ITO, New Delhi v. M/s. Mountain Touch Builders (P) Ltd., New Delhi

ITA 4441/DEL/2010 | 2007-2008
Pronouncement Date: 30-09-2011 | Result: Dismissed

Appeal Details

RSA Number 444120114 RSA 2010
Assessee PAN AAFCM2293K
Bench Delhi
Appeal Number ITA 4441/DEL/2010
Duration Of Justice 11 month(s) 25 day(s)
Appellant ITO, New Delhi
Respondent M/s. Mountain Touch Builders (P) Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 30-09-2011
Date Of Final Hearing 06-12-2010
Next Hearing Date 06-12-2010
Assessment Year 2007-2008
Appeal Filed On 05-10-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI SHAMIM YAHYA ITA NO. 4441/DEL/10 ASSTT. YR: 2007-08 INCOME-TAX OFFICER VS. M/S MOUNTAIN TOUCH BUILD ERS P. LTD. WARD 5(4) NEW DELHI. FLAT NO. 1104 11 TH FLOOR 89 NEHRU PLACE NEW DELHI. PAN NO. AAFCM2293K (APPELLANT ) (RESPONDENT) APPELLANT BY: SH. MOHANISH VERMA CIT DR RESPONDENT BY: S/SHRI. ROHIT JAIN CA & AVDHESH BANS AL ACA O R D E R PER R.P. TOLANI J.M: THIS IS REVENUES APPEAL AGAINST CIT(A)S ORDER DAT ED 13-8-2010 RELATING TO A.Y. 2007-08. 2. SOLE EFFECTIVE GROUND RAISED IS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 9 19 89 841/- MADE BY THE AO U/S 69A OF THE I.T . ACT BEING THE UNEXPLAINED MONEY. 3. BRIEF FACTS ARE THAT ASSESSEE COMPANY WAS INCORP ORATED DURING THE PREVIOUS YEAR WITH OBJECTS OF TRADING IN REAL ESTAT E AND IN REAL ESTATE DEVELOPMENT. IN THIS YEAR THE ASSESSEE IS CLAIMED T O HAVE PURCHASED AGRICULTURAL LAND AT SONEPAT FROM VARIOUS FARMERS F OR RS. 9 19 89 841/-. THESE PURCHASES WERE MADE BY THE ASSESSEE UNDER JOI NT DEVELOPMENT AGREEMENT WITH M/S DUCE PROPERTIES & SERVICES PVT. LTD. (NOW KNOWN AS M/S JINDAL REALITY PVT. LTD.) AND M/S SHIKHAR REAL ESTATES PVT. LTD. IT MAY 2 BE WORTHWHILE TO MENTION THAT NO PURCHASE AMOUNT WA S PAID BY THE ASSESSEE AND IT IS CLAIMED THAT THESE TWO CONCERNS I.E. M/S JINDAL REALITY PVT. LTD. & M/S SHIKHAR REAL ESTATES PVT. LTD. PAID THE PURCHAS E PRICE ON BEHALF OF THE ASSESSEE. AS PER AO NO BANK ACCOUNT WAS MAINTAINED BY THE ASSESSEE. RETURN OF INCOME WAS FILED AT NIL DECLARING A LOSS OF RS. 14 775/-. 4. IN THE ASSESSMENT PROCEEDINGS THE AO ASKED DETAI LS ABOUT PURCHASES AND THE PROPER ESTIMATION OF THE SOURCE OF PURCHASE . THE ASSESSEE EXPLAINED THE ABOVE FACTS. AO HOWEVER RELIED ON THE DECISIO N OF HONBLE SUPREME COURT IN THE CASE OF KALE KHAN MOHD. HANIF VS. CIT (1963) 50 ITR 1 FOR THE PROPOSITION HOLDING AS UNDER: THAT THE ONUS OF PROVING THE SOURCE OF A SUM OF MONEY FOUND TO HAVE BEEN RECEIVED BY THE ASSESSEE IS ON H IM. IF HE DISPUTES LIABILITY FOR TAX IT IS FOR HIM TO SHOW E ITHER THAT THE RECEIPT WAS NOT INCOME OR THAT IF IT WAS IT WAS EX EMPT FROM TAXATION UNDER THE PROVISIONS OF THE ACT. IN THE AB SENCE OF SUCH PROOF THE INCOME-TAX OFFICER IS ENTITLED TO TREAT IT AS TAXABLE INCOME. 5. IT WAS HELD THAT ASSESSEE HAD NOT SATISFACTORILY EXPLAINED THE SOURCE OF INCOME AND UNSECURED LOANS HAD NOT GONE THROUGH TH E ACCOUNT BOOKS OF THE ASSESSEE THE ENTIRE INVESTMENT IN PURCHASES AND CA SH BALANCE WAS TREATED AS UNEXPLAINED INVESTMENT OF ASSESSEE COMPANY ADDED U /S 69A OF THE ACT. 6. AGGRIEVED ASSESSEE PREFERRED FIRST APPEAL BEFOR E THE CIT(A) BEFORE WHOM ASSESSEE TOOK THE PLEAS: (I) INVESTMENT WAS DULY RECORDED IN THE BOOKS OF ACCOUN T INASMUCH AS THOUGH THE CONSIDERATION WAS PAID DIRECTLY BY M/S J INDAL REALITY PVT. LTD. & M/S SHIKHAR REAL ESTATES PVT. LTD CORR ESPONDING ENTRIES WERE MADE IN THE BOOKS OF ACCOUNT BY DEBITI NG THE LAND 3 PURCHASE A/C AND CREDITING THE SAME AS UNSECURED LO AN FROM THESE PARTIES. (II) THE ASSESSEE HAS EXPLAINED THE SOURCE BEING FROM IT S COLLABORATORS (III) THE DEVELOPMENT AGREEMENT DATED 14-4-2006 BETWEEN T HE ASSESSEE JAANDAR BUILDERS (P) LTD. SHAANDAR BUILDERS (P) LT D. BY WHICH THE PARTIES AGREED THAT THE ASSOCIATE COMPANIES WILL AC QUIRE THE LAND INDEPENDENTLY AND USE THE PIECE OF LAND TO JOINTLY DEVELOP THE LAND. 7. THE CIT(A) HELD THAT THE ASSESSEES EXPLANATION WAS PROPER AND HELD THAT MERELY BECAUSE THE CONSIDERATION FOR ACQUISITI ON OF LAND WAS DIRECTLY PAID ON BEHALF OF THE ASSESSEE BY OTHER ASSOCIATES PURSUANT TO THE JOINT DEVELOPMENT AGREEMENT IT CANNOT BE HELD THAT INVES TMENT WAS UNEXPLAINED. THE TRANSACTION WAS FULLY RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THE DEVELOPERS. AGGRIEVED REVENUE IS BEFORE. 8. LEARNED DR RELIED ON THE ORDER OF AO. 9. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHE R HAND CONTENDS THAT AO HAS NEITHER DISPUTED THE JOINT DEVELOPMENT AGREE MENT BETWEEN ASSESSEE AND OTHER CONSTITUENTS NOR RAISED ANY DOUBT ON THE FACT THAT THE SAID M/S JINDAL REALITY PVT. LTD. & M/S SHIKHAR REAL ESTATES PVT. LTD. HAD IN FACT ADVANCED THE MONEY FOR PURCHASE OF LAND. THE LANDS IN QUESTION WERE IDENTIFIED BY THE ASSESSEE AND THE ASSOCIATE CONCER NS AGREED TO PAY THE PURCHASE PRICE ON BEHALF OF THE ASSESSEE. THIS WAS DONE AS THERE WAS AGREEMENT FOR JOINT DEVELOPMENT OF LAND AND THE LAN DS WERE ALREADY IDENTIFIED BY THE ASSESSEE. THIS WAS PURELY A COMME RCIAL TRANSACTION BETWEEN THREE ENTITIES WHICH ARE DULY INCORPORATED AND MAINTAIN SEPARATE E 4 BOOKS OF ACCOUNT. THE PURCHASE OF LAND HAS BEEN ACC EPTED. AOS OBJECTION IS THAT THE ASSOCIATE CONCERNS SHOULD HAVE FIRST PAID THE MONEY TO ASSESSEE AND THE ASSESSEE SHOULD HAVE PAID IT TO FARMERS. ACCOR DING TO LEARNED COUNSEL THIS CANNOT BE A BASIS FOR DISALLOWANCE AS THE PURC HASE IN THE HANDS OF THE ASSESSEE HAS BEEN HELD TO BE GENUINE. THESE BEING P URELY COMMERCIAL TRANSACTIONS ASSESSEE CREDITED THE ACCOUNT OF ASS OCIATE CONCERNS AS UNSECURED LOANS AND DEBITED TO LAND PURCHASE ACCOUN T WHICH ARE PROPER ACCOUNTING ENTRIES. THE INFERENCE DRAWN BY AO THAT THE MONEYS HAVE NOT BEEN PAID TO FARMERS FROM ASSESSEES ACCOUNT IS UNJ USTIFIED AND UNFOUNDED IN VIEW OF THESE FACTS. 10. THE AO HAS NOT CAST ANY DOUBT ABOUT JOINT DEVEL OPMENT AGREEMENT AND FOR PURCHASES ASSESSEE FILED ALL THE NECESSARY COPIES OF AGREEMENT TO PURCHASE FROM FARMERS CONFIRMATIONS FROM M/S JINDA L REALITY PVT. LTD. & M/S SHIKHAR REAL ESTATES PVT. LTD WHICH ARE AVAILA BLE ON RECORD. SINCE THE ASSESSEE HAS DISCHARGED THE ONUS THAT LAY ON IT AND THE UNSECURED LOANS ARE DULY REFLECTED IN ASSESSEES ACCOUNT AS MENTIONED ABOVE ADDITION ON ACCOUNT OF SEC. 69 WAS UNJUSTIFIED WHICH HAS BEEN RIGHTLY DELETED BY THE CIT(A). HIS ORDER MAY BE UPHELD. 11. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUG H THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE AO HAS PLACED NO DOUBT OR OBJECTION ON THE PURCHASE AND SALE AGREEMENTS WITH FARMERS. THE FACT ABOUT PAYMENT OF CONSIDERATION BY ASSOCIATE CONCERNS HAS BEEN ACCEPT ED BY AO WHICH ARE DULY SUPPORTED WITH CONFIRMATIONS AND COPIES OF ACC OUNT. NO DOUBT HAS BEEN RAISED ON THE JOINT DEVELOPMENT AGREEMENT. IN VIEW OF THESE FACTS WE SEE NO JUSTIFICATION FOR THE ADDITION MADE BY THE AO. CIT( A) HAS RIGHTLY DELETED THE ADDITION BY OBSERVING THAT THE TRANSACTIONS HAVE R OUTED THROUGH ASSESSEES 5 BOOKS OF ACCOUNT BY ABOVE ENTRIES. IN VIEW THEREOF WE UPHOLD THE ORDER OF CIT(A) ON THE ISSUE IN QUESTION. 12. IN THE RESULT REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 30-09-2011. SD/- SD/- ( SHAMIM YAHYA ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30-09-2011. MP COPY FORWARDED TO: (1) ASSESSEE (2) AO (3) CIT (4) CIT(A) (5) DR 6