The ACIT, Central Circle-1(4), Ahmedabad V. M/s. Neptune Infrastructure Pvt.Ltd., Ahmedabad

ITSSA 428/AHD/2011

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8020 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 31-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 19-10-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 21-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S PARIDA SR DR ITSSA NO AND
• Assessee Lawyers: S N DIVETIA; ANIL KHATRIYA
• Keywords: Unexplained investment; Capital asset; Business income; Search and seizure; Loose papers; Document seized; Opportunity of being heard; Principle of natural justice; Corroborative evidences; Valuation report; Competent authority; Documents seized
• Section: 143(3); 133A; 153A; 131; 68; 37; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE SHRI BHAVNESH SAINI, JM AND SHRI A. L. GEHL OT, AM) IT(SS)A NO.450, 451, 452, 453 AND 454 /AHD/2011 A. Y.: 2001-02,2002-03, 2003-04,2004-05 AND 2005-06 NEPTUNE INFRASTRUCTURE PVT. LTD., 205, AAROHI COMPLEX, NEAR GANESH PLAZA, AHMEDABAD VS THE A. C. I. T., CENTRAL CIRCLE - 1(4), AAYAKAR BHAVAN, ASHRAM ROAD, AHMEDABAD PA NO. AAACN 5332 D (APPELLANT) (RESPONDENT) IT(SS)A NO. 428,429, 430, 431 AND 432/AHD/2011 A. Y.: 2001-02, 2002-03, 2003-04, 2004-05 AND 2005- 06 THE A. C. I. T., CENTRAL CIRCLE -1(4), AAYAKAR BHAVAN, ASHRAM ROAD, AHMEDABAD VS NEPTUNE INFRASTRUCTURE PVT. LTD., 205, AAROHI COMPLEX, NEAR GANESH PLAZA, AHMEDABAD PA NO. AAACN 5332 D (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI S. N. DIVETIA AND SHRI ANIL KHATRIYA, AR DEPARTMENT BY SHRI S. S. PARIDA, SR. DR IT(SS)A NO.442, 443, 444, 445, 446 AND 447/AHD/2011 A.Y.: 2001-02, 2002-03, 2003-04, 2004-05, 2005-06 A ND 2006-07 MAHALAXMI BHAVAN CO-OPERATIVE HOUSING SOCIETY LTD., SITE OFFICE, NEAR GHANTAKARAN MAHAVIR, O/S. SARANGPUR GATE, AHMEDABAD VS THE A. C. I. T., CENTRAL CIRCLE - 1(4), AAYAKAR BHAVAN, ASHRAM ROAD,AHMEDABAD PA NO. AACBM 0364 R (APPELLANT) (RESPONDENT) 2 IT(SS)A NO. 436, 437, 438, 439 AND 440/AHD/2011 A. Y.: 2001-02, 2002-03, 2003-04, 2004-05 AND 2005- 06 THE A. C. I. T., CENTRAL CIRCLE -1(4), AAYAKAR BHAVAN, ASHRAM ROAD, AHMEDABAD VS MAHALAXMI BHAVAN CO- OPERATIVE HOUSING SOCIETY LTD., SITE OFFICE, NEAR GHANTAKARAN MAHAVIR, O/S. SARANGPUR GATE, AHMEDABAD PA NO. AACBM 0364 R (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI ANIL KHATRIYA, AR DEPARTMENT BY SHRI S. S. PARIDA, SR. DR DATE OF HEARING: 19-10-2011 DATE OF PRONOUNCEMENT: 31-10-2011 O R D E R PER BHAVNESH SAINI: THIS ORDER SHALL DISPOSE OF ALL THE ABOVE CROSS APPEALS OF BOTH THE ASSESSEES WHICH ARE CONNECTED ON THE MATTER IN ISSUE. FOR THE PURPOSE OF DISPOSAL OF ALL THE APPEALS, THE APPEALS OF ASSESSEE M/S. NEPTUNE INFRASTRUCTURE PVT . LTD. (HEREINAFTER REFERRED AS ASSESSEE COMPANY) ARE TAKEN UP FIRST BECAUSE IN THIS CASE SUBSTANTIVE ASSESSMENT IS MADE. THE PROTECTIVE ASSESSMENT WAS MADE IN THE CASE OF MAHALAXMI BHAVAN CO-OPERATI VE HOUSING SOCIETY LTD. (HEREINAFTER MENTIONED AS SOCIETY). 1.1 WE HAVE HEARD LEARNED REPRESENTATIVES OF BO TH THE PARTIES AT LENGTH, PERUSED THE FINDINGS OF THE AUTHORITIES BEL OW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE ALSO FILED WRITTEN SUBMISSION WHICH IS ALSO TAKEN INTO CONSIDERATION. 3 NEPTUNE INSFRASTRUCTUE PVT. LTD. (ALL APPEALS OF ASSESSEE AND REVENUE) ALL THE CROSS APPEALS ARE DIRECTED AGAINST THE COMM ON ORDER OF THE LEARNED CIT(A), AHMEDABAD DATED 31-03-2011 FOR ASSE SSMENT YEARS 2001-02 TO 2005-06. 2. THE FACTS NOTED IN THE IMPUGNED ORDER OF THE LEARNED CIT(A) ARE THAT THE ASSESSEE IS PRIVATE LIMITED COMPANY INCORP ORATED IN 1997 WITH THE SHARE CAPITAL OF RS.46,000/-. THE ASSESSEE COMPANY CLAIMED THAT DURING THE YEAR UNDER CONSIDERATION, I T WAS ENGAGED IN THE SINGLE PROJECT OF DEVELOPING SHREE GHANTAKARNA MAHAVIR CLOTH MARKET FOR MAHALAXMI BHAVAN CO-OPERATIVE HOUSING SO CIETY LIMITED. IT WAS ALSO ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT WORK AND FINANCIAL ACTIVITIES. THE ASSESSEE COMPANY HAS DEVELOPED THE PROJECT SHREE GHANTAKARNA MAHAVIR CLOTH MARKET ON T HE LAND ADMEASURING 31102 SQUARE METERS BEARING REVENUE SUR VEY NUMBER 20/1(PAIKI) AND FINAL PLOT NUMBER 12(PAIKI) OF TPS NO.18 ORIGINALLY BELONGED TO M/S. GUJARAT STATE TEXTILE CORPORATION LIMITED., AN UNDERTAKING OF THE GOVERNMENT OF GUJARAT. M/S. GUJ ARAT STATE TEXTILE CORPORATION LIMITED RECEIVED THE SAID LAND ALONG WI TH TEXTILE MILL PREMISES, PLANT AND MACHINERY ETC., FROM M/S. AHMED ABAD COTTON MANUFACTURING COMPANY LIMITED (KNOWN AS BAGICHA MIL L) AND WAS VESTED WITH ABSOLUTE OWNERSHIP AND POSSESSION T HEREOF. THEREAFTER, M/S. GUJARAT STATE TEXTILE CORPORATION LIMITED SOLD AND CONVEYED ONLY VACANT LAND I.E. THE LAND IN QUESTION TO MAHALAXMI CO- OPERATIVE HOUSING SOCIETY LIMITED BELONGING TO THE MAHALAXMI GROUP 4 ORIGINALLY HEADED BY SHRI BHOLABHAI PATEL. THE MASS IVE PROJECT SHREE GHANTAKARNA MAHAVIR CLOTH MARKET WAS STARTED ON THI S LAND BY SHRI BHOLABHAI PATEL. SHRI BHOLABHAI PATEL COULD NOT GAR NER ENOUGH FUNDS REQUIRED FOR THE PROJECT; AS A RESULT SHRI RAMANBHA I D. PATEL OF M/S. APOLLO ORGANIZERS AND DEVELOPERS ACQUIRED THE DEVEL OPMENT RIGHTS FOR THE IMPUGNED PLOT. HOWEVER, THIS NEW ENTRANT WH O ACQUIRED THE DEVELOPMENT RIGHTS WAS NOT HAVING ADEQUATE FUNDS RE QUIRED FOR THE ACCOMPLISHMENT OF THE SHREE GHANTAKARNA MAHAVIR MAR KET PROJECT. THEREFORE, NEPTUNE GROUP HEADED BY SHRI RASIKBHAI D . PATEL GOT INVOLVED IN IT. THE LATER CONSTRUCTED AND DEVELOPED SHREE GHANTAKARNA MAHAVIR MARKET CLOTH MARKET FINALLY. TH E SHREE GHANTAKARNA MAHAVIR CLOTH MARKET IS A HUGE MARKET C OMPLEX. IT CONSISTS OF 13 BUILDINGS COMPRISING OF LOWER/BASEME NT, GROUND AND THREE FLOORS ABOVE. THESE BUILDINGS ARE NUMBERED FR OM 'A' TO 'M' AND COMPRISE OF 1985 SHOPS WITH TOTAL BUILT UP ARE OF 6 ,20,460 SQ. FT. THE PROJECT IS LOCATED IN PRIME BUSINESS AREA. 2.1 IN THE ASSESSEE'S CASE, SEARCH ACTION WAS CO NDUCTED U/S 132(1) OF THE IT ACT ON 01-11-2006. SIMULTANEOUSLY, SURVEY ACTIONS WERE ALSO CONDUCTED UNDER SECTION 133A OF THE IT ACT IN RESPECT OF FEW PREMISES OF NEPTUNE GROUP OF CASES. DURING THE COUR SE OF SEARCH AND SURVEY ACTIONS, CERTAIN DOCUMENTS WERE SEIZED A ND CERTAIN STATEMENTS WERE RECORDED AND ALSO CERTAIN STATEMENT S WERE TAKEN SUBSEQUENT TO IT. THE SEIZED DOCUMENTS INCLUDED A L OOSE PAPER PAGE NOS. 222 TO 224 OF ANNEXURE - A-1 OF SEIZED MATERIA L WHICH IS ON THE LETTER HEAD PAPER OF M/S. NEPTUNE INFRASTRUCTURE PVT. LTD., FOUND FROM THE OFFICE SITE OF GHANTAKARNA MARKET. THIS PAPER I S EXHIBITED 5 ANNEXURE- A OF THE ASSESSMENT ORDER. IT CONTAINED D ETAIL WORKING OF THE PROJECT SHOWING DIFFERENT BLOCKS, FLOOR UNDER E ACH BLOCK; SHOP NO. UNDER EACH FLOOR, TOTAL AREA OF EACH FLOOR, VALUE O F SQ. FT. IN RUPEES, FLOOR WISE AMOUNT AND GRAND TOTAL OF EACH BLOCK. THERE ARE 13 BLOCKS AND THE GRAND SUMMARY AREA OF BLOCK NOS. A TO M IS SHOWN AS 620450 SQ. FT. THE SUM TOTAL OF ALL THE BLOCKS IS SHOWN AT RS.1,41,46,26,000/- BASED ON THIS LOOSE PAPER. THE AO HAS DRAWN A CONCLUSION THAT THE ASSESSEE HAS REALIZED THE TOTAL SUM OF RS.1,41,46,26,OOO/- FOR THE ENTIRE PROJECT AND AS A GAINST THE SAME, IT HAS RECORDED TOTAL REALIZED VALUE OF RS.50,89,29,741/- AND THERE FORE, THE BALANCE AMOUNT OF RS.90.57 CRORES (RS.141.46 CR ORES RS.50.89 CRORES) IS A SUPPRESSED INCOME. THE AO, TH EREFORE, APPORTIONED THE AMOUNT OF RS.90.57 CRORES IN THE PR OJECT YEARS FROM ITS COMMENCEMENT OF ASSESSMENT YEAR 1997-98 TO 2005 -06 IN THE RATIO OF CUMULATIVE SALES SOLD IN THE BOOKS AS UNDE R:- ASSESSMENT YEAR CUMULATIVE SALES PROCEEDS SHOWN IN THE BOOKS PERCENTAGE UNDISCLOSED INCOME (RS.) 1997-98 27,75,000 0.55 49,81,186 1998-99 1,30,00,000 2.00 1,81,13,405 1999-00 4,40,38,306 6.10 5,52,45,886 2000-01 8,07,88,891 7.22 6,53,89,393 2001-02 24,41,05,634 32.09 29,06,29,586 2002-03 37,89,59,285 26.50 24,00,02,618 2003-04 40,77,28,937 5.66 5,12,60,937 2004-05 49,39,43,660 16.94 15,34,20,542 2005-06 50,89,29,741 2.94 1,06,56,988 6 THE ASSESSEE HAS DECLARED TOTAL INCOME AND THE GROS S DEVELOPMENT FEES AS UNDER:- ASSTT. YEAR GROSS RECEIPT (RS.) TOTAL INCOME DECLA RED (RS. 2001-02 13,80,000 30.850 2002-03 11,40,000 26,968 2003-04 5,32,600 (-) 81,290 2004-05 74,500 (-)4,01,947 2005-06 NIL NIL ON THE BASIS OF ABOVE FACTS, THE AO ASSESSED THE TO TAL INCOME BY BRINGING TO TAX THE ADDITIONAL INCOME AS SUPPRESSED INCOME AND MADE APPORTIONMENT AS SHOWN ABOVE IN CHART IN EACH YEAR. 2.2 THE AO HAS ALSO DRAWN THE CONCLUSION FOR INCOME ADDITIONS BASED ON THE MATERIALS AVAILABLE ON THE RECORD, CO-RELATING, THE LOOSE PAPER FIGURES WITH THE SALE PRICE OF CERTAIN SHOPS BEARING N OS. A/106, 107, B/27, 28, J/231 & 232, J/201 AND CONCLUDED THAT THE PRICE RECORDED IN THE BOOKS OF ACCOUNTS WERE AT A LOWER R ATE AND WITH THE PRICE STATED IN THE STATEMENT RECORDED OF SHRI NIKIN PRABHUDAS PATEL - CHAIRMAN OF MAHALAXMI BHAVAN CO-OPERATIVE HOUSING S OCIETY LTD. IN REPLY TO QUESTION NO. 5 OF HIS STATEMENT DATED 1-11 -2006, WHEREIN, SHRI NIKIN PRABHUDAS PATEL SUBMITTED THAT THE PREVA ILING PRICE AS ON THE DATE OF STATEMENT RANGE FROM GROUND FLOOR TO TH IRD FLOOR BETWEEN RS.8,000 TO RS.1,000 DEPENDING UPON THE SITUATION A ND LOCATION OF THE SHOPS. SIMILARLY, SHRI BHOLABHAI PATEL, KEY PER SON OF MAHALAXMI HOUSING & FINSTOCK PVT. LTD. SUBMITTED THAT THE LOO SE PAPER CONTAINED DETAILS OF CALCULATION PER SQ. FT. OF FLOOR WISE OF SHOPS AND OFFICES IN 13 BLOCK (BLOCKS A TO M) IN FIVE FLOORS, THE TOTAL FIGURE OF RECEIPTS INDICATED IN THE LOOSE PAPER IS RS.1,41,46 ,26,000/-. BASED ON THIS LOOSE PAPER AND THE STATEMENTS OF THE TWO PERS ONS, THE AO HAS 7 DRAWN A CONCLUSION THAT THE SALE PRICE RECORDED IN THE BOOKS OF ACCOUNT IS UNDERSTATED AND THAT THE REAL PRICE RECE IVED IS RS.1,41,46,26,000/-. THE AO FURTHER RELIED ON THE A NNEXURE A-3 PAGE 26 OF THE SEIZED MATERIAL FROM THE OFFICE OF SHRI B HOLABHAI PATEL, WHICH IS A COST CERTIFICATE DATED 21-2-2000 ISSUED BY THE KEY PERSON OF ASSESSEE COMPANY, WHEREIN, THE PRICE OF CERTAIN SHOPS HAVE BEEN DECLARED AT HIGHER PRICE THAN THE DOCUMENTED PRICE. FURTHER, THE AO HAS DRAWN CONCLUSION FROM THE POST SEARCH INQUIRY M ADE FROM THE MEHSANA URBAN COOPERATIVE BANK LTD. THAT COST OF SH OP REFLECTED IN THE LOAN DOCUMENT IS HIGHER THAN THE SAME RECORDED IN THE BOOKS OF ACCOUNT. IN THE SAID DOCUMENT, SHRI RASIKBHAI PATEL - MANAGER OF ASSESSEE COMPANY STOOD AS THE SURETY TO THIS LOAN T RANSACTIONS. FURTHER, THE AO HAS TAKEN THE BASE OF GOVT. REGISTE RED VALUATION REPORT WHEREIN THE VALUATION IS PLACED IN REPORT DA TED 16-1-2001 OF C. K. PATEL, VALUER AND REPORT DATED 26-1-2001 OF MUKUND C. SHAH, VALUER. THE VALUE PLACED BY THEM FOR GROUND FLOOR T O THIRD FLOOR CHANGES FROM RS.3800/- TO RS.4600/- FOR GROUND FLOO R AND LOWER PRICE FOR FIRST FLOOR TO THIRD FLOOR. THE AO, THEREFORE, CONCLUDED THAT THE PRICE INDICATED IN THE LOOSE PAPER WAS THE REAL PRICE FET CHED BY THE ASSESSEE COMPANY. THEREFORE, THE DIFFERENCE BETWEEN THE PRICE INDICATED IN THE LOOSE PAPER AND THE PRICE INDICATE D IN THE BOOKS OF ACCOUNTS IS SUPPRESSED RECEIPT AND CHARGEABLE TO TA X. ACCORDINGLY, THE AO HAS MADE THE ADDITION TO INCOME AS NOTED ABO VE. 3. THE ADDITION OF UNDISCLOSED INCOME WAS CHALLENGE D BEFORE THE LEARNED CIT(A). IT WAS CONTENDED INTER ALIA THAT TH E ASSESSEE COMPANY, NEPTUNE INFRASTRUCTURE PVT. LTD. IN ALL TH E YEARS WAS 8 ENGAGED IN THE DEVELOPMENT OF THE SINGLE PROJECT BY THE NAME SHREE GHANTAKARNA MAHAVIR CLOTH MARKET, THE PROJECT WAS D EVELOPED ON BEHALF OF MAHALAXMI BHAVAN COOPERATIVE HOUSING SOCI ETY LTD. WHICH OWNED THE LAND, THE DEVELOPMENT WORK WAS EXECUTED B Y THE NEPTUNE INFRASTRUCTURE PVT. LTD., THE ASSESSEE UNDER THE DE VELOPMENT AGREEMENT EXECUTED WITH THE SOCIETY. THE ASSESSEE W AS WORKING AS A SUPERVISION CONTRACTOR AND CARRIED OUT THE DEVELO PMENT WORK AS PER APPROVED PLANS. THE RAW MATERIAL REQUIRED FOR CONST RUCTION AND THE ENGAGEMENT OF THE LABOUR WAS DONE BY THE SOCIETY TH E MATERIAL AND LABOUR BILLS WERE RAISED BY THE SUPPLIERS AND LABOU RS IN THE NAME OF THE SOCIETY ONLY, THE LAND PROPERTY AND THE SUPERST RUCTURE WORK IN PROGRESS IS RECORDED IN THE BOOKS OF SOCIETY, THE A SSESSEE COMPANY ONLY SUPERVISED THE ENTIRE PROJECT AND MANAGED THE FUNDS REQUIRED FOR THE PROJECT. THE LEARNED COUNSEL FOR THE ASSESSEE A LSO CONTENDED THAT THE ASSESSEE HAD NO RIGHT, TITLE, INTEREST OR CLAIM EITHER IN THE LAND OR ON THE SUPERSTRUCTURE VIZ. SHREE GHAHTAKARNA MAH AVIR CLOTH MARKET. 3.1 THE MAIN CONTENTIONS OF THE ASSESSEE WERE THAT (A) THE ASSESSEE WAS MERE CONTRACTOR ENGAGED IN THE DEVELOP MENT WORK OF THE LAND PROPERTY OWNED AND BELONG THE SOCIETY, (B) THE OWNERSHIP AND THE LAND PROPERTY AND SUPERSTRUCTURE THEREON WA S OF THE SOCIETY, (C) THE ASSESSEE COMPANY MERELY SUPERVISED THE ENTI RE PROJECT IN TERMS OF THE DEVELOPMENT AGREEMENT AND RECEIVED CON SIDERATION TOWARDS DEVELOPMENT CHARGES WHICH WERE REFLECTED IN BOOKS OF ACCOUNTS, (D) THE ASSESSEE COMPANY HAS ARRANGED THE FINANCE FOR THE PROJECT AND HAS CHARGED INTEREST THEREON AND TD S WAS MADE BY 9 THE SOCIETY AND THIS INCOME WAS OFFERED FOR TAXATIO N, (E) THE ALLOTMENT OF THE SHOPS TO THE BUYERS WAS MADE BY THE SOCIETY UNDER THE RECOMMENDATION OF THE ASSESSEE AFTER THE BUYERS WER E ENROLLED AS MEMBERS OF THE SOCIETY, (F) THE ANNEXURE - A PAGE N OS. 222 TO 224 REFLECTING THE PROJECT DETAILS WERE MERE ESTIMATION /PROJECTION SHEET ONLY AND NOT PAPER TO INDICATE THE SALE CONSIDERATI ON, (G) THE FACT THAT GROUP BOOKING WAS MADE IN RESPECT OF THREE PARTIES REFLECTS THE CORRECT ALLOTMENT PRICE IN AS MUCH AS THE PURCHASE PRICE IN THEIR HANDS WAS ACCEPTED BY THE DEPARTMENT UNDER SCRUTINY ASSESSMENT MADE BY THE CENTRAL CIRCLE OFFICER, (H) THE ALLOTME NT WAS MADE AT PREVAILING MARKET PRICE PREVAILING AFTER THE PERIOD OF EARTH-QUAKE, (I) THE COST CERTIFICATE ISSUED BY THE MANAGER OF THE A SSESSEE COMPANY WAS MADE AVAILABLE TO ACCOMMODATE THE BUYERS OF THE SHOP FOR DRAWING HIGHER AMOUNT OF LOAN SO AS TO HELP THEM TO PURCHASE THE PROPERTY ACCOMMODATING THEIR MARGIN MONEY, (J) THE DIFFERENCE IN THE PRICE RATE SHOWN BY THE AO IN PARA 8 OF THE ORDER S TOOD EXPLAINED AND RECONCILED, (K) THE ALLOTMENT PRICE COLLECTED F OR SOCIETY FROM MEMBERS WAS AT THE PREVAILING MARKET RATES SUPPORTE D BY THE REGISTERED SALE DOCUMENT EFFECTED IN THE CASES OF S UBSEQUENT TRANSFER, WHICH PRICE MATCH WITH THE ALLOTMENT PRIC E FOUND RECORDED IN THE BOOKS, (L) A SPECIFIC REQUEST WAS MADE BY ASSES SEE TO THE AO TO GIVE OPPORTUNITY BEFORE TAKING ANY ADVERSE ACTION A ND ALSO TO OFFER CROSS EXAMINATION OF SUCH PERSON, HOWEVER, THIS OPP ORTUNITY WAS NOT GIVEN, (M) THE ASSESSEE HAS FILLED THE AFFIDAVITS O F FIVE PERSONS INDICATING THAT CERTIFICATES WERE GIVEN TO THEM BY THE REPRESENTATIVE OF THE ASSESSEE COMPANY TO ACCOMMODATE THEIR NEEDS AND THAT THE ACTUAL CONSIDERATION GIVEN TO NEPTUNE INFRASTRUCTUR E PVT. LTD. WAS AS 10 PER MONEY RECEIPTS ISSUED AND IT WAS ONLY PRICE PAI D AND THAT NO OTHER CONSIDERATION WAS PAID, (N) THERE WAS NO MATE RIAL EVIDENCE ON RECORDS TO ESTABLISH THAT THE SO CALLED SUPPRESSED MONEY WAS RECEIVED BY THE ASSESSEE, (O) THE AO HAS MADE AN ER ROR IN THE MEASUREMENT OF THE CONSTRUCTION AREA. THE AO HAS TA KEN INTO CONSIDERATION THE MEASUREMENT OF 620450 SQ. FT. (ON THE BASIS OF THE SEIZED PAPER ANNEXURE - A PAGE NOS. 222 TO 224), WH EREAS, THE ACTUAL CONSTRUCTION MEASUREMENT AREA IS 395636, WHI CH WAS CONFIRMED BY THE DEPARTMENT VALUATION OFFICER, UNIT -II, UNDER HIS REPORT DATED 17 TH FEBRUARY 2011. THEREFORE, THE ALLEGED SUPPRESSED M ONEY CONSIDERED AS INCOME IN ASSESSMENT FOR THE NON-CONS TRUCTED AREA WAS TOTALLY ILLEGAL AND UNWARRANTED. THE LEARNED CO UNSEL FOR THE ASSESSEE FILED THE WRITTEN SUBMISSION ON 25-03-2011 WHICH READS AS UNDER: '1. IN FURTHERANCE TO WHAT IS BEING SUBMITTED EARLI ER, THE APPELLANT BEGS TO SUBMIT AS UNDER:- (I) THE DOCUMENTS SEIZED AND RELIED UPON BY THE ASSESSING OFFICER BEING SCHEDULE A DOES NOT STATE THAT TOTAL SALE PRICE FOR BLOCK NO. A TO M FOR THE ACTUALLY AND PHYSICALLY CONSTRUCTED AREA OF 6,20,45 0 SQ. FT. FOR RS.1,41,46,26,000/- ACTUALLY RECEIVED O R FOUND FROM THE POSSESSION OF THE APPELLANT /ASSESSES NAMELY NEPTUNE INFRASTRUCTURE PVT. LTD. BUT IT WAS A FUTURE BUDGETARY PROJECTION PREPARED MUCH BEFORE THE CONSTRUCTION WORK AND/ OR THE BOOKING WAS STARTED. IN FACT IT HAS BEEN CLEARLY NARRATED IN THE SEIZED DOCUMENTS AS 'VALUE OF RS. /SQ. FT' ONLY AND NOT AS MISINTERPRETED BY THE ASSESSING OFFICER AS SALE PRICE REALIZED. THE DOCUMENT HAS TO BE READ AND INTERPRETED AS SUCH AND NOT OTHERWISE AS HAS BEEN DONE BY THE 11 ASSESSING OFFICER. AFTER THE SITE INSPECTION AND TH E REPORT OF DVO, IT IS NOW PROVED BEYOND DOUBT THAT NEITHER THE PERMISSION FOR BLOCK NO. A TO M FOR CONSTRUCTION ADMEASURING 6,20,450 SQ. FT. WAS GRANTED BY THE COMPETENT AUTHORITY NOR THE CONSTRUCTION WORK OF 6,20,450 SQ. FT. WAS COMPLETED AT THE RELEVANT TIME. IN FACT, THE UNCONSTRUCTED AR EA AS ON 31.12.2009 WAS OF 1,89,898 SQ. FT. (II) THE RELIANCE PLACED BY THE ASSESSING OFFICER ON SOME OF THE VALUATION CERTIFICATES IS ALSO MISPLACE D IN AS MUCH AS THAT THE SAME WERE ISSUED FOR THE PURPOSE OF THE CLIENTS AND DUE CONFIRMATIONS IN THE FORM OF AFFIDAVITS ARE ALSO PLACED ON RECORD. THUS, THE SAME STANDS REBUTTED WITH CONCRETE EVIDENCE AS AFORESAID. 2. ASSUMING WITHOUT CONCEDING AND ADMITTING, IN T HE ALTERNATIVE AT THE MOST THE ADDITION FOR THE VALUE TO THE EXTENT OF SUCH INSTANCES QUOTED IN THE ASSESSMENT ORDER COULD BE SUSTAINED AND IT CANNOT BE TAKEN AS A BASE TO FORTI FY THE FUTURE BUDGETARY PROJECTION DRAWN BEFORE THE START OF THE WORK AS AFORESAID BEING VALUE AT RS.1,41,46,26,000/- AS SAL E PRICE RECEIVED AND TO TAX IT. THERE IS NO DOCUMENTARY EV IDENCE TO SUGGEST THAT THE AFORESAID VALUE IS RECEIVED IN FUL L AND NOT RECORDED IN THE BOOKS OF ACCOUNT. FURTHER THE ENTIR E ADDITION MADE IN ALL THE YEARS IS OF THE ALLEGED SALE PRICE ONLY AND IT IS A SETTLED LAW THAT ONLY INCOME EARNED OUT OF SUCH SAL E CAN BE TAXED. IN THE INSTANT CASE NOWHERE IN THE RELIED SE IZED DOCUMENT THE COST OF CONSTRUCTION IS MENTIONED AND IN SUCH AN EVENTUALITY THE SET OFF OF COST INCURRED HAS TO BE ALLOWED. AT THE MOST PROFIT ON IT COULD BE TAXED BUT CERTAINLY NOT THE WHOLE AMOUNT. 3. THE APPELLANT ALSO RELIES ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS IN SUPPORT OF THE ABOVE CONTENTIONS: - 3.1 A. RAMAN & C0. 67 ITR11 (SC). HEADNOTES :- 12 'LAW DOES NOT OBLIGE A TRADER TO MAKE MAXIMUM PROFIT.' IN THE APPELLANT'S CASE THE SCHEDULE A' SEIZED AN D RELIED WAS A FUTURE BUDGETARY PROJECTION OF THE VAL UE ONLY AND NOT ACTUAL RECEIPT. MOREOVER, BEING A RECESSION ARY MARKET AT THE RELEVANT TIME DIFFERENT PRICE WAS CHA RGED AS SUCH THE VALUE AS SHOWN CANNOT BE TAKEN AS SALE PRI CE AND TO TAX AS SUCH. 3.2 S.P. GOYAL V. DEPUTY COMMISSIONER OF INCOME TAX [2002] 82 ITD 85 (MUM.) (TM). HEADNOTES 'SECTION 68 OF THE INCOME TAX ACT, 1961 - CASH CREDITS -ASSESSMENT YEAR 1993-94 - ADDITION OF RS.60 LACS HAD BEEN MADE BY ASSESSING OFFICER ON ACCOUNT OF CONSIGNMENT SALES ON. BASIS OF ENTRIES FOUND IN LOOSE SHEETS OF DIARY BELONGING TO ASSESSEE SEIZED DURING COURSE OF SEARCH - WHETHER LOOSE SHEETS OF PAPER TORN OUT OF DIARY FOR 1992 COULD BE CONSIDERED AS BOOKS FOR PURPOSE OF SECTION 68 - HELD, NO -WHETHER AS IT WAS ONLY A PLANNING, NOT SUPPORTED BY ACTUAL CASH, THEN THERE HAD TO BE CIRCUMSTANTIAL EVIDENCE FOUND IN FORM OF EXTRA CASH, JEWELLERY OR INVESTMENT OUTSIDE BOOK, EXPLANATION OFFERED BY ASSESSEE COULD NOT BE REJECTED - HELD, YES - WHETHER ADDITION MADE WAS ON MERE SUSPICION WITHOUT ANY CORROBORATIVE EVIDENCE AND HAD TO BE DELETED - HELD, YES. IN THE APPELLANT'S CASE SCHEDULE 'A' WAS PREPARED I N THE NAME OF MAHALAXMI BHAVAN CO-OPERATIVE HOUSING SOCIETY LTD. WHO IS OWNER OF THE 'SHREE GHANTAKARNA MAHAVIR CLOTH MARKET'- PROJECT AND THE APPELLANT HA S EVEN AT THE TIME OF SEARCH PROCEEDINGS VIDE ANSWER TO QUESTION 25 OR STATEMENT DATED 26.03.2007, HAS 13 CATEGORICALLY STATED THAT NO SUCH CONSTRUCTION AS MENTIONED IS CARRIED OUT BECAUSE OF LACK OF PERMISS ION OF AHMEDABAD MUNICIPAL CORPORATION AND ALSO THE SCHEDU LE WAS PREPARED BEFORE THE BEGINNING OF THE PROJECT AN D IT IS NOT IN ACCORDANCE WITH THE ACTUAL ALLOTMENT AND BOO KING AMOUNT. THE COLLECTION SHOWN IN THE BOOKS OF ACCOUN T IS THE TRUE COLLECTION AND NOTHING IS CONCEALED. THE APPELLANT'S CASE IS EVEN ON MORE SOUND FOOTING AS I N THE CITED CASE THE DEPARTMENT DID NOT RECORD ANY STATEM ENT OF THE ASSESSEE REGARDING THAT PAPER DURING THE COU RSE OF SEARCH. 3.3 RADHE DEVELOPERS (INDIA) LTD. V DY. CIT (ASST) S.R. 5, AHMEDABAD IN IT(SS) A.N0.103/AHD/1997 BY ITAT AHMEDABAD BENCH 'B' DATED 15.01.1999. AS AFFIRMED -BY GUJARAT HIGH COURT IN THE CASE OF DEPUTY COMMISSIONER OF INCOME TAX V. RADHE DEVELOPERS (INDIA) LTD. [2010] 329 ITR 1 (GUJ). HEAD NOTES:- 'THE TRIBUNAL HAD AFTER APPRECIATING EVIDENCE ON RECORD FOUND THAT THESE FIGURES WERE PROJECTED BUDGETARY ESTIMATES AND NO ACTUAL TRANSACTION HAD TAKEN PLACE.' IN THE APPELLANT'S CASE HAVING REGARDS TO THE FACTU AL POSITION AS NARRATED IN PARA 1 (I) ABOVE COUPLED WITH ANSWER TO QUESTION NO.25 NARRATED ABOVE BELOW THE C ASE OF S.P. GOYAL (SUPRA) IT SHOULD BE APPRECIATED THAT THE SAME CANNOT BE TREATED AS ACTUAL RECEIPT BUT FUTURE BUDGETARY PROJECTION ONLY AND IT CANNOT BE ADDED AS INCOME. 4. THE APPELLANT THEREFORE EARNESTLY REQUEST YOU HO NOUR TO CONSIDER THE ABOVE SUBMISSIONS JUDICIOUSLY BEFORE DECIDING THE APPEALS. 14 4. THE LEARNED CIT(A) CONSIDERING THE EXPLANATION O F THE ASSESSEE IN THE LIGHT OF THE FINDINGS OF THE AO AND MATERIAL ON RECORD DIRECTED TO ESTIMATE THE TAXABLE PROFIT AT 20% OF T HE TOTAL RECEIPTS OF THE PROJECT AND PARTLY ALLOWED ALL THE APPEALS OF T HE ASSESSEE. THE FINDINGS OF THE LEARNED CIT(A) IN PARA 6 TO 11 OF T HE APPELLATE ORDER ARE REPRODUCED AS UNDER: 6. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT COMPANY AND THE CONTENTION OF THE ASSESSING OFFICER , AS MENTIONED IN THE ASSESSMENT ORDER. I HAVE ALSO REFE RRED TO THE RELEVANT DOCUMENTS OF THE SEIZED MATERIALS. BEFORE ADJUDICATING THE ISSUE, IN ORDER TO DETERMINE THE CORRECT MEASUR EMENT OF THE CONSTRUCTION AREA OF THE SHOPS, THE MATTER WAS REFE RRED BY THE ASSESSING OFFICER DURING THE COURSE OF APPEAL HEARI NG TO THE VALUATION OFFICER, UNIT-L, AHMEDABAD. AS PER THE LO OSE PAPER, TOTAL CONSTRUCTION AREA 620450 SQ. FT. (AS PER ANNE XURE-A), WHEREAS, THE DEPARTMENT VALUATION REPORT CONFIRMS T HE AREA OF CONSTRUCTION OF THE SHOPS (BUILT-UP AREA) AT 395636 SQ. FT. AS SHOWN BY THE APPELLANT COMPANY. THEREFORE, THE TOTA L AREA AND VALUE CONSIDERED BY THE A.O. AS PER THE LOOSE PAPER IS NOT THE CORRECT FACTUAL POSITION. THE VALUATION OFFICER, UN IT-LL, AHMEDABAD HAS CONFIRMED THAT THE COMPLETE CONSTRUC TION WORK AS PER THE LOOSE PAPER WAS NOT DONE EVEN ON THE DAT E OF INSPECTION IN 20-10 -2011. THE VALUATION OFFICER HA S REPORTED THAT OUT OF 13 BLOCKS A TO M, THERE WAS NO CONSTRUC TION WORK PUT ON LAND BLOCK NO. F, G & H (FULLY VACANT LAND) AND BLOCK E SHOPS NO. 20 TO 32 FROM BASEMENT TO TOP FLOOR. THUS , THE CONTENTIONS OF THE A.R. BEFORE THE A.O. THAT THE E NTIRE PROJECT AS PER LOOSE PAPER WAS NOT CONSTRUCTED IS FOUND TO BE TRUE. 7. THE OTHER ISSUES, EMERGING IN THE PRESENT CASE FOR ADJUDICATION ARE:- (I) IN WHICH CASE, THE 'UNACCOUNTED INCOME', IF ANY , SHOULD BE SUBJECTED TO TAX I.E. WHETHER IN THE ASSESSMENT OF THE APPELLANT COMPANY OR IN THE CASE OF THE CO-OP, SOCIETY VIZ. MAHALAXMI BHAVAN CO-OP. HOUSING SOCIETY; 15 (II) BASED ON THE APPRECIATION OF FACTS AND OTH ER CORROBORATIVE AND CIRCUMSTANTIAL EVIDENCES, WHAT SHOULD BE 'UNACCOUNTED INCOME', WHICH SHOULD BE SUBJECTED TO TAX? 8. AS REGARDS TO THE ADJUDICATION ON THE FIRST ISS UE, IT IS NOTICED THAT THE APPELLANT HAS ENTERED INTO A DEVEL OPMENT AGREEMENT WITH M/S. MAHALAXMI CO-OPERATIVE HOUSING SOCIETY ON 15.06.1997, WHEREIN M/S. APOLLO ORGANISERS AND D EVELOPERS HAS ACTED AS CONFIRMING PARTY. THE APPELLANT IS TER MED AS 'PARTY OF THE THIRD PART IN THE AFOREMENTIONED DEVELOPMEN T AGREEMENT. THE FOLLOWING CLAUSES OF THE DEVELOPMENT AGREEMENTS ARE WORTH MENTIONING:- '9(B) ACCORDING TO THIS AGREEMENT, YOU, THE PARTY OF THE THIRD PART, AS DEVELOPERS OF LAND ACQUIRED BY THE PARTY OF THE FIRST PART, ARE ELIGIBLE FOR ALL THE R IGHTS. ACCORDINGLY, YOU, THE PARTY OF THE SECOND PART ARE REQUIRED TO GET THE POSSESSION OF THE WHOLE LAND AND IN RELATION TO THE DEVELOPMENT OF SAID ASSET, T HE PARTY OF THE THIRD PART IS REQUIRED TO PROVIDE ALL NECESSARY FACILITIES AND TO APPOINT STAFF MEMBERS A T ITS CONVENIENT AND AVAILABILITY AND WE, THE PARTY O F THE FIRST PART WILL HAVE NO OBJECTION IN RELATION T O THIS MATTER.' . '9(D) ACCORDING TO THIS DEVELOPMENT AGREEMENT, T HE PARTY OF THE THIRD PART IS ELIGIBLE FOR ALL THE RIG HTS REGARDING THE NECESSARY ACTIVITIES CARRIED OUT BY THEM ON BEHALF OF THE PARTY OF THE FIRST PART FOR DEVELOPMENT OF THE LAND ACQUIRED BY THE PARTY OF THE FIRST PART I.E. SOCIETY. AND FOR CARRYING OUT S UCH DEVELOPMENT ACTIVITIES, THE PARTY OF THE THIRD PART IS ELIGIBLE ON BEHALF OF THE PARTY OF THE FIRST PART I F THEY ARE REQUIRED TO OBTAIN ANY PERMISSION FROM CENTRAL GOVERNMENT, STATE GOVERNMENT AND MUNICIPAL CORPORATION. AND IN RELATION TO DEVELOPMENT OF THE ASSET, THE PARTY OF THE THIRD PART IS ELIGIBLE ON B EHALF OF THE PARTY OF THE FIRST PART IF THE PARTY OF THE THIRD 16 PART IS REQUIRED TO OBTAIN PERMISSION FOR CONSTRUCT ION FROM THE TOWN PLANNING OFFICE OF MUNICIPAL CORPORATION, COLLECTOR, DEPUTY COLLECTOR, COMMISSIONER AND ANY OTHER DEVELOPMENT AUTHORITIES. WE, THE PARTY OF THE FIRST PART ARE AGREED TO PASS NECESSARY RESOLUTION, SIGN THE DOCUMENTS, AND GIVE DECLARATION AND UNDERTAKING FOR CARRYING OUT ALL THE AFORESAID ACTIVITIES BY TH E PARTY OF THE THIRD PART. AND, WE, THE PARTY OF THE FIRST PART UNDERTAKE THE LIABILITY FOR THE ABOVEMENTIONED ACTIVITIES CARRIED OUT BY THE PARTY OF THE THIRD PART. ' 9(E) THE PARTY OF THE THIRD PART IS AUTHORIZED TO APPOINT ENGINEERS, SUPERVISORS, ARCHITECT, SOLICITORS AND NECESSARY STAFF FOR CARRYING OUT CONSTRUCTION AND DEVELOPMENT ACTIVITIES ON THE LAND ACQUIRED BY THE SOCIETY. AND FOR THE PURPOSE OF CONSTRUCTION ON THE LAND, THE PARTY OF THE THIRD PART IS AUTHORIZED DO ENTER INTO CONTRACT FOR GOODS AND LABOUR WORK AND T O PURCHASE ALL NECESSARY ITEMS IN THE NAME OF SOCIETY ON BEHALF OF SOCIETY. FOR THE PURPOSE OF PURCHASING ANY ITEMS IF THE PARTY OF THE THIRD PART IS REQUIRE D TO OBTAIN PERMISSION FROM GOVERNMENT THEN THE PARTY OF THE FIRST PART IS REQUIRED TO PASS NECESSARY RESOLUTIONS AND GIVE UNDERTAKINGS TO THE PARTY OF T HE THIRD PART.' '9(F) THE PARTY OF THE THIRD PART, DEVELOPERS, ACCORDING TO THE RIGHTS ON THE LAND, IS AUTHORIZED TO CARRY OUT ANY KIND OF RESIDENTIAL AND COMMERCIAL CONSTRUCTION. IF ANY PERSON OR PERSON AFTER BECOMING A MEMBER OF SOCIETY I.E. THE PARTY OF THE FIRST PART, DEMAND FOR THE POSSESSION OF DEVELOPED UNITS THEN THE PARTY OF THE THIRD PART CAN ALLOT THE POSSESSION AFTER OBTAINING CONSIDERATION IN LIEU OF SUCH UNIT. IF AN Y PERSON FROM THE PARTY OF THE THIRD PART WISHES TO BECOME A MEMBER OF THE SOCIETY THEN THE PARTY OF THE FIRST PART I.E. SOCIETY WILL ADMIT SUCH PERSON WITHOUT ANY OBJECTION. THE PARTY OF THE FIRST PART WILL 17 NOT ADMIT ANY PERSON AS A MEMBER OF SOCIETY WITHOUT OBTAINING WRITTEN PERMISSION FROM THE PARTY OF THE THIRD PART. THE PARTY OF THE THIRD PART CAN GIVE THE VACANT PLACE TO ANY OTHER PERSON IN LIEU O F ADEQUATE CONSIDERATION. THUS, THE PARTY OF THE THIRD PART IS REQUIRED TO CREDIT ALL AMOUNTS RECEIV ED BY PASSING JOURNAL ENTRY. AND IT IS ALSO REQUIRED TO CREDIT THE ACCOUNT OF THE PARTY OF THE THIRD PART BY PASSING JOURNAL ENTRY FOR ALL THE EXPENDITURE INCURRED FOR THE PURPOSE OF DEVELOPMENT OF ASSET. ' '9(F) THE PARTY OF THE THIRD PART IS AUTHORIZED TO CREATE A LIEN AND CLAIM RIGHTS ON THE SAID PROPERTY FOR THE AMOUNT INVESTED AND EXPENSES INCURRED BY IT FOR THE DEVELOPMENT OF SUCH PROPERTY. AND THE PARTY OF THE FIRST PART CANNOT ENTER INTO ANY TRANSACTION WITH A NY ONE RELATED TO THE PROPERTY POSSESSED BY THE PARTY OF THE THIRD PART AS DEVELOPERS WITHOUT A WRITTEN CONSENT FROM THE PARTY OF THE THIRD PART. AND WITHOUT A PERMISSION OF THE PARTY OF THE THIRD PART , THE PARTY OF THE FIRST PART CANNOT RESCIND THIS DEVELOPMENT AGREEMENT.' '9(1) IN THIS PROJECT, FOR COMPLYING WITH THE LEGAL PROCEDURE, IF THE MEMBER OF THE PARTY OF THE FIRST PART WHO HAS ACQUIRED A PROPERTY IS REQUIRED TO MAKE REGISTERED SALE DEED THEN AS PER THE NOTICE OF THE PARTY OF THE THIRD PART, THE PARTY OF THE FIRST PART HAS TO MAKE SUCH SALE DEEDS, AND WE, THE PARTY OF THE FIRST PART ARE AGREED FOR MAKING SUCH SALE DEEDS.' '9(M) IN THIS PROJECT, IF THE MEMBER OF THE PARTY OF THE FIRST PART IS REQUIRED TO BORROW MONEY OR TAKE A LO AN FROM ANY INSTITUTION FOR ACQUIRING ABOVEMENTIONED UNITS OR PROPERTY THEN THE PARTY OF THE FIRST PART AS PER THE NOTICE OF THE PARTY OF THE THIRD PART, HAS TO PROVIDE NECESSARY AGREEMENT AND CERTIFICATES.' 18 8.1 FROM THE ABOVE TERMS AND CONDITIONS OF THE DEV ELOPMENT AGREEMENT, IT IS APPARENT THAT THE APPELLANT COMPAN Y HAS BEEN ENTRUSTED ALL THE POWERS, INCLUDING POWER TO ENTER NEW MEMBERS AND ALLOT THEM THE SPACE. IN OTHER WORDS, T HE APPELLANT COMPANY IS AUTHORIZED TO SELL THE 'VACANT PLACE' IN LIEU OF CONSIDERATIONS. THESE CLAUSES CLEARLY ILLUS TRATES THAT THE APPELLANT COMPANY HAS SOLD THE 'VACANT PLACE' IN TH E CONSTRUCTED MARKET AND IT HAS ACTUALLY COLLECTED TH E PRICE FOR THE PREMISES TO BE SOLD TO THE PROSPECTIVE BUYERS. IN O THER WORDS, THE APPELLANT COMPANY HAS BEEN GIVEN ABSOLUTE POWER S TO DEVELOP AND SELL THE SHOPS IN THE PROJECT. 8.2 IN VIEW OF ABOVE, I AM IN AGREEMENT WITH THE F INDINGS RECORDED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT THE PROJECT IN QUESTION IS THE VENTURE OF THE APPEL LANT COMPANY. IN OTHER WORDS, THE TASK OF THE CONSTRUCTION OF MAR KET A PROFIT MAKING VENTURE OF THE APPELLANT COMPANY AS ALL THE IMPORTANT AREAS OF WORKS INCLUDING SELLING OF PREMISES IN CLO TH MARKET AND COLLECTION OF FUNDS FROM MEMBERS HAVE BEEN ENTRUSTE D TO THE APPELLANT COMPANY AS PER DEVELOPMENT AGREEMENT. EVE N THE LOAN AGREEMENT WITH DENA BANK HAS BEEN MADE BY THE APPELLANT COMPANY. BASED ON ALL THESE DIRECT AND CI RCUMSTANTIAL EVIDENCES, IT IS APPARENT THAT APPELLANT COMPANY IS THE REAL OWNER OF THE PROJECT. HENCE, INCOME AND PROFITS FRO M THE VENTURE OF CONSTRUCTION OF THE CLOTH MARKET IS REQU IRED TO BE TAXED ON SUBSTANTIVE BASIS IN THE ASSESSMENT(S) OF THE APPELLANT COMPANY. 9. THE NEXT QUESTION FOR DETERMINATION IS AS TO WH AT SHOULD BE QUANTUM OF INCOME TO BE ASSESSED IN THE CASE OF APPELLANT COMPANY? AS MENTIONED IN THE INSTANT APPELLATE ORDE R, THE TOTAL AREA CONSTRUCTED TILL SEARCH DATE IS 3,95,636 SQ. F T. THE DOCUMENT I.E. ANNEXURE-A, SHOWS THE TOTAL CONSTRUCT ED AREA AT 6,20,450 SQ. FT. IT INDICATES THAT DOCUMENT (ANNEX URE-A) ALSO SHOWS THE FUTURE FINANCIAL PROJECTIONS OF THE PROJE CT. HOWEVER, THE RATES OF THE PROPERTIES, AS MENTIONED IN DOCUME NT (ANNEXURE-A) COULD NOT BE BRUSHED ASIDE. IN THE ASS ESSMENT, ORDER, THE ASSESSING OFFICER HAS CITED THE OTHER CI RCUMSTANTIAL AND CORROBORATIVE EVIDENCES, WHICH ESTABLISHES THAT APPELLANT HAS CHARGED 'ON MONEY' IN THE SALE OF PREMISES OF T HE PROJECT. 19 SUCH EVIDENCES INCLUDES INDEPENDENT EVIDENCES COLLE CTED FROM THE OFFICE OF SHRI BHOLABHAI PATEL (ANNEXURE- A/3), WHEREIN ONE OF THE MAIN PERSON OF THE APPELLANT COMPANY GROUP H AS ISSUED CERTIFICATES FOR CERTAIN SHOPS IN THE CLOTH MARKET, AS MENTIONED BY ASSESSING OFFICER AT PAGE 9 OF THE ASSESSMENT OR DER. THE APPELLANT COULD NOT BE ALLOWED TO BRUSH-ASIDE SUCH IMPORTANT PIECES OF EVIDENCES BY MERELY STATING THAT THESE CE RTIFICATES WERE ISSUED FOR AVAILING BANK LOANS. THE FILING OF AFFIDAVITS OR DECLARATIONS IN APPEAL PROCEEDINGS FROM SOME 'SUCH PERSONS', IN ORDER TO REBUT THE CONTENTS OF SUCH EVIDENCES IS OF NO USE, AS SUCH AFFIDAVITS AND DECLARATIONS ARE SELF SERVING D OCUMENTS AND THESE CARRIES NO EVIDENTIARY VALUES. EVEN THE TWO I NDEPENDENT VALUERS VIZ. SHRI C, K. PATEL AND SHRI MUKUND C. SH AH HAVE CERTIFIED THE PREVAILING MARKET PRICE OF THE SHOPS IN THE CLOTH MARKET, WHICH IS MUCH MORE THAN THE JANTRI PRICE. 9.1 IN APPEAL PROCEEDINGS, THE COUNSEL OF THE APPEL LANT HAS VEHEMENTLY ARGUED THAT PROPERTIES IN THE CLOTH MARK ET HAVE SOLD AT JANTRI PRICE, WHICH HAS BEEN RECORDED IN THE BOO KS OF ACCOUNTS. HOWEVER, I AM AFRAID THAT DUE TO AVAILABI LITY OF SUFFICIENT CIRCUMSTANTIAL EVIDENCES, SUCH ARGUMENTS OF THE APPELLANTS COULD NOT BE ACCEPTED. IT IS A WELL KNOW N FACT THAT IN THE REAL ESTATE MARKET, THE ON MONEY' RECEIPT IS A LWAYS THERE. THE SAME PROPOSITION IS ALSO TRUE IN THE CASE OF RE -SALE OF SHOPS. THUS, I AM OF THE OPINION THAT TOTAL RECEIPT S OF THE APPELLANT COMPANY IS REQUIRED TO BE DETERMINED ON T HE CONSTRUCTED AREA (TILL THE DATE OF SEARCH) ON THE B ASIS OF RATES OF THE PROPERTIES AS MENTIONED IN SEIZED DOCUMENT I.E. ANNEXURE- A. THE SAME IS DETERMINED AS UNDER:- BLOCKS L/LL G/F. F/F S/F T/F TOTAL (RS.) A 7039 12763 12732 12447 3768 B 15695 15110 . 15120 14738 15140 C 13016 13625 13769 13449 13839 D 0 11396 11394 11112 7309 E 5760 6076 6076 5916 6076 20 I 8340 7810 7833 7683 7833 J 14397 14595 14537 14387 290 K 2675 3784 3786 3786 606 L 0 4185 4199 0 130 M 0 5372 5373 135 135 ROUND CAB 400 TOTAL 66922 94716 94819 83653 55126 395636 @ 1600 3500 6500 2500 2200 1600 TOTAL 107075200 331506000 237047500 184036600 88201600 947866900 9.2 THE APPELLANT COMPANY, UNDER THE DEVELOPMENT AGREEMENT HAD DECLARED DEVELOPMENT RATE OF 8% OF TH E CONSTRUCTION COST. HOWEVER, FOR THE DETAILED REASON S MENTIONED IN THE INSTANT APPELLATE ORDER, IT IS APPARENT THAT TOTAL RECEIPTS OF THE APPELLANT COMPANY FROM THE CLOTH MARKET PROJECT , TILL SEARCH ACTIONS, ARE RS.94,78,66,900/-. THE APPELLANT COMPANY IS THE REAL OWNER OF THE PROJECT. HENCE, THE APPELLANT WOU LD CERTAINLY EARN SUBSTANTIAL PROFITS FROM THE PROJECT THAN MERE 8% OF CONSTRUCTION COST, AS MENTIONED IN THE DEVELOPMENT AGREEMENT. TAKING INTO CONSIDERATION ALL THE RELEVANT FACTS IN CLUDING RECEIPTS OF SUBSTANTIAL AMOUNTS AS 'ON MONEY' FROM THE PROJECT, THE TOTAL TAXABLE PROFITS ARE ESTIMATED AT 20% OF T HE TOTAL RECEIPTS FROM THE PROJECTS. THUS, TOTAL PROFITS FRO M THE CLOTH MARKET PROJECT IS DETERMINED AT RS.18,95,73,380/- A ND SAME ARE DIRECTED TO BE ASSESSED IN DIFFERENT ASSESSMENT YEARS, AS PER THE FORMULA DEVISED BY THE ASSESSING OFFICER. T HE YEAR- WISE TAXABLE PROFITS FOR A.Y.2001 -02 TO 2005-06 AR E DETERMINED AS UNDER:- A.Y. PERCENTAGE PROFIT TO BE TAXED (RS.) 2001-02 32.09 6,08,34,097/- 2002-03 26.50 5,02,36,945/- 2003-04 5.66 1,07,29,853/- 2004-05 16.94 3,21,13,730/- 2005-06 2.94 55,73,457/- 21 THE ASSESSING OFFICER IS DIRECTED TO MODIFY THE ASS ESSMENT ORDER ACCORDINGLY. THE GROUND OF APPEAL NO.1 IS DIS POSED OFF ACCORDINGLY . 10. AS REGARD GROUND NO.2, THE CHARGEABILITY OF I NTEREST UNDER DIFFERENCE PROVISIONS OF LAW, I HOLD THAT SAM E IS CONSEQUENTIAL NATURE AND DISPOSED OF ACCORDINGLY. 11. IN THE RESULT, THE APPEAL IS TREATED AS PARTLY ALLOWED. 5. THE ASSESSEE AS WELL AS THE REVENUE ARE IN THE C ROSS APPEALS IN ALL THE ASSESSMENT YEARS UNDER REFERENCE. THE AS SESSEE HAS RAISED SEVERAL GROUNDS OF APPEAL IN ALL THE APPEALS . THE ASSESSEE HAS CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN D ETERMINING TOTAL INCOME IN ALL THE ASSESSMENT YEARS AT RS.18,95,73,3 80/- AS MENTIONED IN PARA 9.2 OF THE APPELLATE ORDER REPROD UCED ABOVE. THE ASSESSEE STATED IN THE GROUNDS OF APPEALS THAT THE SOCIETY REMAINED REAL OWNER OF THE LAND AND BUILDING UNDER REFERENCE AND THE ASSESSEE RECEIVED DEVELOPING CHARGES. THE LEARNED CIT(A) SHO ULD HAVE ACCEPTED THE PROPERTY SOLD AT JANTRI PRICE AND SHOU LD NOT HAVE ACCEPTED ALLEGED ON-MONEY. THE SEIZED DOCUMENT ANNE XURE A WAS NOT FOR SALE PRICE REALIZED AS IT WAS ONLY PROJECT BUDGETARY ESTIMATE AND NOT ACTUAL TRANSACTION. THE LEARNED CIT(A) SHOU LD NOT HAVE DETERMINED THE INCOME ON ESTIMATED BASIS AT 20% AND MADE THE ADDITIONS AS MENTIONED IN PARA 9.2 OF THE APPELLATE ORDER. THE LEARNED CIT(A) SHOULD HAVE CONSIDERED THE REAL INCO ME OF THE ASSESSEE AS PER LAW. THE REVENUE CHALLENGED THE ORD ER OF THE LEARNED CIT(A) IN REDUCING THE PROFIT OF THE ASSESS EE AS AGAINST THE INCOME DETERMINED BY THE AO. THE LEARNED REPRESENTA TIVES OF BOTH THE PARTIES SUBMITTED THAT THE ISSUE FOR CONSIDERAT ION THUS WOULD BE 22 AS TO WHO IS THE BENEFICIARY OF THE INCOME OUT OF T HE PROJECT IN QUESTION AND AS TO WHAT QUANTUM INCOME SHOULD BE DE TERMINED IN THE CASE OF THE ASSESSEES. 6. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND R EFERRED TO VARIOUS DOCUMENTS ON RECORD CONSIDERED BY THE AUTHO RITIES BELOW AND SUBMITTED THAT THE REVENUE MAINLY RELIED UPON SEIZE D PAPER ANNEXURE- A/1 (PB-72 TO 74) TO MAKE THE ABOVE ADDIT IONS IN ALL THE YEARS WHICH WAS ONLY FUTURE FINANCIAL PROJECTION AN D WOULD NOT INDICATE ANY ON-MONEY ACTUALLY RECEIVED BY THE ASSE SSEE. THE ASSESSEE AS PER THE AGREEMENT FOR DEVELOPMENT HAS S HOWN THE PROFITS IN ITS BOOKS OF ACCOUNTS AT RS.50.89 CRORES ; THEREFORE, NO UNDISCLOSED INCOME IS EARNED BY THE ASSESSEE. PB - 75 I.E. COST CERTIFICATE IS ISSUED TO GET BANK LOAN WOULD ALSO N OT INDICATE ANY ON- MONEY RECEIVED BY THE ASSESSEE WHICH ALSO CONTAINED EXTRA WORK INSTRUCTED BY THE PARTIES. PB-41 IS STATEMENT OF SH RI NIKIN PATEL CONNECTED WITH THE SOCIETY. PB-66 IS THE STATEMENT OF RASIKBHAI PATEL. PB-12 IS THE STATEMENT OF SHRI BHOLABHAI PAT EL, ORIGINAL OWNER OF THE PROJECT. THE PROPERTY WAS INSPECTED BY THE D VO AT THE APPELLATE PROCEEDINGS AND FALSIFIED THE MEASUREMENT OF THE PROJECT TAKEN BY THE AO AS PER ANNEXURE A/1 (COPY OF THE SAME IS FILED AT PB-210). PB-351 IS THE TRANSLATED COPY OF DEVELOPME NT AGREEMENT DATED 15-06-1997, ACCORDING TO WHICH ASSESSEE WOULD BE ENTITLED FOR 8% DEVELOPMENT CHARGES. HE HAS ALSO REFERRED TO AFF IDAVITS (PB-366 TO 370) OF THE PURCHASERS IN WHICH THEY HAVE AFFIRM ED THAT COST CERTIFICATES WERE ISSUED BY THE ASSESSEE COMPANY FO R TAKING HIGHER 23 LOAN FROM THE BANK AS THEY NEED NOT TO CONTRIBUTE A NY AMOUNT. HE HAS FILED COPIES OF THE TAX AUDIT REPORT ON SAMPLE BASIS FOR ASSESSMENT YEARS 2001-02 (PB- 717 TO 751) TO SHOW D EVELOPMENT CHARGES HAVE BEEN BOOKED IN THE BOOKS OF THE ASSESS EE COMPANY. COPIES OF THE TDS CERTIFICATE ARE FILED AT PB-752 T O 757 TO SHOW THAT TAX HAS BEEN DEDUCTED BY THE SOCIETY ON PAYMENT TO THE ASSESSEE COMPANY. PB-758 TO 788 ARE THE COPIES OF THE ACKNOW LEDGMENT AND STATEMENT OF INCOME FOR THE RETURNS FILED IN RESPON SE TO SEARCH NOTICES U/S 153A OF THE IT ACT AS WELL AS U/S 139(1 ) OF THE IT ACT WITH ASSESSMENT ORDERS U/S 143(3) /143(1) OF THE IT ACT FOR ASSESSMENT YEAR 2001-02 TO ASSESSMENT YEAR 2005-06 TO SHOW THA T INCOME OF THE ASSESSEE FROM DEVELOPMENT CHARGES HAVE BEEN ACCEPTE D BY THE DEPARTMENT IN REGULAR ASSESSMENT PROCEEDINGS. THE S AMPLE COPIES OF BILLS FOR MATERIAL PURCHASED BY THE SOCIETY ALON G WITH LEDGER ACCOUNT OF STEEL, CEMENT ETC. FOR THE PERIOD FROM 0 1-04-2001 TO 06-12-2005 ARE FILED AT PB-789 TO 807 TO SHOW ALL T HE BUILDING MATERIALS FOR CONSTRUCTION OF THE PROJECT WERE PURC HASED IN THE NAME OF THE SOCIETY. PB - 808 TO 816 ARE THE SAMPLE COPI ES OF THE BOOKING RECEIPTS WHICH WERE TRANSFERRED AND ADJUSTED AGAINS T THE SOCIETY. COPIES OF LEDGER ACCOUNTS ARE FILED AT PB - 817 TO 841. THE DETAILS OF UNITS RESOLD BY THE ASSESSEES ALLOTTEE AT JANTRI P RICE ARE ALSO FILED. AT PB - 842 TO 843, CHART IS FILED SHOWING AVERAGE RAT E AS PER ANNEXURE A. THE ASSESSEE HAS SHOWN DEVELOPMENT CHARGES IN THE BOOKS IN ALL THE ASSESSMENT YEARS UNDER APPEAL. APART FROM I T, FOR ASSESSMENT YEARS 1997-98 TO 2000-01, DEVELOPMENT CHARGES RECEI VED FROM THE SOCIETY HAS BEEN SHOWN IN THE REGULAR RETURN. COPIE S OF THE AUDITED ACCOUNTS FOR ASSESSMENT YEAR 2000-01 SHOWING DEVELO PMENT 24 CHARGES RECEIVED FROM THE SOCIETY HAVE BEEN FILED A T PB - 844 TO 887 WHICH HAVE BEEN ASSESSED BY THE REVENUE DEPARTMENT AS DEVELOPMENT CHARGES IN THE EARLIER YEAR AND THE ORD ER OF ITAT AHMEDABAD BENCH IN ITA NO.3181/AHD/2003 DATED 30-07 -2004 FOR ASSESSMENT YEAR 2000-01 IS FILED IN SUPPORT OF THE SAME. HE HAS SUBMITTED THAT WORK IN PROGRESS IS BOOKED IN THE BO OKS OF THE SOCIETY. WHATEVER STATEMENTS OF SHRI BHOLABHAI B. PATEL AND NIKIN P. PATEL WERE RECORDED WERE NOT SUBJECTED TO CROSS EXAMINATI ON BY THE ASSESSEE BECAUSE THE AO DID NOT ALLOW CROSS EXAMINA TION OF THEIR STATEMENT DESPITE REQUEST MADE TO THE AO. HE HAS RE FERRED TO PB - 142, 143 AND 146 TO SHOW THAT ASSESSEE MADE A WRITT EN REQUEST BEFORE THE AO TO ALLOW CROSS EXAMINATION TO THEIR S TATEMENTS. HE HAS, THEREFORE, SUBMITTED THAT SUCH STATEMENTS SHALL HAV E TO BE EXCLUDED FROM CONSIDERATION. HE HAS SUBMITTED THAT NO EVIDEN CE WAS FOUND THAT ASSESSEE EARNED ANY INCOME ON ACCOUNT OF ON-MO NEY. HE HAS SUBMITTED THAT ALL ALLOTMENT TO THE MEMBERS HAVE BE EN MADE BY THE SOCIETY, THEREFORE, THE ENTIRE PROJECT VEST IN THE SOCIETY. THE SALES MADE TO THE MEMBERS MATCH WITH THE BOOKS OF ACCOUNT S AS PER JANTRI RATE. THEREFORE, FINDING OF RECEIPT OF ON-MONEY IS MERELY BASED ON PRESUMPTION. HE HAS SUBMITTED THAT THE REPORT AND S TATEMENTS OF THE VALUER SHRI C. K. PATEL AND M. C. SHAH HAVE NOT BEE N SUPPLIED TO THE ASSESSEE. THE LOANS APPLIED TO THE BANK WERE MEANT FOR GETTING HIGHER LOAN SO THAT THE PURCHASERS NEED NOT TO PAY MARGIN MONEY. HE HAS SUBMITTED THAT SHRI BHOLABHAI PATEL WAS NOT CON NECTED WITH THE PROJECT; THEREFORE, HE WOULD NOT BE KNOWING THE ACT UAL AFFAIRS OF THE ASSESSEE COMPANY. ALL ACCOUNTS OF THE ASSESSEE COMP ANY HAVE BEEN SETTLED WITH THE SOCIETY. THE ASSESSEE COMPANY IS NOT OWNER OF 25 THE PROJECT AND HAS NO BENEFICIAL RIGHT IN THE PROJ ECT. THE ASSESSEE WAS MERELY THE DEVELOPER OF THE PROJECT OF THE SOCI ETY. EARLIER RETURNS FILED BY THE ASSESSEE HAVE BEEN ACCEPTED BY THE REV ENUE DEPARTMENT SHOWING INCOME ON ACCOUNT OF DEVELOPMENT CHARGES FR OM THE SAME PROJECT. DUE TO EARTH-QUAKE THE SALES HAVE GONE DOW N. ANNEXURE - A/1 CONTAINED THE DETAILS OF VALUE WHICH IS WRONG LY TAKEN AS RECEIPTS BY THE REVENUE AUTHORITIES. THE DETAILS CONTAINED I N ANNEXURE - A/1 HAVE BEEN DISPROVED BY THE REPORT OF THE DVO AND RI GHTLY ACCEPTED BY THE LEARNED CIT(A). HE HAS SUBMITTED THAT SHRI N IKIN P. PATEL EVEN DID NOT KNOW WHO IS THE OWNER OF THE SHOP. SHRI BHO LABHAI PATEL ALSO RELINQUISHED HIS RIGHTS IN THE PROPERTY IN QUESTION . THEREFORE, HE HAS NO CONCERN WHATSOEVER WITH THE PROJECT. THE CALCULA TION MADE BY SHRI BHOLABHAI PATEL WAS THUS ONLY PROJECTION. HE HAS SU BMITTED THAT THE PURCHASERS OF THE SHOPS HAVE NOT BEEN EXAMINED BY T HE AO AT ANY STAGE. HE HAS RELIED UPON THE DECISION OF THE HONB LE GUJARAT HIGH COURT IN THE CASE OF M. K. SHAH, 307 ITR 137, DECIS ION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF S. M. C. SHAREBROKE R LTD., 288 ITR 345 AND THE DECISION OF THE HONBLE M. P. HIGH COUR T IN THE CASE OF P. C. NAHATA, 301 ITR 132. HE HAS ALSO RELIED UPON ORD ER OF ITAT AHMEDABAD BENCH IN THE CASE OF HIRAL PHARMA LTD. VS DCIT IN ITA NO.1255/AHD/2001 DATED 29-01-2010 IN WHICH IT WAS H ELD THAT THE STATEMENT RECORDED BY THE ITO AND HIS REPORT WOULD NOT BE RELEVANT TO THE MATTER IN ISSUE AS WELL AS CANNOT BE READ IN EV IDENCE BECAUSE ASSESSEE WAS NEVER ALLOWED CROSS EXAMINATION TO SUC H STATEMENT AT THE ASSESSMENT STAGE. THE STATEMENT RECORDED BY THE AO WAS EXCLUDED FROM CONSIDERATION. HE HAS ALSO RELIED UPO N ORDER OF ITAT AHMEDABAD BENCH IN THE CASE OF YADAV DEVELOPERS PVT . LTD. VS 26 DCIT, ITA NO.3674/AHD/2008 DATED 08-04-2011 IN WHIC H IT WAS HELD THAT THERE WAS NO EVIDENCE IN POSSESSION OF THE REV ENUE ON THE BASIS OF WHICH IT COULD BE HELD THAT THE ASSESSEE HAS TAK EN ON-MONEY ON BOOKING OF THE FLATS. THE LEARNED COUNSEL FOR THE A SSESSEE ALSO SUBMITTED THAT ONUS ON THE AO TO TAX THE INCOME ON ACCOUNT OF ON- MONEY HAS NOT BEEN DISCHARGED. NO EVIDENCE HAS BEE N BROUGHT ON RECORD TO PROVE THAT ASSESSEE HAS RECEIVED ANY ON-M ONEY. THE LEARNED COUNSEL FOR THE ASSESSEE IN THE ALTERNATE C ONTENTION SUBMITTED THAT EVEN THOUGH THERE WAS NO EVIDENCE ON RECORD THAT THE ASSESSEE WAS BENEFICIAL OF THE PROJECT, AT THE MOST ONLY PROFIT COULD BE ADDED AND THE ASSESSEE HAS ALREADY SHOWN THE PRO FIT OUT OF THE PROJECT AT 8%, THEREFORE, ENTIRE ADDITION IS LIABLE TO BE DELETED. 7. ON THE OTHER HAND, THE LEARNED DR RELIED UPON OR DER OF THE AO AND SUBMITTED THAT ASSESSEE MADE UP A STORY TO AVOI D PAYMENT OF TAXES. THE SCHEME OF DEVELOPMENT SHOULD BE CONSIDER ED AS A WHOLE. THERE IS NO SINGLE EVIDENCE FILED TO SHOW THAT ASSE SSEE WAS DEVELOPER ONLY. OWNER HAS GIVEN ALL THE RIGHTS TO T HE ASSESSEE COMPANY. NO DETAILS OF SALE PRICE HAVE BEEN GIVEN. THE ASSESSEE HAS COLLECTED ENTIRE MONEY OF THE PROJECT. SHRI NIK IN P. PATEL CLAIMED IN HIS STATEMENT AS CHAIRMAN OF THE SOCIETY AND ALS O WORKED AS SALARIED EMPLOYEE OF THE ASSESSEE COMPANY. THE LEAR NED DR DID NOT DISPUTE THE MEASUREMENT OF THE CONSTRUCTED PORT ION OF THE PROJECT TAKEN BY THE DVO. HE HAS SUBMITTED THAT SHRI NIKIN P. PATEL WAS APPOINTED CHAIRMAN OF THE SOCIETY BY SHRI RASIKBHAI P. PATEL OF THE ASSESSEE COMPANY; THEREFORE, THE ASSESSEE COMPANY C ONTROLLED ALL THE AFFAIRS OF THE SOCIETY. THE DEVELOPMENT AGREEME NT CLEARLY 27 HIGHLIGHTED THAT ASSESSEE WAS ELIGIBLE FOR ALL THE RIGHTS IN THE PROJECT, PURCHASE ALL GOODS, BUILT ANY COMMERCIAL OR RESIDEN TIAL AREA, PART WITH POSSESSION OR ADD NEW MEMBER AND SALE DEED COULD BE MADE BY THE OWNER/SOCIETY ON THE NOTICE OF THE ASSESSEE COMPANY . THEREFORE, THE ENTIRE INCOME SHOULD BE ASSESSED IN THE HANDS O F THE ASSESSEE COMPANY. THE LEARNED DR SUBMITTED THAT LOAN CERTIFI CATE IS GIVEN BY THE ASSESSEE COMPANY; THEREFORE, ESTIMATE OF INCOME AGAINST THE ASSESSEE WAS JUSTIFIED. NO PROFIT & LOSS ACCOUNT WA S FILED IN THE CASE OF THE SOCIETY AS ONLY BALANCE SHEET WAS FILED. IT IS NOT CLEAR AS TO HOW INCOME IS COMPUTED BY THE SOCIETY. THE TRANSACTIONS OF THE SOCIETY DO NOT INDICATE HOW EXPENSES WERE ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. THE SOCIETY HAS NO SAY IN THE AFFAIRS OF THE PROJECT. THERE IS A SPECIFIC FINDING BY THE LEARNED CIT(A) THAT THE I NCOME BELONG TO THE ASSESSEE COMPANY. HE HAS ALSO REFERRED TO STATEMENT OF SHRI NIKINBHAI P. PATEL AND SHRI BHOLABHAI PATEL TO SHOW THAT SIMILAR ANNEXURE - A/1 WAS FOUND FROM RESIDENCE OF SHRI BHO LABHAI PATEL AND THAT THEY HAVE ADMITTED REAL RATES OF THE PROPERTY IN QUESTION AND THE FUTURE RATES HAVE GONE UP. THE LEARNED DR HOWEVER, FAIRLY STATED THAT THERE IS NOTHING ON RECORD TO SHOW THAT THEIR STATE MENTS WERE SUBJECTED TO CROSS EXAMINATION BY THE ASSESSEE COMP ANY. HE HAS SUBMITTED THAT COST CERTIFICATE ANNEXURE D - 3/26 AND A - 3/26 WERE ISSUED BY THE ASSESSEE COMPANY. HOWEVER, IN THE STA TEMENT OF SHRI RASIKBHAI PATEL, DIRECTOR OF THE ASSESSEE COMPANY, NO UNDISCLOSED INCOME HAVE BEEN DECLARED. HE HAS SUBMITTED THAT CO ST CERTIFICATE MATCH WITH THE ANNEXURE - A/1 AND THAT THE ASSESSEE S COUNSEL ADMITTED RATES/COST CERTIFICATE IN THE STATEMENT OF FACTS. THE VALUATION REPORT OF C. K. PATEL AND M. C. SHAH ARE PRIOR TO T HE SEARCH, WHICH 28 PROVES THAT THE ASSESSEE HAS SHOWN LOWER RATES IN T HE BOOKS OF ACCOUNT. THE BANK LOAN CERTIFICATE HAVE SHOWN HIGHE R VALUE WHICH COMPARED WITH THE ANNEXURE - A/1. HE HAS SUBMITTED THAT IT IS A COMMON KNOWLEDGE THAT IN REAL ESTATE BUSINESS, THE REAL VALUE OF SALE CONSIDERATION IS ALWAYS HIGHER AS AGAINST THE JANTR Y RATE WHICH IS MEANT FOR STAMP VALUATION ONLY. THE LEARNED DR FILE D DETAILS OF FOUR PARTIES OF THE SHOPS WHICH WERE MORTGAGED ALONG WIT H MORTGAGE DOCUMENTS TO SHOW THAT HIGHER RATES HAVE BEEN SHOWN IN THE MORTGAGE DOCUMENTS. HE HAS ALSO REFERRED TO STATEME NT OF FACTS FILED BEFORE LEARNED CIT(A) TO SHOW THAT ASSESSEE ACCEPTE D ENTIRE CONSIDERATION WAS RECEIVED BY THE ASSESSEE. THE LEA RNED DR ALSO FILED COPY OF ANNEXURE - A/1 / 217 TO SHOW THAT CAS H AND CHEQUE AMOUNT WAS RECEIVED FOR J AND L BLOCK WOULD INDICAT E THAT HIGHER CONSIDERATION WAS RECEIVED BY THE ASSESSEE COMPANY. HE HAS SUBMITTED THAT THOUGH THE DVO REFERRED TO THE LESSE R CONSTRUCTED AREA BUT THE ASSESSEE IN THE STATEMENT OF FACTS MEN TIONED THE CONSTRUCTED AREA OF 473394. THE LEARNED DR THEREFOR E SUBMITTED THAT INSTEAD OF GROSS PROFIT ADDITION THE ENTIRE RECEIPT S SHOULD BE ADDED IN THE CASE OF THE ASSESSEE COMPANY BECAUSE THE EXPENS ES HAVE ALREADY BEEN BOOKED IN THE BOOKS OF ACCOUNTS. THE L EARNED DR SUBMITTED THAT THE SEIZED DOCUMENT IS CORROBORATED BY VARIOUS OTHER EVIDENCES, THEREFORE, LEARNED CIT(A) SHOULD NOT HAV E DELETED PART OF THE ADDITION. HE HAS RELIED UPON ORDER OF ITAT PUNE BENCH ( TM ) IN THE CASE OF KHOPADE KISHANRAO MANIKRAO VS ACIT, 69 TTJ ( TM ) 135 IN WHICH IT WAS HELD THAT ASSESSMENT SHOULD BE BASED ON EVIDENCE INCLUDING CIRCUMSTANTIAL EVIDENCES. HE HAS ALSO RELIED UPON 29 THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF D. D. MORE, 82 ITR 540. 8. THE LEARNED COUNSEL FOR THE ASSESSEE IN THE REJO INDER REITERATED THE SUBMISSIONS MADE EARLIER AND SUBMITT ED THAT BHOLABHAI P. PATEL WAS NOT CONNECTED WITH THE PROJECT, SO HIS STATEMENT IS NOT BELIEVABLE, BECAUSE HE WAS NOT IN THE PICTURE IN TH E YEAR 2006 AND EARLIER HE HAS SURRENDERED ALL HIS RIGHTS IN THE PR OJECT. HE HAS ALSO REFERRED TO PROFIT & LOSS ACCOUNT OF THE SOCIETY TO SHOW THAT EVEN WORK IN PROGRESS IS SHOWN AND BOOKED IN THE BOOKS OF THE SOCIETY. HE HAS SUBMITTED THAT STATEMENT OF NIKIN P. PATEL AND BHOL ABHAI P. PATEL WERE NOT ALLOWED CROSS EXAMINATION, THEREFORE, CANN OT BE READ IN EVIDENCE AND FURTHER THEIR STATEMENTS WOULD NOT PRO VE THAT ASSESSEE RECEIVED ANY ACTUAL ON-MONEY. HE HAS SUBMITTED THAT THERE IS NO EVIDENCE ON RECORD TO PROVE ASSESSEE RECEIVED ANY O N MONEY OF THE PROJECT. ENTIRE RECEIPTS HAVE BEEN BOOKED BY THE SO CIETY. THE STATEMENTS AND VALUATION REPORT OF THE VALUER C.K. PATEL AND M. C. SHAH HAVE NOT BEEN SUPPLIED TO THE ASSESSEE. THEREF ORE, PRINCIPLE OF NATURAL JUSTICE IS VIOLATED. HE HAS SUBMITTED THAT ANNEXURE - A/1 / 217 REFERRED TO BY THE LEARNED DR WOULD NOT INDICATE AS SESSEE RECEIVED ANY ACTUAL ON-MONEY. SAME IS THE POSITION WITH REGA RD TO MORTGAGE DOCUMENTS. IN THE WRITTEN SUBMISSION THE QUERIES RA ISED BY THE AO HAVE BEEN EXPLAINED. PB - 638 IS ORDER OF THE LEARN ED CIT(A) DATED 28-02-2011 IN THE CASE OF THE SOCIETY FOR ASSESSMEN T YEAR 2007-08 IN WHICH IT IS MENTIONED THAT THE SOCIETY CEASED TO EX IST WITH EFFECT FROM 07-12-2005 AS PER ORDER OF REGISTRAR OF SOCIETIES A ND THUS THE DEVELOPMENT AGREEMENT BETWEEN ASSESSEE AND SOCIETY RESCIND. IT IS 30 ALSO STATED IN THE WRITTEN SUBMISSION THAT THE LEAR NED CIT(A) HELD THAT THE SEIZED DOCUMENT ANNEXURE - A/1 ALSO SHOWS THE FUTURE FINANCIAL PROJECTION OF THE PROJECT AND SUCH FINDIN G OF FACT HAVE NOT BEEN CHALLENGED BY THE REVENUE DEPARTMENT. THE LEAR NED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE REPLY OF THE A SSESSEE ALSO INDICATE THAT ASSESSEE SUFFERED HUGE LOSSES. HE HAS THEREFORE, SUBMITTED THAT LEARNED CIT(A) SHOULD HAVE DELETED T HE ENTIRE ADDITION. 9. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERI AL ON RECORD. IT IS STATED THAT THE ASSESSEE COMPANY ENTE RED INTO DEVELOPMENT AGREEMENT WITH THE SOCIETY VIDE DEVELOP MENT AGREEMENT DATED 15-06-1997 (PB - 351) ACCORDING TO WHICH THE SOCIETY WAS OWNER OF THE PROPERTY IN QUESTION AND A LSO TAKEN OVER THE POSSESSION OF THE LAND IN PROJECT AND THE ASSESSEE COMPANY WAS REQUIRED TO COMPLETE THE PROJECT SUBJECT TO CERTAIN CONDITIONS WHICH INCLUDES PAYMENT BY SOCIETY TO THE ASSESSEE COMPANY ON ACCOUNT OF DEVELOPING CHARGES. NO TITLE OF THE PROJECT IN QUES TION WAS TRANSFERRED IN FAVOUR OF THE ASSESSEE COMPANY. IF POSSESSION IS TRANSFERRED TO THE ASSESSEE FOR CONSTRUCTION, THERE IS NO ILLEGALI TY BECAUSE ASSESSEE REQUIRED POSSESSION OF THE PROPERTY AND OTHER FACIL ITIES AT THE PROJECT FOR COMPLETION OF THE PROJECT. NECESSARY DOCUMENTS IN FAVOUR OF THE ASSESSEE COMPANY WERE ALSO REQUIRED FOR COMPLETING THE OBLIGATIONS. IF MATERIAL IS PURCHASED OR LABOUR IS ENGAGED THROUGH THE ASSESSEE COMPANY ON BEHALF OF THE SOCIETY AS PER AG REEMENT, THERE IS NOTHING WRONG OR SUSPICION IN THE TRANSACTION. A LL ACCOUNTS ARE ADJUSTED BETWEEN THE ASSESSEE COMPANY AND THE SOCIE TY AND ULTIMATELY SALES HAVE BEEN MADE BY THE SOCIETY. AS PER DEVELOPMENT 31 AGREEMENT, SOCIETY IS REQUIRED TO PAY 8% OF THE TOT AL PROJECT EXPENDITURE TO THE ASSESSEE COMPANY AS DEVELOPING C HARGES IN THE FORM OF REMUNERATION FOR DEVELOPERS. THE ASSESSEE C OMPANY HAS SHOWN DEVELOPMENT CHARGES AS ITS INCOME IN THE EARL IER YEARS PRIOR TO THE ASSESSMENT YEARS UNDER APPEAL. COPY OF THE AUDI T REPORT FOR ASSESSMENT YEAR 2000-01 IS FILED IN THE PAPER BOOK TO SUPPORT THE CONTENTION OF THE ASSESSEE THAT IN EARLIER YEARS DE VELOPMENT CHARGES HAVE BEEN SHOWN TO THE REVENUE DEPARTMENT FOR THE S AME PROJECT. ORDER OF THE TRIBUNAL DATED 30-07-2004 IN ITA NO.31 81/AHD/2003 FOR THE SAME YEAR IS ALSO FILED TO SUPPORT THE CONTENTI ON OF THE ASSESSEE THAT EVEN IN THE REGULAR ASSESSMENT THE REVENUE DEP ARTMENT ACCEPTED DEVELOPMENT CHARGES FROM THE SAME PROJECT IN THE CASE OF THE ASSESSEE. EVEN IN THE RETURNS FILED FOR ALL THE ASSESSMENT YEARS UNDER APPEAL U/S 139(1) OF THE IT ACT PRIOR TO THE SEARCH, THE ASSESSEE HAS SHOWN THE DEVELOPMENT CHARGES FOR DEVE LOPING THE SAME SHOPPING COMPLEX AND IN SEVERAL YEARS UNDER AP PEALS THE CONTENTION OF THE ASSESSEE HAS BEEN ACCEPTED IN THE ASSESSMENT ORDERS U/S 143(3) / 143 (1) OF THE IT ACT. COPIES O F THE SAME ARE FILED IN THE PAPER BOOK. IT WOULD, THEREFORE, SHOW AND PR OVE THAT THE ASSESSEE PRIOR TO THE SEARCH HAS BEEN DISCLOSING TH E INCOME ON ACCOUNT OF DEVELOPMENT CHARGES FOR DEVELOPING THE S HOPPING COMPLEX AS PER THE DEVELOPMENT AGREEMENT IN QUESTIO N AND THE REVENUE DEPARTMENT ACCEPTED THE SAME NATURE AND SOU RCE OF INCOME OF THE ASSESSEE. THEREFORE, THE NATURE OF BUSINESS INCOME OF THE ASSESSEE COULD NOT BE DISPUTED BY THE REVENUE DEPAR TMENT IN THE PROCEEDINGS U/S 153A OF THE IT ACT UNDER APPEALS. I T IS WELL SETTLED LAW THAT THOUGH THE PRINCIPLE OF RES-JUDICATA DOES NOT APPLY TO THE 32 INCOME TAX PROCEEDINGS BUT THE PRINCIPLE OF CONSIST ENCY SHALL HAVE TO BE FOLLOWED BY THE REVENUE DEPARTMENT WHILE MAKING THE ASSESSMENTS. THE REVENUE DEPARTMENT DID NOT DISPUTE THE INCOME RECEIVED BY THE ASSESSEE ON ACCOUNT OF DEVELOPMENT CHARGES FROM THE SAME SHOPPING COMPLEX UNDER CONSIDERATION IN EA RLIER YEARS AS WELL AS IN THE REGULAR ASSESSMENTS U/S 143(3)/143(1 ) OF THE IT ACT FOR THE ASSESSMENT YEARS UNDER APPEAL, THEREFORE, REVEN UE DEPARTMENT CANNOT BE PERMITTED TO TAKE A DIFFERENT STAND AND C HANGE THE NATURE OF BUSINESS INCOME OF THE ASSESSEE. WE RELY UPON TH E DECISIONS OF THE HONBLE M. P. HIGH COURT IN THE CASE OF GODAVAR I CORPORATION LTD., 156 ITR 835, HONBLE SUPREME COURT IN THE CAS E OF BERGER PAINTS (INDIA) LTD., 266 ITR 99, HONBLE SUPREME CO URT IN THE CASE OF SATISH PANNALAL SHAH, 249 ITR 221 AND HONBLE PUNJA B AND HARYANA HIGH COURT IN THE CASE OF VIKAS CHEMI GUM, 276 ITR 32. NO EVIDENCE OR MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OR AT THE ASSESSMENT PROCEEDINGS TO PROVE THAT RIGHT, TITLE O R INTEREST IN THE SHOPPING COMPLEX IN QUESTION HAS BEEN TRANSFERRED B Y THE SOCIETY IN FAVOUR OF THE ASSESSEE COMPANY. PB 638 IS THE ORD ER OF LEARNED CIT(A) DATED 28-02-2011 OF THE SOCIETY FOR ASSESSME NT YEAR 2007-08 IN WHICH IT WAS MENTIONED THAT THE SOCIETY CEASED T O EXIST WITH EFFECT FROM 07-12-2005 AS PER ORDERS OF REGISTRAR OF COOPE RATIVE SOCIETIES. THEREFORE, THE DEVELOPMENT AGREEMENT WOULD NO LONGE R SURVIVE IN FAVOUR OF THE ASSESSEE. IT WOULD ALSO PROVE THAT TH E ASSESSEE WAS NOT VESTED WITH ANY RIGHT OR TITLE OF THE PROPERTY IN Q UESTION; THEREFORE, IT SHOULD NOT BE CONSIDERED AS VENTURE OF THE ASSESSEE COMPANY. ALL BILLS OF MATERIAL AND LABOUR ARE FOUND IN THE NAME OF THE SOCIETY. THE WORK IN PROGRESS IS ALSO BOOKED IN THE BOOKS OF ACC OUNTS OF THE 33 SOCIETY. NO INCRIMINATING MATERIAL WAS SEIZED DURIN G THE COURSE OF SEARCH TO PROVE THAT ASSESSEE RECEIVED ANY ON-MONEY FROM THE BUYERS/PURCHASERS OF THE SHOPS. THE SEIZED PAPER AN NEXURE A/1 CONTAINS THE DETAILS OF FLOOR, SHOP, TOTAL, VALUE OF SQUARE FEET AND AMOUNT. THE TOTAL SQUARE FEET IS GIVEN AT 620450 AN D THE GRAND TOTAL AT RS.141,46,26,000/-. THE ASSESSEE CLAIMED BEFORE LEARNED CIT(A) THAT THE CONSTRUCTED AREA OF THE COMPLEX IS LESSER. THE DVO WAS APPOINTED AT THE APPELLATE STAGE WHO HAS CONFIRMED IN HIS REPORT (PB -210) THAT THE CONSTRUCTED AREA TILL THE DATE OF TH E SEARCH IS 395636. THE REMAINING WAS CONSTRUCTED AFTER SEARCH. THEREFO RE, THERE IS NO AMBIGUITY IN THE REPORT OF THE DVO AS AGAINST THE F ACTS MENTIONED IN THE STATEMENT OF FACT AS POINTED OUT BY THE LEARNED DR. VIRTUALLY, LEARNED DR DID NOT DISPUTE THE REPORT OF THE DVO DU RING THE COURSE OF ARGUMENT. MOREOVER, DVO IS A DEPARTMENTAL OFFICER A ND HAVE SOME EXPERTISE ON THE SAME LINE; THEREFORE, HIS REPORT C OULD NOT BE DISBELIEVED. THUS, THE REPORT OF THE DVO CLEARLY FA LSIFIED THE ANNEXURE - A/1 WHICH IS THE SOLE BASIS FOR MAKING T HE ADDITIONS AGAINST THE ASSESSEE. THE AO HAS NO BASIS TO TAKE T HE VALUE OF SQUARE FEET AS NOTED IN THE SEIZED PAPER AS SALE CO NSIDERATION OR UNDISCLOSED INCOME OF THE ASSESSEE. THE AO HAS NOT APPRECIATED THE LANGUAGE USED IN THE ANNEXURE A/1 AND WITHOUT ANY B ASIS OR EVIDENCE TOOK THE VALUE AS THE SALE PROCEEDS/UNDISC LOSED INCOME. THE HONBLE DELHI HIGH COURT IN THE CASE OF GIRISH CHAUDHURY, 163 TAXMAN 608, HELD THERE IS NO BASIS AS TO HOW, AO CAME TO CONCLUSION THAT 48 WAS RS.48 LACS. NO MATERIAL IS T HERE TO SUPPORT SUCH FINDINGS OF THE AO. IT IS DUMB DOCUMEN T. ADDITIONS DELETED . THE LEARNED CIT(A) IN PARA 9 OF THE IMPUGNED ORD ER ON 34 CONSIDERATION OF THE REPORT OF THE DVO AND SEIZED D OCUMENT ANNEXURE - A ALSO HELD THAT THE SEIZED PAPER INDICA TES THAT THE DOCUMENT ANNEXURE - A ALSO SHOWS THE FUTURE FINANCI AL PROJECTION OF THE PROJECT. THE FINDING OF FACT RECORDED BY THE LE ARNED CIT(A) ON APPRECIATION OF THE SEIZED MATERIAL HAVE NOT BEEN C HALLENGED BY THE LEARNED DR DURING THE COURSE OF ARGUMENT. NO SPECIF IC GROUND OF APPEAL HAS BEEN RAISED IN THE DEPARTMENTAL APPEAL A GAINST THIS FINDING. FURTHER, NO MATERIAL IS PRODUCED TO REBUT THIS FINDING OF THE LEARNED CIT(A). THEREFORE, IT WOULD SUPPORT THE CON TENTION OF THE ASSESSEE THAT THE ASSESSEE HAS NOT RECEIVED ANY UND ISCLOSED INCOME ON ACCOUNT OF ON-MONEY FROM THE PROJECT IN Q UESTION. THERE IS NO INDICATION IN THE SEIZED PAPER THAT THE ASSESSEE ACTUALLY RECEIVED RS.141 CRORES. IN THE ABSENCE OF ANY EVIDENCE TO PR OVE THAT ASSESSEE RECEIVED RS.141 CRORES, AUTHORITIES BELOW WERE NOT JUSTIFIED IN MAKING ADDITION AGAINST THE ASSESSEE. THE HONBL E GUJARAT HIGH COURT IN THE CASE OF CIT VS MAULIKKUMAR K. SHAH, 30 7 ITR 137 HELD, DISMISSING THE APPEAL, THAT FROM THE BEGINNI NG THE ASSESSEE WAS STATING THAT THE NOTINGS APPEARING IN THE DIARY WERE ROUGH ESTIMATES AND ESTIMATION WAS MADE FOR SU BMISSION TO THE BANK FOR OBTAINING A LOAN FROM THE BANK. THE INFERENCE OF THE ASSESSING OFFICER THAT THE ASSESSEE HAD RECEIVE D ON-MONEY, I.E. THE DIFFERENTIAL AMOUNT AS SHOWN IN THE SEIZED DIARY AND THE BOOKS OF ACCOUNT, WAS MERELY BASED ON SUSPICION AND SURMISES AND THERE WAS NO MATERIAL TO SUPPORT THE CONCLUSION OF THE ASSESSING OFFICER THAT THE ASSESSEE HAD IN FACT REC EIVED ANY ON- MONEY. THE ASSESSING OFFICER HAD NO EVIDENCE WITH H IM TO SUPPORT HIS CONCLUSION. THE ASSESSEE HAD WORKED OUT THE FLOOR- 35 WISE RATE OF THE SHOP ON THE SEIZED PAPER BUT IT WA S NOT POSSIBLE THAT EVERY SHOP COULD BE SOLD AT THAT PRICE AND WHI LE SELLING THE SHOPS, MANY PURCHASERS MAY PAY ADVANCE MONEY. THERE FORE, THE RATES OF ALL THE SHOPS AT THE TIME OF ACTUAL SA LES COULD NOT BE THE SAME AS ESTIMATED IN THE SEIZED PAPER. THE AMOU NT MENTIONED ALONG WITH RATES PER SQUARE FOOT OF DIFFE RENT FLOORS ON THE LOOSE PAPER WAS IN RESPECT OF AN ESTIMATE FOR T HE LOAN FROM THE BANK. NO OTHER EVIDENCE HAD BEEN SHOWN TO JUSTI FY THAT THESE AMOUNTS WERE RECEIVED FROM THE PURCHASERS. TH E CONCURRENT FINDING WAS THAT ON THE BASIS OF THESE L OOSE PAPERS, NO ADDITION WAS JUSTIFIED. THUS, THERE WAS NO INTER FERENCE CALLED FOR IN THE ORDER OF THE TRIBUNAL. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF DCIT VS RADHE DEVELOPERS INDIA LTD. AND ANOTHER, 329 ITR 1 HELD THE ASSESSEE-COMPANY WAS ENGAGED IN THE BUSINESS OF LAND DEVELOPMENT AND ALLIED ACTIVITIES. SEARCH A ND SEIZURE PROCEEDINGS UNDER SECTION 132 OF THE INCOME-TAX ACT , 1961 WERE INITIATED AT THE BUSINESS PREMISES OF THE ASSESSEE- COMPANY AND RESIDENTIAL PREMISES OF THE MANAGING DIRECTOR AND A N EMPLOYEE OF THE ASSESSEE-COMPANY. IN RESPONSE TO NOTICE UNDE R SECTION 158BC OF THE ACT, A RETURN OF NIL INCOME FOR THE BL OCK PERIOD WAS FILED BY THE ASSESSEE. THE ASSESSMENT WAS FRAMED ON A TOTAL UNDISCLOSED INCOME OF RS.28,30,21,200. THE ASSESSIN G OFFICER WORKED OUT THE INVESTMENT AT A SUM OF RS.25,10,80,0 00 AS UNEXPLAINED INVESTMENT AND ADDED IT UNDER SECTION 6 9B OF THE ACT. THE TRIBUNAL CAME TO THE CONCLUSION THAT THE A DDITION FOR UNDISCLOSED RECEIPT HAD TO BE SUSTAINED ONLY TO THE EXTENT OF RS.12,80,00,000 AS ACCEPTED BY THE ASSESSEE AND THE RE WAS NO 36 BASIS FOR MAKING ADDITION TO THE TUNE OF RS.20,55,8 6,000 AS THE ASSESSEE HAD ACQUIRED DEVELOPMENT RIGHTS ONLY IN RE LATION TO 7 LAKHS SQ. YDS. OF LAND AND NOT 11.11 LAKHS SQ. YDS. OF LAND. AT THE SAME TIME, THE TRIBUNAL ALSO RECORDED THAT THE AMOUNT OF RS.12,80,00,000 PAID BY THE ASSESSEE FOR ACQUISITIO N OF THE DEVELOPMENT RIGHTS HAD TO BE TREATED AS ALLOWABLE D EDUCTION UNDER SECTION 37 OF THE ACT. ON APPEAL: HELD, DISMISSING THE APPEAL, (I) THAT THE ASSESSEE HAD ENTERED INTO A TRANSACTION INVOLVING THE TOTAL LAND AREA TO THE TUNE OF 11 LAKHS SQ. YDS. AND THIS WAS FOUND ON THE BASIS OF LOOSE PAPERS FOUND FROM THE RESIDENCE OF THE EMPLOY EE OF THE ASSESSEE. THE TRIBUNAL HAD RECORDED, AFTER APPRECIA TING THE SAME SET OF EVIDENCE IN THE FORM OF DOCUMENTS SEIZE D FROM THE RESIDENCE OF THE EMPLOYEE THAT IT ONLY CONTAINED TH E PAYMENT SCHEDULE AND NO AMOUNT WAS ACTUALLY PAID. THE TRIBU NAL HAD THEREFORE, AFTER TAKING THE TOTALITY OF CIRCUMSTANC ES INTO CONSIDERATION RECORDED THAT BOTH, AS REGARDS THE AR EA AS WELL AS THE AMOUNT OF PAYMENT AND THE POINT OF PAYMENT, THE DEPARTMENT HAD NOT BEEN CORRECT IN DISCARDING THE V ERSION PUT FORTH BY THE ASSESSEE AS SUPPORTED BY DOCUMENTARY E VIDENCE. THIS WAS NOT A CASE WHERE RELEVANT EVIDENCE HAD BEE N IGNORED AND IRRELEVANT EVIDENCE HAD BEEN TAKEN INTO CONSIDE RATION. THE ONLY TEST THAT WAS REQUIRED TO BE APPLIED WAS WHETH ER ON THE FACTS FOUND AND THE STATE OF EVIDENCE ON RECORD THE CONCLUSION ARRIVED AT BY THE TRIBUNAL WAS ONE WHICH COULD HAD BEEN ARRIVED AT BY A REASONABLE PERSON PROPERLY INFORMED IN LAW. APPLYING 37 THIS TEST, IT COULD NOT BE SAID THAT THE DECISION R ECORDED BY THE TRIBUNAL WAS ONE WHICH COULD NOT HAVE BEEN ARRIVED AT BY A REASONABLE PERSON PROPERLY INFORMED IN LAW CONSIDER ING THE STATE OF EVIDENCE ON RECORD. HENCE, IN SO FAR AS TH E ADDITION TO THE EXTENT OF RS.12,80,00,000 BEING UPHELD BY THE T RIBUNAL WAS CONCERNED, NO INTERFERENCE WAS WARRANTED. 9.1 CONSIDERING THE ABOVE DISCUSSIONS, IT IS CLEAR THAT THERE IS NO BASIS FOR THE AUTHORITIES BELOW TO HOLD THAT ASSESS EE RECEIVED UNDISCLOSED INCOME OF RS.141 CRORES FOR THE ENTIRE PROJECT. THE SEIZED DOCUMENT ANNEXURE - A/1 WOULD NOT SUPPORT TH E FINDINGS OF THE AUTHORITIES BELOW FOR RECEIPT OF SUPPRESSED INCOME. THE SEIZED PAPER APPEARS TO BE FUTURE FINANCIAL PROJECTION OF THE PR OJECT AND DO NOT DISCLOSE ANY UNDISCLOSED INCOME RECEIVED BY THE ASS ESSEE COMPANY OF THE SOCIETY. IT IS NOT ADMISSIBLE IN EVIDENCE AG AINST THE ASSESSEE OR THE SOCIETY FOR EARNING OF ANY UNDISCLOSED INCOME. 9.2 THE AUTHORITIES BELOW RELIED UPON EVIDENCES COL LECTED FROM BHOLABHAI PATEL AND STATEMENTS OF BHOLABHAI PATEL A ND NIKIN P. PATEL TO ESTABLISH THAT ASSESSEE HAS RECEIVED ON-MONEY OU T OF THE SHOPPING COMPLEX. THE AUTHORITIES BELOW HAVE ALSO R ELIED UPON REPORT AND STATEMENT OF THE VALUER. HOWEVER, ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE DESPITE MAKING A REQUEST T O ALLOW CROSS EXAMINATION TO THEIR STATEMENTS, THE AO DID NOT GIV E ANY OPPORTUNITY TO THE ASSESSEE COMPANY TO CROSS EXAMINE THEIR STAT EMENTS. EVEN, THE REPORT OF THE VALUER WAS NOT MADE AVAILABLE TO THE ASSESSEE. THEREFORE, THEIR STATEMENTS CANNOT BE READ IN EVIDE NCE AGAINST THE 38 ASSESSEE. THE HONBLE SUPREME COURT IN THE CASE OF KISHANCHAND CHELARAM, 125 ITR 713 OBSERVED THAT EVIDENCES COLLECTED AT THE BACK OF ASSESSEE TO BE CONFRONTED TO THE ASSESSEE T O GIVE HIM OPPORTUNITY TO REBUT IT OTHERWISE IT WILL NOT BE AD MISSIBLE. THE HONBLE DELHI HIGH COURT IN THE CASE OF S. M. C. SH AREBROKERS LTD., 288 ITR 345 HELD THAT AO DID NOT ALLOW CROSS EXAMINATION OF THE PERSON SEARCHED. ILLEGAL. CANNOT BE RELIED UPON. PR INCIPLE OF NATURAL JUSTICE NOT FOLLOWED. THE HONBLE M. P. HIGH COURT IN THE CASE OF CIT VS RAMESHCHANDRA SHUKLA, 10 ITJ 286 HEL D THAT IT IS NOW WELL SETTLED THAT WHERE THE ASSESSEE REQUESTS T HE AO TO ISSUE SUMMONS, TO ENFORCE ATTENDANCE OF THE CREDITO R TO ESTABLISH THE GENUINENESS AND CAPACITY OF THE CREDI TOR, IT IS DUTY OF THE AO TO ENFORCE ATTENDANCE OF CREDITORS BY ISS UING SUMMONS. IF THE AO DOES NOT CHOOSE TO ISSUE SUMMONS AND EXAMINE THE CREDITORS, HE CANNOT SUBSEQUENTLY TREAT THE LOANS STANDING IN THE NAME OF SUCH CREDITORS AS NON-GENUI NE, NOR ADD THE AMOUNT THEREOF TO THE INCOME OF THE ASSESSEE. THE HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF PRAKASH CH AND NAHTA VS CIT, 301 ITR134 - HELD, THAT AS THE ASSESSING OFFICER HAD NOT SUMMONED R IN SPITE OF THE REQUEST MADE UNDER SECTI ON 131 OF THE ACT, THE EVIDENCE OF R COULD NOT HAVE BEEN USED AGAINST THE ASSESSEE AND IN THE ABSENCE OF AFFORDING A REASONAB LE OPPORTUNITY OF BEING HEARD BY SUMMONING THE SAID WI TNESS THE ASSESSMENT ORDER WAS VITIATED. 9.3 THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED T O SEVERAL PAGES FROM THE PAPER BOOK WHICH ARE REPLIES FILED B EFORE THE AO TO 39 SHOW THAT ASSESSEE MADE REQUESTS TO THE AO TO ALLOW CROSS EXAMINATION OF THEIR STATEMENTS BUT NOTHING HAS BEE N DONE IN THE MATTER. THE LEARNED DR STATED THAT THERE IS NOTHING ON RECORD TO SHOW THAT AO HAS GIVEN ANY OPPORTUNITY TO THE ASSESSEE T O CROSS EXAMINE ANY OF THE STATEMENTS OF THE PERSONS RECORDED AT TH E BACK OF THE ASSESSEE. THEREFORE, THE EVIDENCES COLLECTED AT THE BACK OF THE ASSESSEE AND THE STATEMENTS RECORDED WHICH WERE NOT SUBJECTED TO CROSS EXAMINATION ON BEHALF OF THE ASSESSEE CANNOT BE READ IN EVIDENCE AGAINST THE ASSESSEE. MOREOVER, THE STATEM ENTS OF THESE PERSONS DO NOT INDICATE IF ASSESSEE RECEIVED ANY ON -MONEY FOR THE PROJECT. ALL THE SEIZED MATERIALS ALSO DO NOT INDIC ATE IF ASSESSEE RECEIVED ACTUAL ON-MONEY OUT OF ANY TRANSACTION. WE MAY FURTHER NOTE THAT NO CORRESPONDING RECOVERIES, ASSETS OR VA LUABLE ITEMS WERE FOUND HAVING ANY NEXUS WITH THE ALLEGED EARNING OF UNDISCLOSED INCOME DURING THE SEARCH OR OTHERWISE. COST CERTIFI CATES OR LOAN PAPERS FILED WITH THE BANK WERE MEANT TO GET HIGHER LOAN SANCTIONED. EVEN, THESE DO NOT INDICATE RECEIPT OF ANY UNDISCLO SED INCOME BY THE ASSESSEE. THE LEARNED DR REFERRED TO ANNEXURE A/1 / 217 WHICH IS NOT CONNECTED WITH THE ASSESSEE AND PROVIDES BALANC E IN THE CASE OF HIMANSHUBHAI AND THE AMOUNT DEPOSITED IN BANK BY SU BHASHCHAND. THESE, THEREFORE, CANNOT BE TREATED AS CIRCUMSTANTI AL OR CORROBORATIVE EVIDENCES. THE SALES MADE BY THE SOCIETY TO VARIOUS PERSONS MAY DIFFER BECAUSE OF THE LOCATION AND THE FLOOR AREA A ND THE MARKET CONDITION IN THE REAL ESTATE. BUT THE SAME WOULD NO T PROVE IN THE ABSENCE OF ANY EVIDENCE THAT ASSESSEE RECEIVED ANY UNDISCLOSED INCOME. THE INFERENCE OF THE AO THAT ASSESSEE HAD R ECEIVED UNDISCLOSED INCOME THAT IS THE DIFFERENTIAL AMOUNT AS SHOWN IN THE 40 SEIZED PAPER AND THE BOOKS OF ACCOUNTS, WAS MERELY BASED ON SUSPICION AND ASSUMPTIONS AND THERE WAS NO MATERIAL TO SUPPORT CONCLUSION OF THE AO THAT ASSESSEE HAD IN FACT RECE IVED ANY ON- MONEY. 9.4 THE ASSESSEE FILED AFFIDAVITS OF CERTAIN PERSON S/PURCHASERS IN WHICH IT IS STATED THAT COST CERTIFICATES WERE OBTA INED FOR TAKING HIGHER LOAN FROM THE BANK IN ORDER TO AVOID PAYMENT OF MAR GIN MONEY. THESE AFFIDAVITS HAVE NOT BEEN DISPUTED BY THE REVE NUE DEPARTMENT. NO PURCHASERS OF THE SHOPS HAVE BEEN EXAMINED BY TH E AO. NO SALE DEEDS EXECUTED IN THEIR CASES HAVE BEEN DISPUTED. T HE ASSESSEE IN THE WRITTEN SUBMISSION EXPLAINED THAT ASSESSEE WAS REQUIRED TO DEBIT ALL AMOUNTS RECEIVED BY PASSING JOURNAL ENTRY AND E XPENDITURES WERE ALSO ADJUSTED. THE ASSESSEE COMPANY WAS ENTITLED TO DEVELOPMENT CHARGES AND THE AMOUNTS RECEIVED ON BEHALF OF THE S OCIETY WERE ADJUSTED AGAINST THE ACCOUNT OF THE SOCIETY. ALL DE VELOPMENT CHARGES RECEIVED BY THE ASSESSEE COMPANY HAVE BEEN CREDITED IN THE REGULAR BOOKS OF ACCOUNTS. SAME SUBMISSIONS WERE ALSO MADE BEFORE THE AUTHORITIES BELOW BUT THE SAME HAVE NOT BEEN REBUTT ED THROUGH ANY EVIDENCE. ALL SALES ARE MADE AT THE JANTRI RATE. TH E ASSESSEE IN THE WRITTEN SUBMISSION ALSO EXPLAINED THAT POST SEVERE EARTH-QUAKE IN CITY ON 26-01-2001, THE REAL ESTATE MARKET WAS AFFECTED AND IT ALSO FURTHER AFFECTED DUE TO GODHRA RIOTS AT THE END OF FEBRUARY , 2002. THE EXPLANATION OF THE ASSESSEE IS REASONABLE AND PROBA BLE AND CANNOT BE BRUSHED ASIDE. THE EXPLANATION OF THE ASSESSEE C LEARLY PROVE THAT THERE WAS NO EVIDENCE WITH THE REVENUE DEPARTMENT T HAT ASSESSEE HAS COLLECTED ANY ON-MONEY FOR ITSELF OR FOR THE SO CIETY. THERE IS NO 41 EVIDENCE OR MATERIAL FOUND ON RECORD TO ESTABLISH T HAT ANY ON-MONEY WAS RECEIVED BY THE ASSESSEE. THE FINDING OF RECEIP T OF ON-MONEY IN REAL ESTATE BUSINESS IS BASED ON NO EVIDENCE AND IS BASED ON ASSUMPTION OF FACTS WHICH ARE NOT ON RECORD. THERE IS NO CIRCUMSTANTIAL OR CORROBORATIVE EVIDENCE AVAILABLE ON RECORD TO SUPPORT THE FINDINGS OF THE AUTHORITIES BELOW. CONS IDERING THE ABOVE DISCUSSIONS, WE FIND THAT THERE IS NO EVIDENCE TO P ROVE THAT THE PROJECT IN QUESTION IS THE VENTURE OF THE ASSESSEE COMPANY. THERE IS NO EVIDENCE ON RECORD TO PROVE THAT THE ASSESSEE WAS R EAL OWNER OF THE PROJECT. THERE IS NO EVIDENCE ON RECORD TO SUPPORT THE CONCLUSION OF THE AO THAT THE ASSESSEE HAD IN FACT RECEIVED ANY O N-MONEY. THE ADDITION MADE ON SUBSTANTIVE BASIS IN THE CASE OF T HE ASSESSEE IS, THEREFORE, HIGHLY UNJUSTIFIED. THE ASSESSEE SOCIETY WAS OWNER OF THE PROJECT AND HAS RIGHTLY SHOWN THE INCOME FROM THE P ROJECT IN THEIR BOOKS OF ACCOUNTS. THE ORDERS OF AUTHORITIES BELOW THUS CANNOT BE SUSTAINED IN LAW. NO ADDITION CAN BE MADE AGAINST T HE ASSESSEE IN ALL THE ASSESSMENT YEARS ON THE BASIS OF ANNEXURE A/1 OR THE REMAINING SEIZED PAPER. 9.5 IN VIEW OF THE ABOVE FINDINGS, THERE IS NO NE ED TO DISCUSS THE QUANTUM OF ADDITION BY APPLYING PROFIT RATE AS IS D ONE BY THE LEARNED CIT(A). HOWEVER, WE FIND THAT THE LEARNED CIT(A) DE CIDED THIS ISSUE ALSO. THEREFORE, WE TAKE UP THIS ISSUE ALSO BRIEFLY FOR FINALIZATION. WE FURTHER FIND THAT THE ASSESSEE COMPANY, UNDER THE D EVELOPMENT AGREEMENT HAS DECLARED DEVELOPMENT CHARGE AT 8% OF THE DEVELOPMENT COST. THE AO MADE ADDITION OF THE ENTIR E RECEIPTS AS PER SEIZED PAPER AND THE LEARNED CIT(A) DETERMINED THE TAXABLE PROFIT BY 42 APPLYING 20% OF THE TOTAL RECEIPTS FROM THE PROJECT FOR MAKING THE ADDITION. THE HONBLE CALCUTTA HIGH COURT IN THE CA SE OF CIT VS S. M. OMER, 201 ITR 608 - HELD, THAT SECTION 69 OF THE INCOME-TAX ACT, 1961 WAS NOT APPLICABLE IN THE INSTANT CASE. THE AS SESSEE SUPPLIED THE GOODS AFTER INCURRING CERTAIN COST AND AFTER MANUFACTURING THE GOODS AND THE AMOUNT THAT WAS REC EIVED FROM THE DEFENCE DEPARTMENT COULD NOT REPRESENT THE NET INCOME BUT IT WAS THE SUM RECEIVED INCLUDING THE PROFIT AND EX PENDITURE. THE TRIBUNAL WAS JUSTIFIED IN UPHOLDING THE DELETIO N OF RS.1,01,649 (SEE P. 610D F). THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS PRESIDENT INDUSTRIES, 258 ITR 65 4 - HELD, DISMISSING THE APPLICATION FOR REFERENCE, THAT THE AMOUNT OF SALES COULD NOT REPRESENT THE INCOME OF THE ASSESSE E WHO HAD NOT DISCLOSED THE SALES. THE SALES ONLY REPRESENTED THE PRICE RECEIVED BY THE SELLER OF THE GOODS; ONLY REALIZATI ON OF THE EXCESS OVER THE COST INCURRED COULD FORM PART OF TH E PROFIT INCLUDED IN THE CONSIDERATION FOR THE SALES. SINCE THERE WAS NO FINDING TO THE EFFECT THAT INVESTMENT BY WAY OF INC URRING THE COST IN ACQUIRING THE GOODS WHICH WERE SOLD HAD BEEN MAD E BY THE ASSESSEE AND THAT THAT INVESTMENT WAS ALSO NOT DISC LOSED, ONLY THE EXCESS OVER THE COST INCURRED COULD BE TREATED AS PROFIT. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SAMIR SYNTHETICS LTD., 326 ITR 410 HELD - IN THE COURSE OF A SEARCH BY THE EXCISE DEPARTMENT IN THE PREMISES OF THE ASSESS EE, IT WAS FOUND THAT THE PRODUCTION OF MAN-MADE FABRICS WAS S UPPRESSED AND ONLY A SMALL PART THEREOF WAS SHOWN IN THE EXCI SE REGISTER. THE ASSESSEE COULD NOT RECONCILE THE PRODUCTION, SA LES AND THE 43 CLOSING STOCK DESPITE OPPORTUNITY GIVEN BY THE ASSE SSING OFFICER AND ADDITION IN RESPECT OF UNACCOUNTED SALE S WAS MADE BY THE ASSESSING OFFICER. THE COMMISSIONER (APPEALS ) FOUND THAT THE ASSESSEE FAILED TO EXPLAIN THE SUPPRESSION OF PRODUCTION OF FABRICS AND ALSO HELD THAT ANY ADDITI ON THAT WAS TO BE MADE WAS NOT IN RESPECT OF THE SALE CONSIDERATIO N BUT ONLY IN RESPECT OF THE PROFIT. THE COMMISSIONER (APPEALS) R EDUCED THE ADDITION MADE BY THE ASSESSING OFFICER. THE TRIBUNA L CONCURRED WITH THE COMMISSIONER (APPEALS) AS IT FOUND THAT TH ERE WAS NO EVIDENCE ON RECORD TO PROVE THAT THE ASSESSEE HAD C LAIMED ALL THE EXPENSES IN THE PROFIT AND LOSS ACCOUNT. ON APP EAL: HELD, DISMISSING THE APPEALS, THAT IN VIEW OF THE CONCURRENT FINDINGS OF FACT BY THE COMMISSIONER (AP PEALS) AND THE TRIBUNAL THAT THE REDUCED ADDITION WAS JUST AND EQUITABLE ON ACCOUNT OF PAPERS FOUND DURING THE SEA RCH, THERE WAS NO MERIT IN THE APPEALS. IT IS, THEREFORE, WELL SETTLED THAT THE AMOUNT OF T HE SALES/RECEIPTS COULD NOT REPRESENT THE INCOME OF THE ASSESSEE WHO HAD NO T DISCLOSED THE SALES. THE SALES ONLY REPRESENT THE PRICE RECEIVED BY THE SELLER OF THE GOODS, ONLY REALIZATION OF THE EXCESS OVER COST INC URRED COULD FORM PART OF THE PROFIT INCLUDED IN THE CONSIDERATION FO R SALES. THEREFORE, THE LEARNED CIT(A) RIGHTLY DELETED THE ADDITION ON ACCO UNT OF THE TOTAL RECEIPTS WHICH WERE TREATED AS UNDISCLOSED INCOME B Y THE AO. HOWEVER, THERE IS NO BASIS IN THE FINDING OF THE LE ARNED CIT(A) TO APPLY 20% AGAINST THE TOTAL RECEIPTS TO COMPUTE THE INCOME OF THE ASSESSEE. THE HISTORY OF THE ASSESSEE SHALL HAVE TO BE CONSIDERED WHILE ESTIMATING THE INCOME OF THE ASSESSEE. AS NOT ED ABOVE, IN 44 EARLIER YEARS THE ASSESSEE DECLARED INCOME ON ACCOU NT OF DEVELOPMENT CHARGES WHICH WERE ACCEPTED BY REVENUE DEPARTMENT AND EVEN IN THE ASSESSMENT YEARS UNDER APPEAL IN RE GULAR ASSESSMENTS ALSO THE INCOME ON ACCOUNT OF DEVELOPME NT CHARGES HAVE BEEN ACCEPTED BY THE REVENUE DEPARTMENT. THE A SSESSEE HAS DECLARED INCOME ON ACCOUNT OF DEVELOPMENT CHARGES I N THE RETURNS UNDER CONSIDERATION; THEREFORE, NO FURTHER ADDITION CAN BE MADE AGAINST THE ASSESSEE. THE LEARNED CIT(A) WAS, THERE FORE, NOT JUSTIFIED IN SUSTAINING PART ADDITION IN ALL THE ASSESSMENT Y EARS BY APPLYING PROFIT RATE OF 20%. THE LEARNED CIT(A) SHOULD HAVE DELETED THE ENTIRE ADDITION. 9.6 CONSIDERING THE ABOVE DISCUSSIONS, WE ARE OF TH E VIEW THAT ASSESSEE HAS NOT EARNED ANY UNDISCLOSED INCOME. THE RE IS NO EVIDENCE OR MATERIAL ON RECORD TO PROVE THAT THE AS SESSEE HAS IN FACT RECEIVED ANY UNDISCLOSED INCOME FOR THE ENTIRE PROJ ECT. WHATEVER EVIDENCE WAS COLLECTED BY THE AO IS NOT SUFFICIENT TO MAKE OUT A CASE AGAINST THE ASSESSEE. IN VIEW OF THE ABOVE FINDING S WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ENTI RE ADDITIONS IN ALL THE ASSESSMENT YEARS. 9.7 IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED AND DEPARTMENTAL APPEALS ARE DISMISSED. 45 (MAHALAXMI BHAVAN CO-OPERATIVE HOUSING SOCIETY LTD. ) (ALL APPEALS OF THE ASSESSEE AND THE REVENUE) 10. ALL THE CROSS APPEALS ARE DIRECTED AGAINST COMM ON ORDER OF LEARNED CIT(A)-1, AHMEDABAD DATED 31-03-2011 FOR AS SESSMENT YEARS 2001-02 TO 2005-06. HOWEVER, ASSESSEE HAS FUR THER PREFERRED APPEAL IN ITA NO.447/AHD/2011 AGAINST THE ORDER OF THE LEARNED CIT(A)-I, AHMEDABAD DATED 28-02-2011 FOR ASSESSMENT YEAR 2006- 07. 11. IN ALL THE DEPARTMENTAL APPEALS, THE REVENUE CH ALLENGED THE DELETION OF ADDITIONS ON ACCOUNT OF PROFIT FROM THE CLOTH MARKET MADE ON PROTECTIVE BASIS. THE AO MADE THE SUBSTANTIVE AD DITION IN THE CASE OF M/S. NEPTUNE INFRASTRUCTURE PVT. LTD. AND P ROTECTIVE ASSESSMENT IN THE CASE OF THE SOCIETY. THE LEARNED CIT(A) NOTED IN THE IMPUGNED ORDER THAT SINCE SUBSTANTIVE ADDITION ON ACCOUNT OF UNDISCLOSED INCOME IS UPHELD BY HIM IN THE CASE OF ASSESSEE COMPANY M/S. NEPTUNE INFRASTRUCTURE PVT. LTD., TH EREFORE, PROTECTIVE ASSESSMENT WAS DELETED IN THE CASE OF TH E SOCIETY. WHILE CONSIDERING THE ISSUE IN THE CASE OF ASSESSEE COMPA NY, WE HAVE HELD THAT NO ADDITION COULD BE MADE IN THE CASE OF THE ASSESSEE COMPANY M/S. NEPTUNE INFRASTRUCTURE PVT. LTD. BEC AUSE ADDITIONS WERE MADE WITHOUT ANY BASIS OR EVIDENCE AND DELETED THE ENTIRE ADDITIONS. THEREFORE, NO PROTECTIVE ADDITION COULD BE MADE IN THE CASE OF THE SOCIETY ALSO. WE ACCORDINGLY, DO NOT FI ND ANY MERIT IN ALL THE APPEALS OF THE REVENUE. THE SAME ARE DISMISSED. ON THE SAME ISSUE, ASSESSEE ALSO RAISED GROUND NO.3 IN ALL THE APPEALS STATING 46 WHETHER THE LEARNED CIT(A) WAS RIGHT IN HOLDING THA T DEVELOPER AS REAL OWNER OF THE PROJECT IN SPITE OF THE FACT THAT THE OWNERSHIP REMAINED WITH THE ASSESSEE SOCIETY AND ULTIMATELY AGREEMENT WAS CANCELLED. IN VIEW OF THE FINDING GIVEN IN THE CASE OF THE ASSESS EE COMPANY M/S. NEPTUNE INFRASTRUCTURE PVT. LTD. AND ON DISMISSAL O F THE DEPARTMENTAL APPEALS, IN THE CASE OF THE SOCIETY, THIS GROUND HA S BECOME INFRUCTUOUS IN ALL THE APPEALS AND IS ACCORDINGLY D ISPOSED OF. 12. IN ALL THE APPEALS OF THE ASSESSEE SOCIETY, THE ASSESSEE RAISED GROUNDS NO.1 AND 2 CHALLENGING THE ASSESSMENT ORDER S U/S 153A OF THE IT ACT ON THE GROUND THAT NO SEARCH ACTION U/S 132 OF THE IT ACT HAVE BEEN CARRIED OUT BECAUSE NO WARRANT HAS BEEN I SSUED IN THE NAME OF THE ASSESSEE SOCIETY. THE LEARNED DR OBJECT ED TO THESE GROUNDS OF APPEALS BECAUSE IT WAS NOT RAISED BEFORE THE LEARNED CIT(A) AND NO REQUEST IS MADE FOR ADMISSION OF ADDI TIONAL GROUNDS OF APPEAL. THE LEARNED DR ALSO PRODUCED WARRANT OF AUT HORIZATION IN THE NAME OF THE ASSESSEE SOCIETY TO SHOW THAT SEARCH WA S CARRIED OUT ON THE BASIS OF WARRANT OF AUTHORIZATION. IN THIS VIEW OF THE MATTER, WE FIND THAT THIS GROUND IS MISCONCEIVED AND RAISED WI THOUT ANY BASIS AND EVEN WITHOUT SEEKING LEAVE OF THE BENCH FOR ADM ISSION OF ADDITIONAL GROUND. THE LEARNED COUNSEL FOR THE ASSE SSEE ON THE OBJECTION OF THE LEARNED DR SEEKS PERMISSION TO WIT HDRAW BOTH THE GROUNDS IN ALL THE APPEALS OF THE ASSESSEE. GROUNDS NO.1 AND 2 IN ALL THE APPEALS OF THE ASSESSEE ARE ACCORDINGLY DISMISS ED AS NOT PRESSED. 47 13. THE ASSESSEE SOCIETY RAISED GROUNDS NO.4 AND 5 IN ALL THE APPEALS WHICH READ AS UNDER: 4. WHETHER UNDER THE FACTS & CIRCUMSTANCES OF THE CASE LD. CIT(A) WAS LEGALLY AND FACTUALLY CORRECT IN UPHOLDI NG THE RENT RECEIVED ON UNSOLD SHOPS AND OFFICES IN THE PR OJECT AS RENT ON THE VACANT LAND AND THEREBY TREATING THE SAME AS INCOME FROM OTHER SOURCES AS ORIGINATING FROM TH E CAPITAL ASSET I.E. LAND, RESULTING INTO DENIAL OF S TATUTORY DEDUCTION UNDER SECTION 24 OF THE ACT ? 5. WHETHER THE CIT (A) WAS RIGHT IN NOT CONSIDERING RENT RECEIVED ON VACANT SHOPS & OFFICES AS NON TAXABLE O N MUTUALITY CONCEPT? 14. ON THESE GROUNDS OF APPEALS IN ASSESSMENT YEARS 2001-02 TO 2005-06, LEARNED CIT(A) FOLLOWED HIS ORDER FOR ASSE SSMENT YEAR 2006-07 DATED 28-02-2011 AND DISMISSED THESE GROUND S OF APPEALS OF THE ASSESSEE. WE THEREFORE, TAKE UP THIS ISSUE F ROM ASSESSMENT YEAR 2006-07. THE ASSESSEE SUBMITTED BEFORE THE AO THAT IT IS NOT LIABLE FOR ANY TAX AS IT CLAIMED THAT THEY WERE CAR RYING ON ACTIVITY OF CONSTRUCTION OF BUILDING FOR ITS MEMBERS ONLY AS MU TUAL CONCERN OUT OF FUNDS PROVIDED BY THE MEMBERS OF THE SOCIETY AND AL SO THAT THE SOCIETY WAS WORKING ON NO PROFIT NO LOSS BASIS. THE AO NOTED THAT TWO ISSUES CROPPED UP AS FAR AS THE TAXABILITY IS CONCE RNED VIZ., RENT INCOME AND PROFIT FROM CONSTRUCTION ACTIVITY OF SHR EE GHANTAKARNA MAHAVIR CLOTH MARKET PROJECT. ON THE RENTAL INCOME AO NOTED THAT ASSESSEE FURNISHED BALANCE SHEET ALONG WITH ITS OTH ER SUBMISSIONS. ON PERUSAL OF BALANCE SHEET IT WAS OBSERVED THAT TH E WORK IN PROGRESS HAS BEEN ARRIVED AFTER REDUCING THE RENT R ECEIVED TO THE TUNE OF RS.3,10,574/-. THE AO FOLLOWING THE DECISION OF THE HONBLE 48 SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMI CALS AND FERTILIZERS, 227 ITR 172 HELD THAT THE RENT DERIVED BY THE SOCIETY FROM LETTING OUT OF THE OPEN PLOT REQUIRES TO BE TAXED. THE RENT BEING DERIVED FROM THE LETTING OF THIS PLOT AS THE BUILDI NG WAS NOT READY, AS EVIDENT FROM THE FACT THAT THE BALANCE SHEET SHOWS WORK IN PROGRESS, THE INCOME REQUIRED TO BE BROUGHT TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ADDITION WAS MADE IN ALL THE AS SESSMENT YEARS UNDER APPEAL UNDER THE HEAD INCOME FROM OTHER SOUR CES INSTEAD OF RENTAL INCOME. THE LEARNED CIT(A) NOTED IN THE IM PUGNED ORDER FOR ASSESSMENT YEAR 2006-07 THAT ASSESSEE HAS NOT MADE ANY SUBMISSION ON THIS POINT. THE LEARNED CIT(A) CONFIR MED THE ORDER OF THE AO BY FOLLOWING THE SAME DECISION OF THE HONBL E SUPREME COURT AND NOTED THAT RENTAL INCOME CANNOT BE ASSESSED UND ER THE HEAD INCOME FROM HOUSE PROPERTY, BECAUSE THE ASSESSEE HA S GIVEN VACANT LAND ON RENT WHICH WAS LYING IDLE AT THE RELEVANT T IME. RESULTANTLY, STATUTORY DEDUCTION U/S 24 OF THE IT ACT WAS ALSO N OT ALLOWED. THE LEARNED CIT(A) FOLLOWED THE ORDER OF ASSESSMENT YEA R 2006-07 IN THE REMAINING APPEALS AND DISMISSED THIS GROUND OF APPE AL IN ALL THE REMAINING YEARS. IT MAY BE NOTED THAT IN ASSESSMENT YEAR 2001-02 TO 2005-06 THE LEARNED CIT(A) NOTED THE SUBMISSIONS OF THE ASSESSEE WITH REGARD TO RENTAL INCOME AND EXCLUSION OF INCOM E ON PRINCIPLE OF MUTUALITY. THE LEARNED CIT(A) ALSO NOTED THAT SINCE INCOME IS EARNED FROM RENTING THE PROPERTY, THEREFORE, IT HAS NO NEX US WITH THE MUTUALITY ACTIVITIES. THE REMAINING APPEALS WERE ALSO DISMISS ED ON THIS ISSUE. 15. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT COMPLETE DETAILS WERE FILED BEFORE THE AUTHORITIES BELOW WHI CH INCLUDES RENT 49 RECEIPTS OF SHOPS/OFFICES RENTED OUT TO VARIOUS PER SONS/PARTIES DETAILS OF THE SAME CONSTRUCTED AREA IS ALSO MENTIONED IN T HE RENT RECEIPTS COPIES OF WHICH ARE FILED IN THE PAPER BOOK FROM PB - 208 TO 221. HE HAS ALSO REFERRED TO REPLY OF THE ASSESSEE (PB - 15 6 PARA 5) IN WHICH THE ASSESSEE EXPLAINED THE NAMES OF MEMBERS TO WHOM SHOPS ARE RENTED OUT ALONG WITH COPY OF RESOLUTION OF THE SOC IETY. COPIES OF RETURN OF INCOME, BALANCE SHEET AND LEDGER ACCOUNT OF RENTAL INCOME ARE ALSO FILED IN PAPER BOOK TO DEMONSTRATE THAT RE NTAL INCOME WAS SHOWN IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. COP IES OF THE SAME ARE FILED FROM PAGES 101 TO 117 AND PB - 274 TO 297 . THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO DID NOT ASKED FOR ANY SPECIFIC DETAILS AND MERELY ON WORK IN PROGRESS SHO WN IN THE BOOKS PRESUMED THAT ASSESSEE HAS RENTED OUT VACANT LAND O F THE PROJECT. HE HAS SUBMITTED THAT SINCE LARGE NUMBER OF SHOPS AND OFFICES HAVE BEEN RENTED OUT TO VARIOUS PERSONS, THEREFORE, IT I S DIFFICULT TO BELIEVE THAT LARGE NUMBER OF PEOPLE COULD BE ACCOMMODATED A S TENANT IN THE OPEN SPACE. HE HAS SUBMITTED THAT FINDINGS OF THE A UTHORITIES BELOW ARE FACTUALLY INCORRECT AND THE RENTAL INCOME COULD BE TAX AS INCOME FROM HOUSE PROPERTY ON WHICH ASSESSEE WOULD BE ENTI TLED FOR DEDUCTION U/S 24 OF THE IT ACT AND FURTHER INCOME W OULD BE EXEMPT ON PRINCIPLE OF MUTUALITY. 16. ON THE OTHER HAND, THE LEARNED DR RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THERE IS A FAC TUAL DIFFERENCE IN THE SUBMISSION OF THE ASSESSEE AND FINDING OF THE A O. THEREFORE, MATTER COULD BE RESTORED TO THE FILE OF THE AO FOR RECONSIDERATION. HE HAS FURTHER SUBMITTED THAT EVEN IF IT MAY BE PRESUM ED THAT 50 SHOPS/OFFICES ALREADY CONSTRUCTED HAVE BEEN RENTED OUT IN THE SHOPPING COMPLEX TO VARIOUS PERSONS, IT WOULD AMOUN T TO BUSINESS INCOME OF THE ASSESSEE ON WHICH DEDUCTION U/S 24 OF THE IT ACT WOULD NOT BE ALLOWABLE. 17. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERI AL ON RECORD. WE FIND THAT THE AO HAS NOT DISCUSSED THE DETAILS A ND FACTS IN THE ASSESSMENT ORDERS. THE AO ON FINDING THAT WORK IN P ROGRESS HAS BEEN SHOWN IN THE BALANCE SHEET OF THE ASSESSEE, PR ESUMED THAT OPEN PLOT HAS BEEN RENTED OUT. THE AO HAS NOT EXAMI NED THE RECEIPTS AND OTHER DETAILS AND THE REPORT OF THE DV O WHICH PROVE THAT SUBSTANTIAL CONSTRUCTION WAS COMPLETED ON THE DATE OF THE SEARCH. IT APPEARS THAT NO SPECIFIC SHOW CAUSE NOTICE IS ISSUE D TO THE ASSESSEE ON THIS ISSUE. THE DOCUMENTS AND EXPLANATIONS FILED BY THE ASSESSEE PRIMA FACIE PROVE THAT THE ASSESSEE LET OUT SHOPS A ND OFFICE PREMISES TO VARIOUS PERSONS. IT IS DIFFICULT TO BELIEVE THAT LARGE NUMBER OF PEOPLE COULD BE RENTED OUT OPEN PLOT FOR ANY ACTIVITIES. S INCE THERE IS A FACTUAL DIFFERENCE IN THE FINDING OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE, THEREFORE, IN OUR VIEW THE MATTER REQUIRE S RECONSIDERATION AT THE LEVEL OF THE AO. WE ACCORDINGLY, SET ASIDE T HE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THIS ISSUE TO THE FIL E OF THE AO WITH DIRECTION TO RE-DECIDE THIS ISSUE BY GIVING REASONA BLE SUFFICIENT OPPORTUNITY OF BEING HEARD. THE AO SHALL GIVE SPECI FIC FINDING ON THE EXPLANATION OF THE ASSESSEE SUPPORTED BY DOCUMENTS. IN THE RESULT, GROUNDS NO. 4 AND 5 IN ALL THE APPEALS OF THE ASSES SEE SOCIETY ARE ALLOWED FOR STATISTICAL PURPOSES. 51 18. GROUND NO.6 IN ALL THE APPEALS OF THE ASSESSEE ARE GENERAL AND PRAYER FOR GRANTING RELIEF ON THE GROUNDS OF APPEAL S CONSIDERED ABOVE AND REQUIRE NO FURTHER ADJUDICATION. 19. IN THE RESULT, ALL THE APPEALS OF THE REVENUE I N THE CASE OF THE ASSESSEE SOCIETY ARE DISMISSED WHEREAS ALL APPEALS OF THE ASSESSEE SOCIETY ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES . 20. NO OTHER POINT IS ARGUED OR PRESSED. 21. IN THE RESULT, ALL THE DEPARTMENTAL APPEALS IN CASES OF BOTH THE ASSESSEES ARE DISMISSED. ALL THE APPEALS OF THE ASS ESSEE COMPANY M/S. NEPTUNE INFRASTRUCTURE PVT. LTD. ARE ALLOWED . ALL THE APPEALS OF THE ASSESSEE SOCIETY M/S. MAHALAXMI BHAVAN COOPER ATIVE HOUSING SOCIETY LTD. ARE ALLOWED PARTLY FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A. L. GEHLOT) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- ORDER PRONOU NCED IN OPEN COURT ON 31/10/11 SD/- SD/- (A. K. G.) (B. S.) A. M. J. M. 52 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD