES TILL DATE. 4. SHREE ADHITYA GARDENS , NANUPALAYAM, SULUR: THIS IS A HOUSING PROJECT . THERE ARE 83 SITES IN TOTAL. ABOUT 63 SITES HAVE BEEN SOLD AND CONSTRUCTION IS GOING ON IN ABOUT 20 SITES. I WISH TO STATE THAT WE DO NOT PURCHASE THE LAND AN D DO DEVELOPMENT ACTIVITIES. WE ONLY WORK AS COMMISSION AGENTS. BEFORE 2010, I WAS ONE OF THE PARTNERS IN M/S. PYRA MID PROPERTY DEVELOPERS. THE OTHER PARTNERS ARE MR. K.K.JEEVANA DAN AND SMT. J.VASANTHAKUMARI. THIS CONCERN ALSO DEALT WITH REA L ESTATE ACTIVITIES AND HAS BEEN CLOSED IN MARCH 2011. ONLY ONE PROJECT BALAJI MEGA GARDEN, MALLAIGOUNDENPALAYAM HAS BEEN DONE BY THIS CONCERN WHEREIN 1000 SITES WERE DEVELOPED AND SOLD. Q.7: PLEASE EXPLAIN IN DETAIL THE PROJECTS SHREE G ARUDA AVENUE DEVELOPED AT ARAKULAM, PALLADAM? 9 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT ANS: A TOTAL OF 90 SITES WERE DEVELOPED IN 45 ACRES OF LAND 55 SITES HAVE BEEN SOLD FOR A REGISTERED VALUE OF RS.39,000/- FOR 3 CE NTS. HOWEVER, WE RECEIVED RS.60,000/- FOR 3 CENTS SITE. Q.8: PLEASE EXPLAIN IN DETAIL THE PROJECT UNDERTAKE N AT SHREE GARUDA MEGA AVENUE, SUKKAMPALAYAM? ANS: A TOTAL OF 1072 SITE WAS DEVELOPED AND 500 SIT ES HAVE BEEN SOLD TILL DATE. REGISTERED VALUE IS RS. 47,000/- FOR CENTS. HOWEVE R, THE ACTUAL VALUE RECEIVED IS RS.45,000/- PER CENT. Q.9: PLEASE EXPLAIN IN DETAILS THE PROJECT WORK UND ERTAKEN AT SHREE GARUDA AVENUE, K. AYYAMPALAYAM? ANS: A TOTAL OF 600 SITES WAS DEVELOPED AND 300 SIT ES HAVE BEEN SOLD TILL DATE. REGISTERED VALUE FOR 3 CENTS SITE IS RS. 39,000/- A ND THE ACTUAL VALUE IS RS. 60,000/- FOR 3 CENTS. Q.10: PLEASE STATE THE MODE OF RECEIPT OF THE PAYME NTS OF THE AFORESAID PROJECTS? ANS: MODE OF RECEIPT IS BY CASH DIRECTLY BY THE OWN ER IN MY PRESENCE. Q.11: VIDE REPLIES TO YOUR PREVIOUS QUESTIONS, YOU HAVE STATED THAT THE COMPANY HAS ENTERED INTO FOUR PROJECTS. PLEASE STATE WHAT IS THE AMOUNT AGREED BY THE COMPANY TO THE OWNER OF THE LAND OF EACH PROJECT? ANS: THE COMPANY ENTERS INTO AN AGREEMENT WITH THE LAND OWNERS TO PAY A SUM FOR THE LAND AFTER DEVELOPING IT INTO SITES AND SEL L THE SAME. THE COMPANY UNDERTAKES THE RESPONSIBILITY OF DEVELOPMENT OF THE LAND, LAYING OF ROADS, ADVERTISEMENT, ETC. HOWEVER THE EXPENSES ARE MADE F ROM THE LAND OWNERS MONEY THAT IS FROM THE LAND ADVANCE RECEIVED FROM C USTOMERS. THE LAND OWNER RECEIVES THE BALANCE AMOUNT ON REGISTRATION FROM TH E CUSTOMERS. OVER AND ABOVE THE AMOUNT AGREED TO THE LAND OWNER IS THE PROFIT O F THE COMPANY . THE AMOUNT AGREED UPON IN RESPECT OF EACH LAND IS AS UNDER:- 1. SHREE GARUDA AVENUE, PARUVAI (ARAKULAM), PALLADAM: RS. 53 LAKHS. 2. SHREE GARUDA MEGA AVENUE, SUKKAMPALAYAM, 46 ACRES O F LAND @ RS. 12 LAKHS PER ACRE, TOTALING TO RS. 5,52,00,000/-. 3. SHREE GARUDA MEGA AVENUE, K.AYYAMPALAYAM, 21 ACRES OF LAND 10 ACRES @ RS. 10 LAKHS PER ACRE AND 11 ACRES OF @ R S. 8 LAKHS PER ACRE, TOTALING TO RS. 1,88,00,000/-. 4. S.R.ADHITYA GARDENS, SULUR 5 ACRES OF LAND. NO AG REEMENT IS ENTERED IN RESPECT OF THIS PROJECT AS THIS IS A HOUSING PRO JECT. HOWEVER, WE ARE ENTERING INTO AGREEMENT WITH EACH CUSTOMER FOR WHOM WE ARE CONSTRUCTING HOMES. Q.12. PL. EXPLAIN WHETHER THE COMPANY HAS ENTERED I NTO ANY OTHER PROJECTS OTHER THAN THOSE MENTIONED IN THE ABOVE REPLIES? 10 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT ANS: NO, APART FROM THOSE MENTIONED ABOVE NO OTHER PROJECTS HAVE BEEN ENTERED INTO BY THE COMPANY. HOWEVER, INDIVIDUALLY I HAVE SOLD SOME SITES IN TWO PROJECTS OF OTHER PERSONS. 1. SRI GANESH DEVELOPERS, AYYAMPALAYAM:- THE OWNERS O F THIS LAND ARE MR. CHANDRAN AND MR. SURESH. THEY DEVELOPED 17 4 SITES AND I INDIVIDUALLY SOLD ONLY 5 SITES FOR WHICH I RECEIVED COMMISSION OF RS. 5,000/- PER SITE. 2. 200 SITES WERE DEVELOPED AT ANUPATTI IN THE NAME B ALAJI NAGAR & GANESH GARDEN BY MR. ANANTAKRISHNAN, MR. CHANDRAN, & MR. JAYA PRAKASH & MR. LAKSHMI NARASIMHAN. I PERSONALLY SOL D 25 SITES FOR A COMMISSION OF RS. 5000/- PER SITE. I RECEIVED MONEY FROM THE BUYERS AND THE INVOICE WAS GIVEN IN THE NAME OF SRI KRISHN A PROMOTERS. SRI KRISHNA PROMOTERS IS JUST A NAME TO NAME INVOICES TO THE BUYERS. AFTER DEDUCTING MY COMMISSION, I GIVE THE BALANCE A MOUNT TO THE OWNER. Q.13. HAVE YOU/YOUR COMPANY TAKEN ANY LOAN FROM ANYBODY? ANS: I HAVE TAKEN LOAN. HOWEVER, I DO NOT EXA CTLY REMEMBER THE DETAILS. I SHALL SUBMIT THE DETAILS AT YOUR OFFICE WITHIN TWO DAYS. Q.14. HAVE YOU/YOUR COMPANY ADVANCED ANY LOAN TO AN YBODY? ANS: NO. Q.15. HAVE YOU/YOUR FAMILY MEMBERS GIVEN/TAKEN ANY GIFT TO ANYBODY? ANS: NO. Q.16. HAVE YOU/YOUR COMPANY MADE INVESTMENTS IN CHI T FUNDS? ANS: THE COMPANY HAS MADE NO INVESTMENTS IN CHITS. HOWEVER, AS DIRECTOR, WE HAVE MADE INVESTMENTS IN SHREE GOKULAM CHIT & FI NANCE CO. (P.) LTD. AS FOLLOWS: SURESH : RS. 6,16,000/- G.VYAYANDHA : RS. 6,36,000/- P.KRISHNAKUMAR : RS. 6,36,000/- THIS WAS INVESTED FROM OUT OF PROFIT FROM THE COMPA NY . Q.17. PLEASE EXPLAIN THE BALANCE AMOUNT TO BE PAID TO THE LAND OWNERS OF THE ABOVE MENTIONED THREE PROJECTS? ANS: THE BALANCE AMOUNT TO THE PAID ARE PARUVAI SITE : RS. NIL SUKKAMPALAYAM : RS. 1,00,37,000/- K.AYYMPALAYAM : RS. 30,00,000/- Q.18. VIDE REPLY TO Q.11 OF YOUR STATEMENT, YOU HAV E MENTIONED THE COST PRICE OF THE SITES OF THE ABOVE PROJECTS AND THE AG REEEMTNS OF THE SAME HAVE BEEN IMPOUNDED AS SGP/PS/LS/IMP/PAGES TO DATED 12/4 /2011. CONSIDERING THE 11 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT COST PRICE, WHAT IS THE CLOSING STOCK AVAILABLE WIT H THE COMPANY IN THE FORM OF LAND? ANS: SIR, AS I HAVE STATED IN MY PREVIOUS REPLIES T HE STOCK AVAILABLE IS WORKED OUT AS UNDER: PARUVAI SITE: COST PRICE AS PER AGREEMENT : RS. 52,59,800/- BALANCE SITES AVAILABLE FOR SALE : 174 CENTS (TOT AL SITES 394) STOCK VALUE : 52,59,800 ------------- X 174 = 23,22,855/- 394 SUKKAMPALAYAM : TOTAL SITES : 3456 CENTS COST PRICE AS PER AGREEMENT : RS. 5,81,49000/- BALANCE SITES AVAILABLE AS STOCK : 1776 CENTS VALUE OF STOCK : 5,81,49,000 -------------- X 1776 2,98,82,124/- AMOUNT TO BE PAID TO LAND OWNER 3456 RS. 1,00,37,000/- STOCK RS. 1,98,45,124/- K.AYYAMPALAYAM TOTAL SITES: 1143 CENTS COST PRICE: 1,60,00,000/- BALANCE SITES AS STOCK 1,60,00,000/- --------------- X 483 1143 = 67,61,154/- (-) 30,00,000/- --------------- = RS. 37,61,154/- -- -------------------------- THUS THE TOTAL CLOSING STOCK OF THE COMPANY IS 23,2 2,855 + 1,98,45,124 + 37,61,154 = 2,59,29,133/- . I ADMIT THE SAME AS THE CLOSING STOCK OF THE COMP ANY AND SHALL PAY THE TAXES FOR THE SAME. Q.19. VIDE REPLY TO Q.NO.18 OF THIS STATEMENT. YOU HAVE DECLARED A CLOSING STOCK OF RS. 2,59,29,133/- WHAT IS THE SOURCE FOR THE ABOVE? ANS: THE SOURCE FOR ABOVE IS INCOME EARNED FROM REA L ESTATE BUSINESS. WE ADMIT THAT WE HAVE MADE THE ABOVE INVESTMENT FROM R EAL ESTATE / COMMISSION BUSINESS WHICH WILL BE DECLARED IN THE RESPECTIVE R ETURNS OF INCOME AFTER PAYING THE DUE TAXES. Q.20. PLEASE FURNISH THE DETAILS OF SOURCE OF INVES TMENT IN CHITS? 12 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT ANS: SOURCE OF INVESTMENT IS FROM OUT OF REAL ESTAT E BUSINESS. Q.21. ARE YOU MAINTAINING BOOKS OF ACCOUNTS? ANS: NO. WE ARE NOT MAINTAINING ANY BOOKS OF ACCOU NTS. Q.22. WHAT IS THE CASH BALANCE AVAILABLE AS ON DAT E? ANS: SIR, WE ARE NOT MAINTAINING ANY PROPER BOOKS O F ACCOUNTS IN RESPECT OF BUSINESS AS IT IS REAL ESTATE/COMMISSION BUSINESS . THE CASH AVAILABLE WILL BE ABOUT RS. 3000/-. Q.23. WHAT IS THE MONTHLY EXPENDITURE OF YOUR FAMI LY? ANS: ABOUT RS. 50,000/- PER MONTH. THE SOURCE FOR T HIS MONEY IS FROM REAL ESTATE BUSINESS. Q.24: PLEASE FURNISH THE DETAILS OF MONTHLY EXPENDI TURE OF THE COMPANY? ANS: AROUND RS. 2 TO 2.5 LAKHS, INCLUDING VEHICLE, POSTAL, TELEPHONE, SALARY AND MISC. EXPENSE. Q.25. WHAT IS THE RATE OF COMMISSION RECEIVED BY TH E COMPANY? ANS: ABOUT 5% TO 10% DEPENDING ON THE NATURE OF SIT ES. Q.26. DO YOU HAVE ANYTHING ELSE TO SAY? ANS: SIR, AS STATED IN MY PREVIOUS REPLIES, I ADMIT RS. 2,59,29,133/- TOWARDS CLOSING ASSETS OF THE COMPANY, RS. 18,88,000/- TOW ARDS INVESTMENT IS CHITS IN THE RESPECTIVE HANDS. THE COMPANY SHALL IN FUTURE M AINTAIN PROPER ACCOUNTS. I SHALL ALSO CORRECT MY ACCOUNTS AND SUBMIT DETAILS . I ADMIT RS. 2,78,17,133/- AND SHALL PAY THE TAXES FOR THE SAME. I MAY KINDLY BE EXEMPTED FROM ANY PENALTY FOR THE ABOVE. SD/- SD/- (EXAMINER/ADMINISTRATOR) 12/4 (EXAMINEE) 12/04/2011 THE ABOVE STATEMENT WAS WRITTEN AS I STATED AND WAS GIVEN VOLUNTARILY WITHOUT ANY THREAT OR FORCE AND IN SOUND STATE OF MIND. TH E STATEMENT IS TRUE TO THE BEST OF MY KNOWLEDGE. SD/- SD/- (EXAMINER/ADMINISTRATOR) 12/4 (EXAMINEE) 12/04/2011 [EMPHASIS, BY ITAL ICS, OURS] THE MANAGING DIRECTOR EXPLAINS THE MODUS OPERANDI OF THE ASSESSEES BUSINESS. THE COMPANY, ACTING THROUGH ITS DIRECTORS , PRINCIPALLY THE MD, ENTERS INTO AGREEMENTS (FOR SALE) WITH THE LAND OWNERS FOR A CONSIDERATION BY MAKING PART PAYMENT THERETO. SIMULTANEOUSLY, A GPA IS ENTE RED INTO IN FAVOUR OF THE DIRECTOR. BOTH THE DOCUMENTS CLARIFY THAT THE LAND OWNER IS OBLIGED TO REGISTER 13 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT THE TRANSFER, UPON RECEIPT OF THE ENTIRE CONSIDERAT ION, IN THE NAME OF THE GPA OR ANY PERSON NOMINATED BY HIM. THE DEVELOPMENT OF THE LAND, PLOTTING ETC., IS TO BE DONE BY THE COMPANY, WHICH ALSO PERFORMS THE MAR KETING FUNCTION. THE EXPENDITURE IS TO BE BORNE BY THE OWNERS, WHICH IS MET BY THE ADVANCE RECEIVED FROM THE CUSTOMERS, WHO ARE SOLD THE PLOTS AT, UNDE RSTANDABLY, A HIGHER CONSIDERATION. THE DIFFERENCE BETWEEN THE PURCHAS E AND SALE CONSIDERATION, IS THE COMPANYS PROFIT. THE TRANSFER (OF THE PLOT) IS REGISTERED BY THE LAND OWNER IN THE NAME OF THE CUSTOMER. DETAILS OF VARIOUS PRO JECTS UNDERTAKEN, INCLUDING THE NUMBER OF SITES DEVELOPED AND SOLD, ETC., ARE P ROVIDED, ALONG WITH THE VALUES AT WHICH THE RESPECTIVE LANDS WERE PURCHASED (BY TH E COMPANY) AND THE PLOTS SOLD, INDICATING THE PROFIT ON DIFFERENT PROJECTS , WORKING OUT THE VALUE OF THE STOCK-IN-HAND (UNPAID) (IN-AS-MUCH AS PART OF THE P URCHASE CONSIDERATION IS UN- DISCHARGED) AS ON DATE (12/4/2011) AT . 259.29 LACS. INVESTMENTS IN THE FORM OF SUBSCRIPTION TO CHIT FUND (WITH SHRI GOKULAM CHIT A ND FINANCE COMPANY LTD.), AT AN AGGREGATE AMOUNT OF . 18.88 LACS WHICH IS NOT DENIED EVEN SUBSEQUENTLY, WERE STATED AS HELD, GIVING THE INVES TMENT HELD BY EACH OF THE THREE DIRECTORS SEPARATELY. THE SOURCE OF BOTH, I. E., THE STOCK-IN-TRADE (OF THE COMPANY) AND THE INVESTMENT IN CHIT FUNDS, AT THUS A TOTAL OF . 278.17 LACS, WAS EXPLAINED AS THE PROFIT OF THE COMPANY DERIVED FROM ITS OPERATIONS, AND WHICH WAS AGREED TO BE DULY RETURNED, PAYING TAX THEREON. FURTHER, THE PURCHASE CONSIDERATION OF LAND AT DIFFERENT PROJECTS, AS STA TED IN THE STATEMENT, IS THE SAME AS IN THE SALE AGREEMENTS. THE SAME ALSO AGREES WIT H THAT STATED IN RESPECT OF PURVAI PROPERTY (IN THE FINAL ACCOUNTS, FURNISHED A LONG WITH THE RETURN OF INCOME). A STATUTORY PRESUMPTION AS TO THE TRUTH OF THE CONTENTS THEREOF APPLIES TO THE MATERIALS FOUND AND IMPOUNDED DURING SURVEY, VIZ. THE SALE AGREEMENTS, GPA/S, RECEIPT BOOKS, LOOSE SHEETS/REGISTERS, ET. A L. THE STATEMENT, IN AGREEMENT THEREWITH, BY IMPLICATION, STATES THE TRUTH. WHY, T HE ASSESSEE RELIES ON THE VERY SAME STATEMENT TO SHOW THAT THE COMPANY IS WORKING ON COMMISSION BASIS, AS SUBSEQUENTLY RETURNED. THE RELEVANCY OF THE STATEMENT THUS CANNOT BE OVER 14 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT EMPHASIZED; THE SAME BEING, RATHER, CORROBORATIVE, AND IN THE NATURE OF AN EXPLANATION OF THE VARIOUS DOCUMENTS FOUND DURING S URVEY . WE, ACCORDINGLY, FIND NO MERIT IN QUESTIONING OR CHALLENGING EITHER THEIR RELEVANCE OR USEFULNESS IN THE CONTEXT OF THE PRESENT PROCEEDINGS. IN FACT, THE ASSESSEE RELIES ON THE DIFFERENT PARTS OF THE SAME STATEMENT (OF PK, OR THE PA HOLDER) TO PROVE ITS POINT, I.E., THAT THE ASSESSEE COMPANY HAS, APART F ROM ONE PROJECT, UNDERTAKEN ONLY DEVELOPMENT AND MARKETING ACTIVITIES ON COMMIS SION BASIS, AND HAD THUS CORRECTLY RETUNED ITS INCOME FOR THE YEAR. HOW COULD THAT BE ? THAT IS, HOW COULD THE ASSESSEE RELY UPON AS WELL AS RESILE FROM THE SAME STATEMENT AT THE SAME TIME, UNLESS A PARTICULAR PART OF IT IS SHOWN AS ON ACCOUNT OF A MISTAKEN BELIEF, INCLUDING THE SOURCE/BASIS OF THE SAID BELI EF, INDICATING THE MISTAKE? WE MAY AT THIS STAGE ALSO EXAMINE THE ASSESSEES RELIANCE ON THE STATEMENT SO AS TO SEE IT FOR ANY MERIT, IF ANY, TH EREIN. THIS IS, AS AFORESAID, IT COULD (POSSIBLY) BE THAT A PART OF THE STATEMENT IS INCORRECT, EVEN AS, GOING BY THE ASSESSEES CLAIM, IT IS, ON THE CONTRARY, THE ENTIR E STATEMENT, SAVE THE PARTS THEREOF BEING RELIED UPON, THAT ARE CORRECT. THE SE NTENCES TO WHICH OUR ATTENTION WAS DRAWN DURING HEARING READ AS UNDER; WE EMPHASIZ ING BY HIGHLIGHTING THE SAME, REPRODUCING THE RELEVANT PART SO AS TO SUPPLY THE CONTEXT IN WHICH THE SAME IS MADE: M/S. SHREE GARUDA PROMOTERS INDIA PRIVATE LIMITED HAS PURCHASED 4 ACRES OF LAND DURING THE YEAR 2010 AT AYYAMPALAYA M FOR . 8,00,000/-. THE PAYMENT OF . 8,00,000/- WAS MADE BY ME IN CASH. WE HAVE PURCHASED ONLY THERE ONE PROPERTY IN THE NA ME OF THE COMPANY . (IN ANSWER TO Q. 4 ) THIS COMPANY HAS ONLY FOUR PROJECTS SHOWN. 1. . 2. 3. . 4. . I WISH TO STATE THAT WE DO NOT PURCHASE THE LAND AN D DO DEVELOPMENT ACTIVITIES WE ONLY WORK AS COMMISSION AGENTS . (ANSWER TO Q.6 ) 15 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT ABOUT 5% TO 10% PENDING ON THE NATURE OF SITES . (ANSWER TO Q. 25 ) THE PROPERTY STATED AS PURCHASED IS 4 ACRES AT AYY AMPALAYAM FOR . 8 LACS. HOW, WE WONDER, DOES THIS HELP THE ASSESSEES CASE IN ANY MANNER ? FIRSTLY, THE AO HAS, IN WORKING OUT THE PROFITS ON THE SAID PROJECT (P-3), RESTRICTED IT TO, ON THE BASIS OF THE MATERIAL IN THE FORM OF GPA (FO R . 15.28 LACS / 403 PLOTS) TO 10.33 ACRES (202 PLOTS); PK STATING BEFORE HIM THAT THE BALANCE LAND WAS BEING TRANSACTED BY HIM INDIVIDUALLY, ADDUCING ANOTHER GP A FOR THE BALANCE 4.95 ACRES (REFER PARAS 19-24/PAGES 12-16 OF THE ASSESSM ENT ORDER). THIS IN FACT RUNS COUNTER TO THE ASSESSEE MAINTAINING (IN THE ASSESSM ENT PROCEEDINGS) AND ADMITTING (PER ITS RETURN OF INCOME) OF HAVING ACQ UIRED ONLY THE PARUVAI, PALLADAM PROJECT (PROJECT 1) . IN FACT, WHEN PK STATES THAT WE (IMPLYING THE COMPANY) DO NOT PURCHASE LAND, HE IS BEING NEITHER INCONSISTENT NOR CONTRADICTORY. THE COMPANY, AS EXPLAINED WHILE NOTI NG ITS MODUS OPERANDI , ACQUIRES ONLY THE RIGHT TO SELL THE PROPERTY AT A HIGHER CONSIDERATION, RETAINING THE DIFFERENCE, WITH THE OWNER BEING ENTITLED ONLY TO THE CONSIDERATION AGREED UPON WITH IT (THE VENDEE). THE SALE AGREEMENTS, WHI CH, AS AFORE-STATED, ARE UNREGISTERED AND IN THE POSSESSION OF PK ( AS MENTIONED IN THE AGREEMENTS ITSELF, BESIDES BEING ACTUALLY FOUND DURING SURVEY ), CLEARLY STIPULATE THAT ON PAYMENT OF THE BALANCE SALE CONSIDERATION (SPECIFYING THE AMOU NT), I.E., THE CONSIDERATION AGREED UPON LESS THAT PAID IN ADVANCE, THE VENDEE H AS THE RIGHT TO GET IT REGISTERED IN ITS NAME, EVEN IF REQUIRED TO MOVE T O THE COURT FOR THE SAME, I.E., WHERE THE OWNER DOES NOT COOPERATE. THE SALE AGREEM ENT, COUPLED WITH THE GPA (SPECIMEN COPY OF WHICH IS ENCLOSED AT PB PGS. 34-4 2, FOLLOWED BY ENGLISH TRANSLATION AT PGS. 43-45), WHEREBY PK (GPA HOLDER) IS AUTHORIZED TO FINALIZE THE SAME; EXECUTE SALE DEEDS; RECEIVE THE SALE CONS IDERATIONS AND ISSUE RECEIPT/S IN ITS RESPECT, ETC., MAKE IT ABUNDANTLY CLEAR THAT THE VENDEE HAS ACQUIRED COMPLETE RIGHTS IN THE LAND AND THE VENDOR IS ONLY ENTITLED TO THE BALANCE SALE 16 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT CONSIDERATION. THE TRANSACTION HAS ACCORDINGLY RIGH TLY BEEN REGARDED AS ONE SATISFYING THE INGREDIENTS OF S. 2(47)(V) OF THE AC T. THERE IS CLEARLY NO PURCHASE IN THE STRICT SENSE OF THE TERM, BY THE COMPANY A T ANY TIME, THOUGH HAS THE POWER FOR THE SAME, WITH THE TRANSFER BEING REGISTE RED DIRECTLY IN THE NAME OF THE CUSTOMER BUYING A PLOT. THIS IN FACT IS THE USUAL P RACTICE, SAVING BOTH TIME AS WELL AS COST, IN TERMS OF STAMP DUTY AND OF REGISTR ATION. FOR A COMPANY IN DEVELOPMENT BUSINESS, IT NEEDS TO BE APPRECIATED, L AND IS ONLY IN THE NATURE OF STOCK-IN-TRADE, SO THAT NO USEFUL PURPOSE IS SERVED BY ACQUIRING TITLE TO THE SAME. IN FACT, EVEN FOR THE PARUVAI PROPERTY, ADMITTEDL Y PURCHASED BY THE COMPANY, IT IS NOT SHOWN THAT THE TRANSFER OF TITLE THEREIN STOOD MADE IN ITS NAME. FURTHER, THE LAND STATED AS PURCHASED IS ONLY FOR . 8 LACS (REFER ANSWERS TO QS. #4, 18 & TO P&L A/C), WHILE THE PURCHASE CONSIDER ATION (FOR THE ONLY PROJECT UNDERTAKEN ON OWN ACCOUNT) IS . 53 LACS (REFER ANSWER TO Q. #11). AS REGARDS THE OTHER EXTRACTS, STATING OF WORKING AS COMMISSIO N AGENT, THE SAME IS NECESSARILY TO BE READ IN CONJUNCTION AND HARMONY W ITH THE OTHER PARTS OF THE STATEMENT. THE DIFFERENCE BETWEEN THE ACQUISITION C OST AND THE TRANSFER PRICE OF THE RIGHTS ACQUIRED AND TRANSFERRED IN THE LAND IS THE COMPANYS REMUNERATION FOR ITS LABORS/ACTIVITIES. THE SAME MAY EQUALLY OR VARI OUSLY BE TERMED AS PROFIT, COMMISSION, ET.AL. THE COMPANY DOES NOT ASSUME LE GAL TITLE TO, AND THUS DOES NOT BECOME THE LEGAL OWNER OF THE LAND AT ANY POINT OF TIME, SO THAT THE PROFIT EARNED COULD BE, AND NOT INCORRECTLY SO, TERMED AS COMMISSION. THE TWO SENTENCES (IN ANSWER TO Q. 6) HAVE TO BE READ TOGET HER; RATHER, ALONG WITH THE PREVIOUS PART OF THE ANSWER, LISTING THE FOUR PROJE CTS. WHY, PER THE VERY STATEMENT, THE EXAMINEE, PK, HAS REFERRED TO THE CO MPANYS REMUNERATION AT VARIOUS PLACES AS PROFIT (REFER, ANSWERS TO QS. 1 1,16,18,19,20,22 & 26), ALSO COMPUTING CLOSING STOCK. IN OTHER WORDS, THE STATEMENT IS TO BE READ AS A WH OLE . TWO THINGS IN FACT NEED TO BE NOTED HERE. FIRSTLY, THE ASSESSEE WAS DURING ASSESSMENT PROCEEDINGS WHICH SPANNED OVER 20 MONT HS, SPECIFICALLY REQUIRED (VIDE LETTERS DATED 08.7.2013, 10.02.2014 AND 15.03 .2014) TO FURNISH INFORMATION 17 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT ON ITS VARIOUS ACTIVITIES, TABULATING THE SAME COMP REHENSIVELY UNDER VARIOUS COLUMNS (REFER PARA 12 /PAGES 6-7 OF THE ASSESSMENT ORDER). THE SAME INCLUDE COLUMNS (INFORMATION) ON COMMISSION TO THE ASSESSEE , ITS MODE OF RECEIPT, AS WELL AS THE DEVELOPMENT EXPENDITURE INCURRED. THE A SSESSEE COMPLETELY FAILED TO FURNISH ANY INFORMATION, CLAIMING IT TO BE NOT MAIN TAINING ANY PROPER ACCOUNTS. REFERENCE AT THIS STAGE MAY ALSO BE MADE TO ANSWERS TO Q. NOS. 21 & 22 OF THE STATEMENT, ADMITTING TO NON-MAINTENANCE OF BOOKS OF ACCOUNTS. NO MATERIAL EVIDENCING THE RECEIPT OF COMMISSION WAS RECOVERED DURING SURVEY. WHAT VALUE, THEN, CAN BE PLACED ON THE CLAIM OF COMMISSION BEIN G NOW MADE ON THE BASIS OF FINAL ACCOUNTS BASED ON NON-EXISTENT ACCOUNTS & REC ORDS ? THE BURDEN TO PROVE ITS CLAIMS IS ONLY ON THE ASSESSEE IN-AS-MUCH AS I T ONLY IS IN THE KNOWN OF ITS AFFAIRS. RATHER, THE ASSESSEE WOULD NOT BE ABLE TO CONDUCT ITS AFFAIRS IF IT WERE NOT MAINTAINING THE BASIC RECORDS. IT ADMITTEDLY MARKET ING THE PLOTS, SELLING THEM, NAY, FINALIZING THE SALE DEEDS, HOW COULD IT, ASSUM ING SO, I.E., WORKING ON COMMISSION BASIS, CLAIM COMMISSION WITHOUT KNOWING THE SALE AMOUNT ON WHICH THE COMMISSION IS TO BE CLAIMED? RATHER, IT B EING AUTHORIZED TO COLLECT THE SALE PROCEEDS, WOULD TRANSMIT THE SAME, ASSUMIN G SO, TO THE LAND OWNER ONLY AFTER APPROPRIATING ITS COMMISSION, IF NOT THE DEVE LOPMENT EXPENSES (PROPORTIONATE), BESIDES ADJUSTING THE ADVANCE AMOU NT (AGAIN, PROPORTIONATE). REFERENCE, AGAIN, BE MADE TO ANSWERS TO Q. NOS. 6 & 12 OF THE STATEMENT, AFFIRMING PAYMENT TO THE LAND OWNERS ONLY AFTER DED UCTING COMMISSION. THERE IS, AGAIN, NO MATERIAL TO EXHIBIT THE RECOVERY OF T HE DEVELOPMENT EXPENSES, MUCH LESS RECORDING ITS INCURRING, WHICH WOULD BE THROUG H VARIOUS CONTRACTORS, RECORD QUA WHICH WOULD ONLY BE METICULOUSLY MAINTAINED WHERE A RECOVERY IN RESPECT THEREOF IS TO BE MADE. ONLY COMPLETE RECORDS, INCLUDING SUPPORTING VOUCHER S, MAINTAINED PROJECT-WISE, WOULD ENSURE THE SAID CLAI M AS WELL AS OF COMMISSION . HOW WOULD, ONE MAY ASK, THE OWNER CONFIRM AND VERIF Y THE VERACITY OF THE ASSESSEES CLAIM AS TO DEVELOPMENT AND MARKETING EX PENDITURE? AGAIN, IT IS ONLY UPON COMPLETION OF THE DEVELOPMENT WORK THAT THE EX TENT TO WHICH IT RELATES TO A 18 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT PLOT OF LAND COULD BE WORKED OUT IN-AS-MUCH AS THE SAME, TO BE RECOVERED THROUGH THE SALE PROCEEDS (OF THE PLOTS), WOULD BE SO ONLY PROPORTIONATELY, WHILE THE PLOTS COULD BE SOLD PRIOR TO COMPLETION OF DEVE LOPMENT. ALSO, HOW WOULD THE DEVELOPMENT EXPENSES RELATABLE TO THE PLOTS UNSOLD BE RECOVERED AND HOW ? THAT IS, REPRESENTS AN INTRACTABLE ASPECT OF THE CLAIMED ARRANGEMENT, APART FROM THE BEING TOTALLY UN-EVIDENCED AS WELL AS CONTRARY TO T HE OTHER PARTS OF THE STATEMENT AND RECORDS, I.E., OF THE OWNER-VENDOR BEING ENTITLED TO ONLY THE BALA NCE (AGREED) CONSIDERATION IRRESPECTIVE OF THE AMOUNT AT WHICH T HE PLOT/S MAY BE ACTUALLY SOLD SUBSEQUENTLY, I.E., AFTER DEVELOPMENT OF LAND AND PLOTTING, THE DIFFERENCE BEING THE PROFIT OF THE COMPANY . WHY, THE ASSESSEE HAS, CONTRADICTING ITSELF, CLAIMED THESE EXPENSES PER ITS PROFIT AND LOSS A/C, AND, FURTHER, HAS BEEN, IN COMPUTING ITS BUSINESS INCOME, ALLOWED DEVELOPMENT AND MARKETING EXPENSES ON DIFFERENT PROJECTS FOR WHICH THE SAME WERE UNDER TAKEN, AND WHICH IN FACT IS IN FAR IN EXCESS OF THAT CLAIMED (I.E., NET OF THAT ST ATED AS RECOVERED). WE DWELL ON THIS ASPECT, I.E., DEVELOPMENT EXPENDITURE, HERE, A S CLAIM IN ITS RESPECT IS AT PAR WITH AND OPERATIONALLY RELATED TO THAT OF COMMISSIO N. THERE IS IN FACT NO WHISPER OF COMMISSION IN ANY OF THE DOCUMENTS FOUND AND IMP OUNDED DURING SURVEY . THAT APART, I.E., THE CLAIM OF COMMISSION BESIDES B EING UNSUBSTANTIATED AND UNCORROBORATED, ALSO DOES NOT AGREE WITH THE SAID D OCUMENTS, TO WHICH, AS AFORE- STATED, THE PRESUMPTION OF TRUTHFULNESS (OF THEIR C ONTENTS) U/S. 292C APPLIES. THIS IS AS COMMISSION IMPLIES THAT THE ASSESSEE ACTS FOR AND ON BEHALF OF ITS PRINCIPAL, THE LAND OWNER/S, WHO HAVE IN FACT AUTHO RIZED IT (THROUGH GPA) TO DEAL WITH THE LAND WITHOUT REFERENCE THERETO, I.E., IN AN ABSOLUTE MANNER AND, FURTHER, IS ENTITLED ONLY TO THE BALANCE CONSIDERAT ION, I.E., THE AMOUNT ALREADY AGREED UPON (WITH THE VENDEE) NET OF ADVANCE RECEIV ED BY HIM, ON THE SALE OF THE PLOTS OF LAND. THIS IS ALSO MADE ABUNDANTLY CLEAR I N THE SALE AGREEMENTS SUPRA. COMMISSION IMPLIES THAT THE OWNER CONTINUES TO BE S O AND, ACCORDINGLY, IN COMPLETE CONTROL OF THE PROPERTY, INCLUDING ITS DIS POSAL, WITH THE AGENT ACTING ONLY FOR AND ON HIS BEHALF. GPA (FOUND DURING SURVE Y, ALSO FORMING PART OF THE 19 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT PAPER-BOOK) CONNOTES OTHERWISE. WHY WOULD THE AGENT ENTER INTO A SALE AGREEMENT WITH THE OWNER, MUCH LESS PAY HIM AN ADVA NCE ? CLEARLY, IN SUCH A CASE, THE INTEREST OF THE OWNER IN THE PROPERTY STA NDS DETERMINED, I.E., AT THE SALE PRICE AGREED UPON IN THE SALE AGREEMENT, WITH THE G PA BEING FREE TO SELL THE PROPERTY AT ANY PRICE HE DEEMS FIT. HOW COULD IN SU CH A CASE, AS OPPOSED TO THE FORMER, THE OWNER CONFIRM THE SALE PRICE STATED BY THE VENDEE? WE HAVE IN THIS REGARD ALREADY NOTED THE COMPUTATIO N OF (UNPAID) STOCK-IN- TRADE (AS ON DATE, I.E., 12.4.2011) OF ITS DIFFEREN T PROJECTS BY THE ASSESSEE IN THE VERY SAME STATEMENT ! THE AO HAS ALSO COMPUTED PROFIT ON DIFFERENT PR OJECTS BASED ON THE CONSIDERATION STATED IN THE SALE AGREE MENT/S AND THE SALE REALIZATION AS EVIDENCED BY THE RECEIPTS ISSUED. THE ASSESSEES REPUDIATION OF THE STATEMENTS OF ITS DIRECTORS IS, THEREFORE, WITHOUT ANY BASIS I N LAW OR ON FACTS. IN FACT, THE STATEMENT, READ AS A WHOLE, IS IN AGREEMENT WITH TH E ASSESSMENT MADE, BASED ON MATERIALS FOUND, SO THAT IT CAN ONLY BE REGARDED AS CORROBORATIVE . ON THE CONTRARY, THE ASSESSEES CLAIM IS CONTRARY AND DISP ROVED BY THE MATERIAL ON RECORD, TO WHICH THE STATUTORY PRESUMPTION OF TRUTH FULNESS ATTACHES. THE ASSESSEE HAS BEEN, NEEDLESS TO ADD, ALLOWED CREDIT, IN THE C OMPUTATION OF PROFIT OF ITS DIFFERENT PROJECTS, FOR DEVELOPMENT AND MARKETING E XPENSES, IN FACT, IN EXCESS OF THAT CLAIMED . THE STATEMENT BY PK AND, BY IMPLICATION, OF SHRI R.SURESH (IN VERNACULAR), WHO THEREIN REITERATES WHAT STANDS STA TED IN THE FORMER, BINDING HIM THEREBY (REFER PARA 8 OF THE ASSESSMENT ORDER), ARE THUS NOT ONLY RELEVANT, BUT TRUTHFUL ACCOUNTS, TO WHICH EVEN OTHERWISE THE PRES UMPTION OF TRUTHFULNESS, BY IMPLICATION, APPLIES. THERE IS NO ESTOPPLE AGAINST TRUTH. THE VALUE OR RELEVANCE OF THE STATEMENTS IS THUS ESTABLISHED AND THE RELIA NCE THEREON, VALID. THE VALIDITY OF THE STATEMENT IS FURTHER PROVED BY THE AGREEMENT BETWEEN THE PROFIT AS COMPUTED IN THE ASSESSMENT ORDER AND THE CLOSING ST OCK COMPUTED IN THE STATEMENT (ALSO REFER PARAS 4.2,4.3 & 5) 20 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT 4.2 THE ASSESSEES NEXT OBJECTION IS THAT THE SALE AGREEMENTS HAVE BEEN ENTERED INTO BY PK, AS STATED THEREIN, IN HIS CAPAC ITY AS A PARTNER OF THE FIRM GARUDA PROMOTERS AND NOT AS DIRECTOR, GARUDA PRO MOTERS INDIA PVT. LTD.,, THE ASSESSEE, SO THAT THE SAME ARE OF NO CONSEQUENC E IN-SO-FAR AS THE INSTANT ASSESSMENT, WHICH IS ON THE ASSESSEE-COMPANY, IS CO NCERNED. THE ARGUMENT, APPEALING AT FIRST BLUSH, HOWEVER, FAILS ON SCRUTIN Y. THE SALE AGREEMENTS ARE NOT DISPUTED; IN FACT, SAVED BY S. 292C. THE DETAILS OF THE VARIOUS PROJECTS, VIZ. LAND LOCATION, AREA, COST, ETC., STATED THEREIN, IN FACT AGREES WITH THAT STATED IN THE STATEMENT OF PK, FURTHER ENDORSING THE VALIDITY OF BOTH . IN FACT, THE VALIDITY OF THE SALE AGREEMENTS IS NOT UNDER CHALLENGE, AND THE ONLY QUESTION IS AS TO THE PERSON, THE ASSESSEE-COMPANY OR THE FIRM, GARUDA PR OMOTERS, TO WHICH THEY PERTAIN. THE EXISTENCE OF A FIRM BY THAT NAME IS TH US VITAL TO OR THE PREMISES OF THE ARGUMENT INASMUCH AS IT PREDICATES ON THE SAME, I.E., THE EXISTENCE OF A FIRM BY THAT NAME. HOWEVER, NEITHER BEFORE US NOR IN ANY PROCEEDING PRIOR THERETO HAS ANY MATERIAL BEEN ADVANCED IN RESPECT THERETO, EXHIBITING ITS EXISTENCE, MUCH LESS ACTIVITIES. IN OTHER WORDS, THE FIRM IS C OMPLETELY UNEVIDENCED. IT IS ONLY THE EXISTENCE OF THIS FIRM THAT WOULD VALIDATE THE ARGUMENT . IN FACT, THERE HAS BEEN NO REFERENCE BY THE ASSESSEE THERETO AT AN Y STAGE. COUPLE THIS WITH THE FACT THAT, THOUGH ENTERED INTO ON BEHALF OF SAID F IRM, THERE IS NO REFERENCE THERETO IN ANY DOCUMENT FOUND OR IN ANY PROCEEDINGS OR AT ANY STAGE, INCLUDING BEFORE US, BEFORE WHOM THIS PROPOSITION STANDS CANV ASSED FOR THE FIRST TIME. THIS IN FACT IS ITSELF INCONGRUENT BEYOND COMPREHENSION INASMUCH AS THIS WOULD BE THE NATURAL AND ORDINARILY THE FIRST OBJECTION ADVA NCED IN CASE THERE IS A FIRM BY THAT NAME, WHICH IS, AS AFORE NOTED, COMPLETELY CON SPICUOUS BY ITS ABSENCE. RATHER, IN THAT CASE THE ASSESSEE MAY HAVE RETURNED THE INCOME IN ITS HANDS, AND NOT IN THE CASE OF INDIVIDUAL DIRECTORS. THE RETURN S, AS AFORE-NOTED, HAVE BEEN FILED, APART FROM THE ASSESSEE COMPANY, IN THE INDI VIDUAL HANDS OF THE THREE DIRECTORS, WHO ARE CLAIMED TO, BEFORE US, HAVE UNDE RTAKEN THE WORK IN THEIR INDIVIDUAL CAPACITY, APPROPRIATING THE PROFITS AMON GST THEMSELVES, AS IN FACT, 21 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT CLEARLY EVIDENCED BY THE RECEIPT BOOKS, AS FOR EXAM PLE BOOK NO.23 (MARKED COMPANY FILE) QUA K. PALLAYAM PROJECT (P-3). A PART OF THIS PROJECT (4.95 ACRES) HAS BEEN ADMITTEDLY UNDERTAKEN BY PK INDIVIDUALLY A ND THE BALANCE (10.33 ACRES) BY THE ASSESSEE-COMPANY, SO THAT THE APPROPR IATION AMONGST THREE DIRECTORS (THE THIRD, G.VIJAYA SUDHA, BEING REPRESE NTED BY HER HUSBAND, PRADEEP) IS ONLY IN RESPECT OF THE PROFITS OF THE C OMPANY. IF THE PROJECTS ARE UNDERTAKEN BY THE COMPANY AND/OR THE DIRECTORS INDI VIDUALLY, AS CLAIMED PER THEIR REVISED RETURNS (SAVE SOME PROJECTS STATED PE R HIS STATEMENT AS UNDERTAKEN INDIVIDUALLY BY PK), HOW COULD THE SAME PROJECTS BE EXECUTED BY THIS FIRM? THERE IS NO REFERENCE TO ANY OTHER PROJECT IN THE S TATEMENT OF PK, A PARTNER IN THE SAID FIRM, WHO IN FACT HAS CLARIFIED TO HAVE BE EN (PRIOR TO 2010) A PARTNER IN A FIRM BY THE NAME PYRAMID PROPERTY DEVELOPERS, ALSO STATING THE NAMES OF HIS OTHER TWO PARTNERS. NEITHER IN THE ACTIVITIES NOR I N THE STATEMENT OF ASSETS, WHICH HE ENLISTS IN RESPECT OF, APART FROM THE COMPANY, H IMSELF AND HIS FAMILY MEMBERS, IS THERE A MENTION OF THIS FIRM, OR QUA A FIRM BY THAT NAME. NOT ONLY WOULD THERE BE ASSETS, IN CASE OF SUCH A FIRM, BUT INVESTMENT BY ITS PARTNERS, LIKE HIMSELF, THEREIN, WHICH IS ABSENT. AGAIN, WHEN FINA LLY ASKED (VIDE Q.NO.26) IF HE HAS ANYTHING TO SAY, THERE IS NO MENTION OR REFE RENCE TO THIS FIRM EVEN AS THE FIRM IS ENGAGED IN THE SAME ACTIVITIES. THERE IS, W E MUST EMPHASIZE, NOTHING TO INDICATE THE EXISTENCE OF THIS FIRM, OR ANY OTHER F IRM FOR THAT MATTER, IN THE ABUNDANT MATERIALS FOUND DURING SURVEY. IT IS NOT U NUSUAL, WE MAY ADD, IN COMMON PARLANCE, TO REFER TO A COMPANY AS A FIRM. T HE FIRST TWO WORDS OF THE COMPANYS NAME GARUDA PROMOTERS ONLY BEAR ITS IDE NTITY, THAT FOLLOWING IT BEING GENERIC. IT IS AGAIN USUAL TO REFER TO A COMP ANY ONLY BY ITS DISTINGUISHING NAME. THE WORD PARTNER IS ALSO IN COMMON PARLANCE INDICATIVE OF THE PERSON MANAGING THE AFFAIRS OF THE ENTITY UNDER REFERENCE. THE ONLY INFERENCE UNDER THE CIRCUMSTANCES IS THAT THE MENTION OF THE WORDS PAR TNER AND GARUDA PROMOTERS IN THE SAME AGREEMENTS DENOTE THE WORDS DIRECTOR AND GARUDA PROMOTERS INDIA PVT. LTD.,. THE SAID OBJECTION IS THUS AGAI N TO NO MOMENT. 22 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT 4.3 THE NEXT ISSUE IS THE REJECTION OF ACCOUNTS AND ESTIMATION OF PROFITS. THE COMPANY HAS NOT, DESPITE REPEATED REMINDERS, PRODUC ED ANY BOOKS OF ACCOUNT, ADMITTING IN FACT DURING SURVEY PROCEEDINGS TO BE N OT MAINTAINING ANY PROPER BOOKS OF ACCOUNT; NOR WERE ANY FOUND DURING SURVEY PROCEEDINGS, WITH IN FACT THE ASSESSMENT ORDER RECORDING A COMPLETE MESS AS F AR AS ACCOUNTS ARE CONCERNED, WITH VARIOUS ENTRIES OF RECEIPTS AND PAY MENTS SPREAD ACROSS VARIOUS BOOKS AND REGISTERS. WE HAVE ALREADY RECORDED IN TH E EARLIER PART OF THIS ORDER A COMPLETE ABSENCE OF ANY SYSTEMATIC RECORDING OF ITS FINANCIAL TRANSACTIONS BY THE ASSESSEE. THE UNRELIABILITY OF ITS BOOKS OF AC COUNT FOR THE PURPOSE OF DETERMINING PROFITS, AS RETURNED, IS THUS COMPLETE IN THE PRESENT CASE. THE LAW DOES NOT IMPOSE ANY BURDEN ON THE REVENUE TO PROVE BY POSITIVE EVIDENCE THAT THE ACCOUNTS ARE UNRELIABLE OR INCOMPLETE, OR THAT THE FIGURE AT WHICH INCOME IS ASSESSED IS THE CORRECT FIGURE, FOR THE FACTS NECES SARY TO PROVE THIS WOULD ONLY BE IN THE SPECIAL KNOWLEDGE OF THE ASSESSEE. THE DISSA TISFACTION OF THE AO WITH THE ASSESSEES ACCOUNTS AS WELL AS OF THEIR BEING NOT R ELIABLE FOR THE PURPOSE OF ASCERTAINING THE PROFITS FROM ITS ACTIVITIES THUS C ANNOT BE FAULTED WITH. THERE IS IN FACT NO SEPARATE CHALLENGE TO THE PROFIT AS ASSESSE D, NOR WERE ANY ARGUMENTS IN THE MATTER RAISED BEFORE US . THIS ASPECT IS BEING DISCUSSED WITH A VIEW TO ENS URE THE COMPLETENESS OF THE DISCUSSION IN THE MATTER, A S WELL AS OF IT BEING INEXTRICABLY LINKED TO THE PRINCIPAL ISSUE THE VALIDITY OF THE ASSESSMENT AS MADE . THE ESTIMATION BY THE AO HAS ONLY TO BE ON THE BA SIS OF THE MATERIALS FOUND DURING SURVEY, WHICH IS EVEN OTHERWISE PRESUM ED TO REPRESENT A TRUE STATE OF AFFAIRS, WITH WE FURTHER OBSERVING THE CALCULATI ONS MADE ALLOWING, IN CONFORMITY WITH THE SAID MATERIALS AND HIS FINDINGS , DEDUCTION TOWARD DEVELOPMENT (AND MARKETING) EXPENSES. FURTHER, AGAI N, IN CONSONANCE WITH HIS FINDINGS, HE HAS NOT MADE ANY ADDITION IN RESPECT O F COMMISSION INCOME, MATERIAL ON WHICH IS CONSPICUOUS BY ITS ABSENCE. FURTHER STILL, THE PROFITS ESTIMATED BY THE AO AGREE, BROADLY SPEAKING, AND SO FAR AS SUCH AN ESTIMATION 23 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT CAN MATCH, THE CLOSING STOCK AS COMPUTED BY THE ASS ESSEE, REPRESENTED BY PK HIMSELF, VALIDATING BOTH . THIS IS AS THE TWO REPRESENT THE TWO SIDES OF THE SAME COIN ; WHILE PROFIT REPRESENTS THE SOURCE OF (GENERATI ON OF) FUNDS, THE CLOSING STOCK (UNPAID) REPRESENTS THE VALUE OR THE APPLICAT ION OF THE FUNDS. THERE IS THUS A MATHEMATICAL IDENTITY BETWEEN THE TWO, SO THAT TH E AGREEMENT OF THE TWO VALUES, INDEPENDENTLY ARRIVED AT, BASED ON BOTH, CO MMON (VIZ, PURCHASE PRICE, SALE PRICE, NUMBER OF SITES, SITES SOLD, ETC.) AND DIFFERENT (VIZ. UNPAID COST, OVERHEAD/DEVELOPMENT COST, ETC.) PARAMETERS, ENDORS E EACH OTHER, IMPLYING, IF ANY WAS REQUIRED, THE TRUTHFULNESS OF THE ACCOUNT R ENDERED BY PK AS WELL AS THE VERACITY AND THE REASONABLENESS OF THE AOS ESTIMAT ION, WHO WE OBSERVE HAS NOT INCLUDED THE PROFIT FROM THE CONSTRUCTION BUSINESS. SIMILARLY, THE DISCLOSURE PER THE STATEMENT ALSO DOES NOT CONSIDER THE JOINT INVE STMENT BY THE DIRECTORS IN 7.35 ACRES OF LAND (REFER ANSWER TO Q.4). 4.4 THE ASSESSEES GROUND 2, WHICH IS ARGUMENTATIVE , ASSAILING THE DETERMINATION OF INCOME, WHICH IS ASSESSABLE U/S. 2 8, IS, IN VIEW OF THE FOREGOING, DISMISSED, WITH GROUND 1, BEING GENERAL NATURE, REQUIRING NO ADJUDICATION. WE DECIDE ACCORDINGLY. 5. COMING TO GROUND 3, THE AO HAS DISALLOWED .10 LAKHS UNDER SECTION 40(A)(IA), CONSIDERING THAT THE ASSESSEE HAS CLAIME D EXPENSES AT . 16.18 LACS PER ITS PROFIT AND LOSS ACCOUNT, COMPRISING PRIMARI LY PAYMENTS TO MEDIA, VIZ. SUN TV, DTV, UTV, POLYMER TV, BESIDES TAMIL DAILIES , SO THAT TAKING A LENIENT VIEW, . 10 LACS OF THE SAME WAS TAKEN AS LIABLE TO DEDUCT ION OF TAX AT SOURCE AND DISALLOWED IN VIEW OF THE ADMITTED NON-DEDUCTIO N OF TAX AT SOURCE. IN THIS REGARD, IN OUR VIEW, THE DISALLOWANCE IS VALID IN L AW. THIS IS AS THE ASSESSEES BUSINESS PROFIT, THOUGH NOT COMPUTED ON THE BASIS O F ITS ACCOUNTS, I.E., THE SAID PROFIT AND LOSS ACCOUNT, FURNISHED ALONG WITH ITS R ETURN OF INCOME, HAS ADMITTEDLY BEEN ARRIVED AT BY ALLOWING IT DEDUCTION IN RESPECT OF DEVELOPMENT AND MARKETING EXPENSES AT .51.44 LACS (IN RESPECT OF ITS VARIOUS PROJECTS). THE 24 ITA NO.367/MDS/2016 (AY 2011-12) S HREE GARUDA PROMOTERS PVT. LTD. V. DY.CIT IDENTITY OF .16.18 LACS OF THE SAME STANDS CONFIRMED. THE DISAL LOWANCE IS ACCORDINGLY CONFIRMED IN THE GIVEN FACTS AND CIRCUM STANCES OF THE CASE, EVEN AS NO ARGUMENTS CONTESTING THE SAME WERE RAISED BEFORE US. WE DECIDE ACCORDINGLY, DISMISSING THE RELEVANT GROUND. 6. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISS ED. ORDER PRONOUNCED ON FEBRUARY 27, 2017 AT CHENNAI . SD/- SD/- ( . ) ( ) (G. PAVAN KUMAR) (SANJAY ARORA) ! /JUDICIAL MEMBER /ACCOUNTANT MEMBER /CHENNAI, - /DATED, FEBRUARY 27, 2017. EDN . ) '!+/0 10$+ /COPY TO: 1. %& /APPELLANT 2. '(%& /RESPONDENT 3. 2+ ( )/CIT(A) 4. 2+ /CIT 5. 034 '!+! /DR 6. 45# 6 /GF