Validity of order passed by majority as per section 255(4) of IT

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
The assessee company is engaged in the business of operation and management of hotels owned by third parties. The assessee has taken over the management of the hotel property, viz. Tulip Star Mumbai, situated at Juhu Tara Road, Juhu, Mumbai. The assessee was redeveloping the said property into a multi product hospitability destination and was also developing international standard Service Apartments. The assessee offered the space in the same property to Shri Somendra Khosla of UAE on a 99 years lease basis. After negotiation, Shri Khosla agreed to acquire the space admeasuring 12700 sq. ft. at the rate of Rs.7,500/- per sq. ft. In pursuance to such booking of the property, Shri Khosla advanced the sum of Rs.4,78,12,403/- during the accounting year relevant to assessment year 2004- 05 and the sum of Rs.1,02,91,176/- in the accounting year relevant to assessment year 2005-06. During the assessment proceedings, the assessee produced the copies of correspondence between the assessee and Shri Khosla; confirmation of Shri Khosla with regard to advance given by him; complete details with regard to remittance in USD; the correspondence showing why the property could not be developed as stipulated and the termination of the agreement with the liability on the assessee to refund the money. The assessee also produced the certificate from Citibank, Mumbai, certifying the receipt of inward foreign remittance by the assessee, which was sent by Shri Khosla. The Assessing Officer, not being satisfied with the evidences furnished before him held that the assessee has not established the identity, creditworthiness and genuineness of the transaction and accordingly added an amount of Rs.4,78,12,403/- u/s 68 of the Income Tax Act, 1961 (the Act) to the total income of the assessee. In the assessment year 2005-06 also, the assessee had received a sum of Rs.1,02,91,176/- from Shri Khosla and for the same reasons given in the assessment order for the assessment 2004-05, the AO added the sum of Rs.1,02,91,176/- as income of the assessee u/s 68 of the Act. On appeal before the CIT(A), the assessee furnished various additional evidence in the form of certificate from a Chartered Accountant, giving the detai ls of the properties owned by Shri Khosla; copy of his Passport; the Trade License issued to the company of Shri Khosla, viz. Dome Services (FZC); copy of his telephone bi l l, electricity bi ll; newspaper cuttings showing the voluminous business being done by the company named as New World Real Estate (NWRE), whose President is Shri Somendra Khosla; the Heath Card and other Cards issued by the Government of UAE. The ld. CIT(A) whi le observing that these documents were not produced before the Special Auditor during the special audit conducted u/s 142(2A) of the Act or the AO at the time of assessment , held that the same cannot be admitted being fresh evidence at the appel late stage as the appellant has failed to explain the reasons for not producing these documents before the AO or Special Auditor. He further held that since no evidence of creditworthiness of Shri Somendra Khosla was produced during the assessment proceedings, the AO was justified in making addition u/s 68 of the Act Rs.4,78,12,403/- for the assessment year 2004-05 and Rs.1,02,91,176/- for the assessment year 2005-06.

Citation :
M/s Tulip Hotels Pvt. Ltd. Chandramukhi(Basement) Behind The Oberoi, Mumbai-400 021. (PAN: AAACT9446Q) Appellant Vs. Deputy Commissioner of Income Tax, Central Circle 36,Mumbai.Respondent