Khialdas Constructions Pvt. Limited, Bhopal V. The ACIT 1(1), Bhopal

ITSSA 46/IND/2013

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2563 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-10-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 26-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJEEV VARSHANEY
• Assessee Lawyers: S S DESHPANDE
• Keywords: Business income; Tax effect
• Section: 143(3); 153A; 131; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE .., .., % BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER KHIALDAS CONSTRUCTIONS PRIVATE LIMTED, BHOPAL. .. ./ PAN: AADCK3822A VS. ACIT, 1(1), BHOPAL / APPELLANT / RESPONDENT ACIT, 1(1), BHOPAL VS. KHIALDAS CONSTRUCTIONS PRIVATE LIMTED, BHOPAL. .. ./ PAN: AADCK3822A / APPELLANT / RESPONDENT / ASSESSEE BY SHRI S.S.DESHPANDE, CA / DEPARTMENT BY SHRI RAJEEV VARSHANEY, CIT DR DATE OF HEARING 19.10.2016 DATE OF PRONOUNCEMENT 10.11.2016 .. . / I.T.(SS).A. NO. 46/IND/2013 #% % / ASSESSMENT YEAR: 2001-02 .. ./ I.T.(SS).A. NO. 62/IND/2013 #% % / ASSESSMENT YEAR: 2001-02 I.T(SS).A.NOS. 46 & 62/IND/2013 A.Y.2001-02 KHIALDAS CONSTRUCTIOSN P.LTD.,BHOPAL. PAGE 2 OF 19 / O R D E R PER O.P. MEENA, ACCOUTANT MEMEBR. THESE APPEALS ONE BY ASSESSEE AND DEPARTMENT ARE F ILED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)- I, BHOPAL [HEREINAFTER REFERRED TO AS THE CIT(A)] D ATED 24.01.2013 AND PERTAIN TO ASSESSMENT YEAR 2001-02 A S AGAINST APPEAL DECIDED IN ASSESSMENT ORDER PASSED U/S 153C R.W.S. 153A R.W.S. 143(3) OF THE INCOME-TAX ACT, 1961 , DATED 30.12.2008 OF ACIT, 1(1), BHOPAL [HEREINAFTER REFER RED TO AS THE AO]. I.T.(SS)A.NO.46/IND/2013 (ASSESSEES APPEAL ) : 2. GROUNDS NO. 1 & 2 RELATING TO INITIATION OF PROCEED INGS U/S 153C ARE NOT PRESSED BY THE LD. COUNSEL FOR TH E ASSESSEE. THEREFORE, THE SAME ARE TREATED AS DISMISSED. 3. GROUNDS NO. 3 & 4 RELATE TO ADDITION OF RS. 13,48,925/- MADE BY THE LD. CIT(A)-I. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN TH E BUSINESS OF DEVELOPMENT AND CONSTRUCTION. THE ASSES SEE HAS I.T(SS).A.NOS. 46 & 62/IND/2013 A.Y.2001-02 KHIALDAS CONSTRUCTIOSN P.LTD.,BHOPAL. PAGE 3 OF 19 NOT FILED ORIGINAL RETURN OF INCOME U/S 139 OF THE ACT. THE SEARCH U/S 132(1) WAS CONDUCTED ON 15.11.2006 IN THE GROUP OF SHRI CHANDRABHAN J. LALCHANDANI, WHEREIN DOCUMENT S BELONGING TO THE ASSESSEE WERE ALSO FOUND AND SEIZE D. ACCORDINGLY, NOTICE U/S 153C WAS ISSUED, IN RESPONSE TO WHICH THE RETURN OF INCOME WAS FILED DECLARING LOSS OF RS. 5160/- AND SAME WAS ASSESSED U/S 143(3) READ WITH SECTION 153C A T RS. 29,19,840/- VIDE ORDER DATED 30.12.2008. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE HAD SHOWN OUTSTANDING ADVA NCES FROM RELIABLE GRAH NIRMAN SAHKARI SOCIETY AT RS. 30 ,63,300/- CONSISTING OF OPENING BALANCE OF RS. 26,25,000/- AN D AMOUNT OF RS. 4,38,300/- RECEIVED DURING THE YEAR UNDER CONSIDERATION. IT WAS EXPLAINED TO THE AO THAT RELIA BLE GRAH NIRMAN SAHKARI SOCIETY OWNED A PLOT OF LAND AT IDGAH HILLS, ON WHICH A RESIDENTIAL COLONY WAS TO BE CONSTRUCTED. THE ASSESSEE WAS AWARDED A WORK CONTRACT FOR DEVELOPMENT AND CONSTRUCTION AND THE AMOUNT HAS BEEN PAID BY THE S OCIETY AS PER WORK ORDER, BUT THE WORK REMAINED SUSPENDED TILL DATE I.T(SS).A.NOS. 46 & 62/IND/2013 A.Y.2001-02 KHIALDAS CONSTRUCTIOSN P.LTD.,BHOPAL. PAGE 4 OF 19 BECAUSE THE COLLECTOR, BHOPAL, HAD BANNED BUILDING PERMISSION AND ISSUE OF NOC FOR ALL PLOTS AT IDGAH HILLS VIDE LETTER DATED 26.09.2001. THEREFORE, THE AO CONCLUDE D THAT THERE WAS NO REAL LIABILITY IN THE CASE OF RELIABLE GRAH NIRMAN SAHKARI SOCIETY EXISTED. HENCE, HE MADE THE ADDITIO N OF RS. 26,25,000/-. 6. IN APPEAL, BEFORE THE LD. CIT(A), IT WAS CONTENDED T HAT AGAINST THE SAID ADVANCE, THE ASSESSEE HAD INCURRED SUBSTANTIAL EXPENDITURE AS WERE REFLECTED IN THE BO OKS OF ACCOUNTS AND AUDITED BALANCE SHEET FILED BEFORE THE AO. THE LD. CIT(A) HAD NOTED THAT THE ASSESSEE HAD INCURRED TOTAL EXPENDITURE OF RS. 17,14,375/- UP TO ASSESSMENT YEA R 2001- 02. THEREAFTER, NEITHER ANY FURTHER WORK WAS DONE BY THE ASSESSEE NOR ANY AMOUNT WAS RECEIVED FROM THE SOCIET Y TO THE ASSESSEE. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE DIFFERENCE BETWEEN THE WORK CONTRACT RECEIPT RECEIVE D BY THE ASSESSEE OF RS. 30,63,300/- AND AN EXPENDITURE INCU RRED ON WORK CONTRACT OF RS. 17,14,375/- I.E. RS. 13,48,925/ - SHOULD NOT BE TREATED AS BUSINESS INCOME FROM THE CONTRACT OF I.T(SS).A.NOS. 46 & 62/IND/2013 A.Y.2001-02 KHIALDAS CONSTRUCTIOSN P.LTD.,BHOPAL. PAGE 5 OF 19 DEVELOPMENT WORK OF SHANKAR NAGAR IN THE ASSESSMENT YEAR UNDER CONSIDERATION. IT WAS SUBMITTED THAT THE RECEI PT OF RS. 26,25,000/- DID NOT RELATE TO ASSESSMENT YEAR 2001- 02 AS THESE WERE RECEIVED IN EARLIER ASSESSMENT YEARS 200 0-01. THE AMOUNT OF RS. 4,38,300/- IS ONLY RECEIVED DURING T HE YEAR UNDER CONSIDERATION. THEREFORE, IT WAS CONTENDED THA T THE INCOME IF ANY IS TO BE ASSESSED THAT IS TO BE ASSES SED IN ASSESSMENT YEAR 2000-01. HOWEVER, THE LD. CIT(A) N OTED THAT THE PHASE I WAS TOBE COMPLETED UP TO 30.01.2000. THE ASSESSEE HAD RECEIVED RS. 26,25,000/- IN ASSESSMENT YEAR 2000-01 AND FURTHER AN AMOUNT OF RS. 4,38,300/- DUR ING THE ASSESSMENT YEAR 2001-02 I.E. TOTAL OF RS. 30,63,300 /-. THE ASSESSEE INCURRED TOTAL EXPENDITURE ON THE SAID WORK CARRIED OUT UP TO 30.03.2001 AT RS. 17,14,375/-. DUE TO THE DISPUTE, FURTHER WORK WAS STOPPED AND COLLECTOR, BHOPAL HAD AL SO BANNED PERMISSION. THEREFORE, THE ASSESSEE HAD NOT INCURRED ANY EXPENDITURE ON THIS CONTRACT AFTER ASSESSMENT Y EAR 2001- 02. THE ASSESSEE HAD ALSO NOT REFUNDED ANY AMOUNT T O RELIABLE GRAH NIRMAN SAHKARI SOCIETY TILL NOW EVEN A FTER LAPSE I.T(SS).A.NOS. 46 & 62/IND/2013 A.Y.2001-02 KHIALDAS CONSTRUCTIOSN P.LTD.,BHOPAL. PAGE 6 OF 19 OF 12 YEARS. CONSIDERING THESE FACTS, THE LD. CIT(A ) CONCLUDED THAT THE ASSESSEE HAD APPROPRIATED/RETAINED THE PAY MENT OF RS. 30,63,300/- AS THE CONTRACT RECEIPT AGAINST TH E WORK UNDERTAKEN BY THE ASSESSEE FOR THE SOCIETY. SINCE T HE ASSESSEE HAD INCURRED EXPENDITURE OF RS. 17,14,375/-, HENCE BALANCE AMOUNT OF RS. 13,48,925/- WAS INCOME IN THE HANDS OF THE ASSESSEE. THE CONTENTION OF THE ASSESSEE THAT THE P AYMENT RECEIVED IN ASSESSMENT YEAR 2000-01 OF RS. 26,25,00 0/- CAN ONLY BE ASSESSED IN ASSESSMENT YEAR 2000-01 IS NOT TENABLE BECAUSE IN THAT YEAR, THE AMOUNT WAS RECEIVED AS ADV ANCE AND THE ASSESSEE HAD INCURRED ONLY RS. 8,68,069/-, BUT IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD UNDERTAKEN SU BSTANTIAL DEVELOPMENT WORK OF PHASE I AND INCURRED TOTAL EXPEN DITURE OF RS. 17,14,375/-. ACCORDINGLY,, THE LD. CIT(A) HAS U PHELD THE ADDITION OF RS. 13,48,925/- AS AGAINST THE ADDITION OF RS. 26,25,000/- MADE BY THE AO AND ALLOWING RELIEF OF RS . 12,76,075/-. 7. BEING AGGRIEVED THE ASSESSEE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. I.T(SS).A.NOS. 46 & 62/IND/2013 A.Y.2001-02 KHIALDAS CONSTRUCTIOSN P.LTD.,BHOPAL. PAGE 7 OF 19 8. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS RECEIVED THE AMOUNT AS ADVANCE AGAINST THE WORK. HOWEVER, BECAUSE OF THE COLLECTORS BAN, THE WORK COULD NOT BE EXECUTED FURTHER AND AS SUCH TILL FURTHER CLEARANCE, THE WORK WAS STOPPED. THEREFORE, T HE ADVANCE RECEIVED CANNOT BE TREATED AS THE INCOME OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT THE LD. CIT( A) HAS NOT CONSIDERED THE ADVANCE GIVEN BY THE ASSESSEE TO THE SUB- CONTRACTOR AT RS. 11,35,025/- WHICH SHOWN IN THE BAL ANCE SHEET UNDER THE HEAD ADVANCE R4ECOVERABLE AT PAGE 3 3 OF THE PAPER BOOK. THIS AMOUNT WAS BEING CARRIED OVER TILL 2007 AS ADVANCE RECOVERABLE. THEREFORE, IT WAS SUBMITTED THA T THIS AMOUNT COULD HAVE BEEN CONSIDERED AS EXPENDITURE IN CURRED BY THE ASSESSEE. 9. THE LD. CIT DR SUPPORTED THE ORDER OF THE CIT(A) AN D SUBMITTED THAT THE ASSESSEE HAS NOT MADE ANY CLAIM REGARDING ADVANCES OF RS. 11,35,025/-, CLAIMED TO HAVE BEEN G IVEN TO SUB-CONTRACTOR. I.T(SS).A.NOS. 46 & 62/IND/2013 A.Y.2001-02 KHIALDAS CONSTRUCTIOSN P.LTD.,BHOPAL. PAGE 8 OF 19 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND FIND THAT T HE ASSESSEE HAS RECEIVED THE TOTAL AMOUNT OF RECEIPT O F RS. 30,63,300/- IN RESPECT OF DEVELOPMENT WORK CARRIED O UT FOR THE SOCIETY ON WHICH EXPENDITURE OF RS. 17,14,375/- HAS BEEN INCURRED. SINCE FURTHER WORK COULD NOT BE COMPLETED DUE TO BAN IMPOSED BY THE COLLECTOR, THEREFORE, THE SAID AMOUNT REMAINED WITH THE ASSESSEE EVEN AFTER LAPSE OF 12 YE ARS. THEREFORE, THE DIFFERENCE AMOUNT OF RS. 13,48,925/- BETWEEN RECEIPT AND EXPENDITURE AMOUNT TO INCOME CHARGEABLE TO TAX. HOWEVER, THE LD. CIT(A) HAS NOT CONSIDERED THE AMO UNT FOR ADVANCE GIVEN BY THE ASSESSEE TO SUB-CONTRACTOR FOR THE SAID PROJECT, WHICH IS REFLECTED IN THE BOOKS OF ACCOUNTS AS COULD BE SEEN FROM THE PAPER BOOK PAGE 33. 11. DURING THE COURSE OF HEARING BEFORE US, BOTH THE PARTIES HAVE AGREED THAT THE ASSESSEE IS A CONTRACT OR AND IN THE CASE OF CONTRACTOR 8 % PROFIT IS CONSIDERED AS CHARGEABLE TO TAX. THEREFORE, TO MEET THE END OF JUSTICE, IT WOULD BE REASONABLE TO UPHOLD THE NET PROFIT RATE OF 8% OF T OTAL CONTRACT RECEIPT AMOUNTING TO RS. 30,63,300/-, WHICH COMES TO RS. I.T(SS).A.NOS. 46 & 62/IND/2013 A.Y.2001-02 KHIALDAS CONSTRUCTIOSN P.LTD.,BHOPAL. PAGE 9 OF 19 2,45,064/-. THIS WILL TAKE CARE OF THE EXPENDITURE B Y THE ASSESSEE AT RS. 17.14 LAKHS AS WELL AS ADVANCE GIVE N TO SUB- CONTRACTOR AT RS. 11.35 LAKHS. IN VIEW OF THESE FACT S, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 12. GROUND NOS. 5 TO 7 RELATE TO ADDITION OF RS. 5,10,0 00/- ON ACCOUNT OF CASH RECEIPT ON THE BASIS OF STATEMEN T OF A CREDITOR. 13. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS RECEIVED ADVANCE OF RS. 3 LAKHS FROM S HRI SHAILESH GUPTA AGAINST LAND AT CHUNA BHATTI. HOWEVE R, THE CONTENTION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE. HENCE, THE ADVANCE AMOUNT OF RS. 3 LAKHS WAS TREATED AS UND ISCLOSED INCOME. 14. IN APPEAL, IT WAS SUBMITTED THAT AN AMOUNT OF RS. 3 LAKHS WAS RECEIVED FROM SHRI SHAILESH GUPTAAS AN ADV ANCE AGAINST THE PROPERTY AT CHUNA BHATTI, WHICH WAS OWNED BY THE ASSESSEE. SINCE THE SALE DEED WAS NOT EXECUTED IN FA VOUR OF SHRI SHAILESH GUPTA, THE ASSESSEE WAS LIABLE TO REPA Y THAT TO SHRI SHAILESH GUPTA. HOWEVER, DUE TO DISPUTE, THE AMOUNT I.T(SS).A.NOS. 46 & 62/IND/2013 A.Y.2001-02 KHIALDAS CONSTRUCTIOSN P.LTD.,BHOPAL. PAGE 10 OF 19 WAS NOT REFUNDED TO SHRI SHAILESH GUPTA. IN CONNECTI ON WITH THIS DISPUTE, THE ASSESSEE HAD RECEIVED A LEGAL NOT ICE FROM THE ADVOCATE OF SHRI SHAILESH GUPTA, WHEREIN IT WAS CLEA RLY MENTIONED THAT SHRI SHAILESH GUPTA HAD GIVEN A CHEQ UE OF RS. 3 LAKHS FOR THE PURCHASE OF THE LAND AT CHUNA BHATT I. HOWEVER, ON PERUSAL OF THE SAID NOTICE DATED 19 TH MARCH, 2008, SHRI SHAILESH GUPTA HAD GIVEN AN AMOUNT OF RS . 10,000/- IN CASH AT THE TIME OF EXECUTION OF THE AG REEMENT FOR THE PURCHASE OF THE AFORESAID PROPERTY FOR A TOTAL CONSIDERATION OF RS. 13.50 LAKHS. THEREAFTER, SHRI SHAILESH GUPTA PAID A SUM OF RS. 3 LAKHS BY WAY CHEQUE ON 25.04.2000 AND THEREAFTER, PAID A SUM OF RS. 5 LAKHS IN CASH TO TH E ASSESSEE. THUS, IT WAS CLAIMED THAT SHRI SHAILESH GUPTA HAD MA DE PAYMENT OF TOTAL SUM OF RS. 8.10 LAKHS TO THE ASSES SEE, WHEREAS THE ASSESSEE HAD SHOWN AT RS. 3 LAKHS. ACCORD INGLY, THE LD. CIT(A) ASKED THE ASSESSEE TO EXPLAIN AS TO HOW THE BALANCE AMOUNT OF RS. 5.10 LAKHS WAS ACCOUNTED FOR I N THE BOOKS. HOWEVER, THE ASSESSEE HAS DENIED TO HAVE RE CEIVED RS. 5.10 LAKHS IN CASH AND CLAIMED THAT THE COMPANY HAD ONLY I.T(SS).A.NOS. 46 & 62/IND/2013 A.Y.2001-02 KHIALDAS CONSTRUCTIOSN P.LTD.,BHOPAL. PAGE 11 OF 19 RECEIVED RS. 3 LAKHS BY CHEQUE. IT WAS REQUESTED THA T THE AO MAY BE DIRECTED TO SUMMON SHRI SHAILESH GUPTA U/S 1 31 AND ASCERTAIN THE FACTS FROM HIM. DURING THE COURSE OF REMAND PROCEEDINGS, THE AO RECORDED A STATEMENT ON OATH ON 24.12.2012 FROM SHRI SHAILESH GUPTA, WHEREIN SHRI SH AILESH GUPTA ADMITTED THAT HE HAD PAID RS. 10,000/- AND RS . 5 LAKHS IN CASH AND RS. 3 LAKHS BY CHEQUE. HE HAS ALSO STAT ED THAT HE HAS PAID CASH TO SHRI CHANDAN LALCHANDANI FROM THE SITE OF THE ASSESSEE COMPANY AND IN CROSS-EXAMINATION ALSO HE CONFIRMED THE PAYMENT OF RS. 11,000/- AND RS. 5 LAK HS IN CASH APART FROM RS. 3 LAKHS BY CHEQUE. IT WAS ALSO CONTENDED BY THE ASSESSEE BEFORE THE CIT(A) THAT SHRI SHAILES H GUPTA WAS TELLING A LIE ALL ALONG AS HE HAS NOT PRODUCED A NY RECEIPT FOR ALLEGED CASH PAYMENT NOR DISCLOSED THE SAID MON EY IN HIS BOOKS OF ACCOUNTS. IT WAS ALSO SUBMITTED THAT THERE WAS A FURTHER DEVELOPMENT IN THIS MATTER AND A SETTLEMENT IS ARRIVED WITH SHRI SHAILESH GUPTA ON 8.6.2012 AND AS PER SETT LEMENT, EH WAS PAID RS. 6 LAKHS VIDE CHEQUE NO. 63851 DATED 08.06.2012 AND IN PARA 3 OF SETTLEMENT SHRI SHAILES H GUPTA I.T(SS).A.NOS. 46 & 62/IND/2013 A.Y.2001-02 KHIALDAS CONSTRUCTIOSN P.LTD.,BHOPAL. PAGE 12 OF 19 HAS CLEARLY STATED THAT HE DID NOT PAY ANY AMOUNT O VER AND ABOVE RS. 3 LAKHS. THESE FACTS WERE EXAMINED BY THE LD. CIT(A) . THE LD. CIT(A) NOTED THAT AN AMOUNT OF RS. 3 LAKH S WAS RECEIVED BY CHEQUE AS ADVANCE FROM SHRI SHAILESH GU PTA, WHICH IS SATISFACTORILY EXPLAINED, HENCE, THE ADDITI ON ON ACCOUNT OF THAT AMOUNT WAS DELETED. HOWEVER, WITH RE GARD TO RS. 5.10 LAKHS CASH RECEIPTS, THE LD. CIT(A) NOTED THAT SHRI SHAILESH GUPTA HAS CLEARLY STATED IN HIS STATEMENT THAT HE HAD GIVEN THE SAID AMOUNT TO THE DIRECTOR OF THE ASSESS EE COMPANY IN HIS OFFICE AT G.T.B. COMPLEX, WHICH WAS ALSO CONFI RMED IN THE CROSS EXAMINATION BY THE ASSESSEE. THE ASSESSEE HAD NOT RECORDED THE RECEIPT OF RS. 10,000/- AND RS. 5 LAKH S RECEIVED IN CASH. AS ADMITTED BY THE ASSESSEE, THE IMPUGNED LAND WAS STOCK IN TRADE AND THAT THE AMOUNT WAS RECEIVED AGAI NST THE SALE OF STOCK IN TRADE. ACCORDINGLY, THE LD. CIT(A) HAS MADE ADDITION OF RS. 5.10 LAKHS IN THE HANDS OF THE ASSE SSEE FOR NOT SHOWING THE RECEIPT IN CASH IN THE BOOKS OF ACCOUNTS . 15. BEING AGGRIEVED, THE ASSESSEE HAS FILED THE APPEAL BEFORE US. I.T(SS).A.NOS. 46 & 62/IND/2013 A.Y.2001-02 KHIALDAS CONSTRUCTIOSN P.LTD.,BHOPAL. PAGE 13 OF 19 16. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE RECEIVED THE PAYMENT OF RS. 3 LAKHS AGAINST THE AGREEMENT FOR SALE OF CHUNA BHATT I PROPERTY LAND. HOWEVER, THE PARTY DID NOT PAY ANY FURTHER M ONEY AND NO SALE DEED WAS EXECUTED. SUBSEQUENTLY, THE ASSESSE E SOLD THE PROPERTY TO SMT. VIJAY LAXMI AND SHRI VIJAY SHA NKAR PANDEY IN THE YEAR 2006. THE PROFIT ARISING FROM TH IS TRANSACTION IS DISCLOSED IN THE RETURN FOR ASSESSME NT YEAR 2006-07. THE ADVOCATE OF SHRI SHAILESH GUPTA GAVE A NOTICE IN MARCH 2008, TO THE ASSESSEE THAT THEIR CLIENT HAD P AID MONEY OF RS. 5 LAKHS IN CASH AGAINST THE SALE CONSIDERATI ON AND ALLEGED THAT THE RECEIPT IS DULY ACKNOWLEDGED BY THE ASSESSEE. IT WAS ALSO STATED THAT THE SALE DEED IN FAVOUR OF S HRI VIJAY SHANKAR PANDEY BE CANCELLED AND BE EXECUTED IN FAVO UR OF SHRI SHAILESH GUPTA. 17. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE CONTENDED THAT THE ASSESSEE HAS RECEIVED RS. 3 LAKH S FROM SHRI SHAILESH GUPTA AND AGREED TO SETTLE THE DISPUT E BY PAYING RS. 6 LAKHS, WHICH WAS CONSISTED AS RS. 3 LAKHS AS PR INCIPAL I.T(SS).A.NOS. 46 & 62/IND/2013 A.Y.2001-02 KHIALDAS CONSTRUCTIOSN P.LTD.,BHOPAL. PAGE 14 OF 19 AND RS. 3 LAKHS AS COMPENSATION. IT WAS SUBMITTED TH AT IN REPLY TO QUESTION NO. 3, SHRI SHAILESH GUPTA HAD ST ATED THAT HE HAS NOT TAKEN ANY RECEIPT OF RS. 5 LAKHS FROM TH E ASSESSEE AND IN REPLY TO QUESTION NO.4, HE HAS STATED THAT T HIS AMOUNT WAS NOT DISCLOSED IN HIS BALANCE SHEET FOR THE ASSES SMENT YEAR 2001-02. THEREFORE, ENHANCEMENT OF INCOME BY RS. 5. 10 LAKHS BY THE CIT(A) AS REVENUE RECEIPT AGAINST THE SALE OF STOCK IN TRADE IS NOT JUSTIFIED. THEREFORE, IT WAS SUBMITTED THAT WITHOUT ANY DOCUMENTARY EVIDENCE ABOUT THE RECEIPT OF RS. 5 .10 LAKHS, NO ADDITION CAN BE MADE MERELY ON THE BASIS OF ALLE GATION BY THE THIRD PARTY. 18. THE LD. CIT DR SUPPORTED THE ORDER OF THE CIT(A) AN D SUBMITTED THAT THE ASSESSEE HAS EXAMINED SHRI SHAIL ESH GUPTA, WHERE IN THE CROSS-EXAMINATION, HE HAS CATEGO RICALLY ADMITTED THAT THE PAYMENT OF RS. 3 LAKHS WERE GIVEN BY CHEQUE AND RS. 5.10 LAKHS WAS GIVEN BY CHEQUES. THEREFORE, THE LD. CIT(A) WAS JUSTIFIED IN MAKING ADDITION ON THIS ACCO UNT. 19. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THE LEGAL I.T(SS).A.NOS. 46 & 62/IND/2013 A.Y.2001-02 KHIALDAS CONSTRUCTIOSN P.LTD.,BHOPAL. PAGE 15 OF 19 NOTICE SERVED ON THE ASSESSEE BY ADVOCATE OF SHRI S HAILESH GUPTA DATED 19 TH MARCH, 2008, CLEARLY MENTIONED THAT HE HAS PAID A SUM OF RS. 10,000-/- IN CASH AT THE TIME OF EXECUTION OF THE AGREEMENT FOR THE PURCHASE OF CHUNA BHATTI FOR A TOTAL CONSIDERATION OF RS. 13.50 LAKHS AND HE HAS FURTHER PAID A SUM OF RS. 5 LAKHS IN CASH TO THE ASSESSEE AND RS. 3 LAKHS BY WAY OF CHEQUE DATED 25.04.2000. THUS, TOTAL SUM OF R S. 8.10 LAKHS WAS PAID TO THE ASSESSEE FOR PURCHASE OF THE CHUNA BHATTI PROPERTY. WE ALSO FIND THAT THE AO HAS RECOR DED THE STATEMENT OF SHRI SHAILESH GUPTA ON 24.12.2012, WHER EIN SHRI SHAILESH GUPTA HAD ADMITTED THAT HE HAS PAID RS. 10 ,000/- AND RS. 5 LAKHS IN CASH AND RS. 3 LAKHS BY CHEQUE. HE HAS ALSO STATED THAT CASH AMOUNT WAS PAID TO SHRI CHANDA N LALCHANDANI, DIRECTOR OF THE ASSESSEE COMPANY IN TH E OFFICE SITUATED AT G. T. B. COMPLEX. HE WAS ALSO CROSS EXAM INED BY SHRI NITIN LALCHANDANI FROM THE ASSESSEE COMPANY, WH EREIN HE HAS CONFIRMED OF MAKING SUCH PAYMENT IN CASH APA RT FROM RS. 3 LAKHS BY CHEQUE TO THE ASSESSEE. THE ASSESSEE WAS ALSO PROVIDED A COPY OF REMAND REPORT. WE FURTHER NOTE T HAT THE I.T(SS).A.NOS. 46 & 62/IND/2013 A.Y.2001-02 KHIALDAS CONSTRUCTIOSN P.LTD.,BHOPAL. PAGE 16 OF 19 ASSESSEE HAS REACHED A SETTLEMENT FROM SHRI SHAILES H GUPTA ON 08.06.2012, WHEREIN THE ASSESSEE HAS PAID RS. 6 LAKHS VIDE CHEQUE DATED 08.06.2012. THUS, ALL THE SURROUNDING CIRCUMSTANCES, STATEMENT OF THE PAYEE LEADS TO THE CONCLUSION THAT THE ASSESSEE HAS RECEIVED RS. 8.1 LAKHS TOWARDS AGREEMENT TO PURCHASE OF PROPERTY KEPT BY THE ASSES SEE AS IN STOCK IN TRADE. THIS AMOUNT INCLUDED PAYMENT OF RS. 3 LAKHS BY CHEQUE WHICH HAS BEEN DULY EXPLAINED. THEREFORE, THE BALANCE AMOUNT OF RS. 5.10 LAKHS RECEIVED IN CASH I S RIGHTLY TREATED BY THE LD. CIT(A) AS UNDISCLOSED BUSINESS RECEIPT. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT TH E LD. CIT(A) IS JUSTIFIED IN MAKING THE SAID ADDITION. ACCORDING LY, THIS GROUND OF APPEAL IS DISMISSED. 20. GROUND NO. 8 RELATES TO CHARGING OF INTEREST U/S 23 4B OF THE ACT, WHICH IS CONSEQUENTIAL IN NATURE. 21. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. I.T(SS).A.NOS. 46 & 62/IND/2013 A.Y.2001-02 KHIALDAS CONSTRUCTIOSN P.LTD.,BHOPAL. PAGE 17 OF 19 I.T.(SS)A.NO. 62/IND/2013 ( REVENUES APPEAL ) : 22. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF CIT(A) DATED 24.01.2013 RELATING TO ASSESSMENT Y EAR 2001- 02. 23. WE HAVE HEARD BOTH THE SIDES. WE FIND THAT THE CBDT VIDE CIRCULAR NO.21/2015 ISSUED ON 10.12.2015 [F. N O. 279/MISC. 142/2007-ITJ (PT)] HAS REVISED THE MONETA RY LIMIT FOR FILING OF APPEAL BEFORE ITAT FIXING THE TAX EFF ECT LIMIT AT RS.10 LACS. THE SAID CIRCULAR IS IN SUPERSEDES THE EARLIER INSTRUCTIONS/CIRCULAR ISSUED ON THE SUBJECT OF TAX EFFECT AND APPLIES TO ALL PENDING APPEAL RETROSPECTIVELY. THE RELEVANT PARA10 OF CIRCULAR IS REPRODUCED AS FOLLOWS FOR READ Y REFERENCE: - 10.THIS INSTRUCTION WILL APPLY RETROSPECTIVELY TO PENDING APPEALS AND APPEALS TO BE FILED HENCEFORTH IN HIGH COURTS/ TRIBUNALS. PENDING APPEALS BELOW THE SPECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITHDRA WN/NOT PRESSED. APPEALS BEFORE THE SUPREME COURT WILL BE I.T(SS).A.NOS. 46 & 62/IND/2013 A.Y.2001-02 KHIALDAS CONSTRUCTIOSN P.LTD.,BHOPAL. PAGE 18 OF 19 GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT, OPERA TIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. 24. IN VIEW OF THE PARA 10 OF THE ABOVE CIRCULAR, THE AP PEAL FILED BY THE REVENUE IN WHICH THE TAX EFFECT INVOLVE D IS BELOW THE PRESCRIBED MONETARY LIMIT FOR FILING OF APPEALS BEFORE THE ITAT ARE EITHER TO BE WITHDRAWN OR NOT PRESSED BY THE DEPARTMENT. THE CIRCULAR/ INSTRUCTIONS ISSUED ON TH IS ISSUE BY THE CBDT WOULD BE APPLIED RETROSPECTIVELY IS ALSO SUPPORTED BY CATENA OF DECISIONS OF HCT HIGH COURTS VIZ: CIT VS. CIT VS. SURESHCHANDRA DURGAPRASAD KHATOD (HUF) (2012) 253 CTR 492 (GUJ), M/S. P. S. JAIN & CO. (ITANO.17 9/1991 DTD. 02.08.2010 (DELHI) AND CIT VS. DELHI RACE CLU B LTD.'(DEL) DTD. 03.03.2011. SINCE THE TAX EFFECT INVOLVED IN T HE PRESENT APPEAL IS BELOW THE MONETARY LIMIT, THEREFORE, WE DIS MISS THE DEPARTMENTAL APPEAL IN LIMINE BEING NOT MAINTAINABLE OR NOT PRESSED. 25. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. I.T(SS).A.NOS. 46 & 62/IND/2013 A.Y.2001-02 KHIALDAS CONSTRUCTIOSN P.LTD.,BHOPAL. PAGE 19 OF 19 26. CONSEQUENTLY, THE APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED AND APPEAL FILED BY THE REVENUE IS DISMISS ED. THE ORDER HAS BEEN PRONOUNCED IN OPEN CO URT ON THE 10 TH NOVEMBER, 2016. SD/- (..) (D.T.GARASIA) JUDICIAL MEMBER SD/- (..) (O.P.MEENA) ACCOUNTANT MEMBER * / DATED : 10 TH NOVEMBER, 2016. CPU* 10.11