ITO 25(3)(1), MUMBAI v. NARESH K. SHAH, MUMBAI

ITA 3187/MUM/2010 | 2005-2006
Pronouncement Date: 15-07-2011 | Result: Dismissed

Appeal Details

RSA Number 318719914 RSA 2010
Assessee PAN ANEPS6449Q
Bench Mumbai
Appeal Number ITA 3187/MUM/2010
Duration Of Justice 1 year(s) 2 month(s) 22 day(s)
Appellant ITO 25(3)(1), MUMBAI
Respondent NARESH K. SHAH, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 15-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 15-07-2011
Date Of Final Hearing 20-06-2011
Next Hearing Date 20-06-2011
Assessment Year 2005-2006
Appeal Filed On 23-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F MUMBAI BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN JUDICIAL MEMBER ITA NO.3187/MUM/2010 ASSESSMENT YEAR:2005-2006 INCOME TAX OFFICER 25(3)(1) R.NO. 307 C-11 3 RD FLOOR PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX BANDRA (E) MUMBAI 400 051. VS. MR. NARESH H. SHAH PROP. OF M.H. BUILDERS 52 SHREEJI KUTIR RAM GALLY S.V. ROAD KANDIVALI (WEST) MUMBAI 400 067. PAN:ANEPS6449Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.T. JACOB SR. A.R. RESPONDENT BY : SHRI. DR. K. SHIVARAM O R D E R PER P.M. JAGTAP A.M: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT (A)-XXXV MUMBAI DATED 25 TH JANUARY 2010. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO IS ENGAGED IN THE BUSINESS OF BUILDER AND DEVELOPER IN THE NAME A ND STYLE OF PROPRIETARY CONCERN M/S. M.H. BUILDERS AND DEVELOPERS. HE DID NOT FILE HIS RETURN OF INCOME FOR THE UNDER CONSIDERATION TILL THE RELEVAN T DUE DATE. A SURVEY U/S 133A THEREFORE WAS CARRIED OUT AT THE BUSINESS PREM ISES OF THE ASSESSEE. DURING THE COURSE OF SURVEY A STATEMENT OF THE AS SESSEE WAS RECORDED U/S 131 WHEREIN HE STATED THAT A PROJECT KNOWN AS GAGAN DEEP BUILDING AT ITA NO. 3187/M/2010 A.Y 2005-2006 2 PLEASANT PARK MEERA-BHAYANDAR ROAD DIST. THANE S TARTED IN THE YEAR 2003 WAS ONLY UNDER EXECUTION DURING THE RELEVANT P ERIOD. IN THE ABSENCE OF ANY BOOKS OF ACCOUNT MAINTAINED FOR THE PREVIOUS YEARS RELEVANT TO A.Y. 2005-06 2006-07 THE ASSESSEE AGREED TO DECLARE IN COME OF RS. 51 LAKHS FROM THE SAID PROJECT BEING 10% OF THE TOTAL PROJEC T RECEIPTS AMOUNTING TO RS. 5.10 CRORES. HE HOWEVER DID NOT FILE ANY RETUR N OF INCOME EVEN AFTER THE SURVEY. A NOTICE U/S 148 THEREFORE WAS ISSUED BY THE ASSESSING OFFICER IN RESPONSE TO WHICH THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY THE ASSESSEE. DURING THE COURSE OF ASSESS MENT PROCEEDINGS THERE WAS HOWEVER NO COMPLIANCE ON PART OF THE ASSESSEE T O THE VARIOUS NOTICES ISSUED BY THE AO FIXING THE HEARING FROM TIME TO TI ME. KEEPING IN VIEW THIS NON-COOPERATIVE AND NON-COMPLIANT ATTITUDE OF THE A SSESSEE THE ASSESSING OFFICER WAS LEFT WITH NO OPTION BUT TO FINALIZE THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION TO THE BEST OF HIS JUDGEMENT ON THE BASIS OF MATERIAL AVAILABLE ON THE RECORD. HE FOUND THAT IN THE RETU RN OF INCOME FILED FOR A.Y. 2005-06 & 2006-07 PROFIT OF RS. 15 90 676/- AND RS. 21 17 657/- WAS DECLARED BY THE ASSESSEE FROM GAGANDEEP BUILDING PR OJECT AS AGAINST RS. 51 LACKS OFFERED DURING THE COURSE OF SURVEY. SINCE N O EXPLANATION IN THIS REGARD WAS OFFERED BY THE ASSESSEE THE DIFFERENCE OF RS. 13 91 667/- WAS ADDED BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE IN THE ASSESSMENT COMPUTED U/S 144 R.W.S. 147 VIDE AN ORDE R DATED 29 TH DECEMBER 2008. IN THE SAID ASSESSMENT HE ALSO MA DE ADDITIONS INTER ALIA OF RS. 42 76 000/- ON ACCOUNT OF UNSECURED LOANS U/ S 68 RS. 7 88 469/- ON ACCOUNT OF DISALLOWANCE OF EXPENSES FOR NON-DEDU CTION OF TAX AT SOURCE U/S 40(A)(IA) AND RS. 39 268/- AND RS. 22 800/- ON ACCOUNT OF DISALLOWANCE ITA NO. 3187/M/2010 A.Y 2005-2006 3 OF DEPRECIATION AND STAMP DUTY EXPENSES RESPECTIVEL Y. HE ALSO REDUCED CLOSING WORK-IN-PROGRESS SHOWN BY THE ASSESSEE BY R S. 29 60 039/- FOR THE FAILURE OF THE ASSESSEE TO FURNISH THE DETAILS OF W ORK-IN-PROGRESS AND HELD THAT OPENING WORK-IN-PROGRESS FOR THE NEXT YEAR TO THAT EXTENT WILL BE TAKEN LESS. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R U/S 144 R.W.S. 147 THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (A) CHALLENGING THE ADDITIONS MADE TO HIS TOTAL INCOME BY THE AO. AFTE R CONSIDERING THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE AND THE MATERIAL ON RECORD BEFORE HIM THE LD. CIT (A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE IN THE PROFITS FRO M GAGANDEEP BUILDING PROJECT ON THE BASIS OF SURRENDER MADE BY THE ASSE SSEE IN HIS STATEMENT RECORDED DURING THE COURSE OF SURVEY AFTER ALLOWING SMALL RELIEF FOR INCOME FROM THAT PROJECT DECLARED BY ASSESSEE IN A.Y. 2007 -08. HE HOWEVER DELETED ALL THE REMAINING ADDITIONS MADE BY THE ASSESSING O FFICER TO THE TOTAL INCOME OF THE ASSESSEE BY ACCEPTING THE STAND OF TH E ASSESSEE THAT WHEN THE AO HAD REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE INCOME OF THE ASSESSEE THERE WAS NO JUSTIFICATION FOR MAKING FUR THER ADDITION BY RELYING ON THE SAME BOOKS OF ACCOUNT. HE HELD THAT WHEN THE A O HAD RESORTED TO ESTIMATION OF INCOME BASED ON THE MATERIAL GATHERED AT THE TIME OF SURVEY AFTER REJECTING THE BOOKS OF ACCOUNT WHICH WERE FOU ND TO BE INCOMPLETE EVEN ON THE DATE OF SURVEY THERE WAS NO JUSTIFICATION F OR MAKING FURTHER ADDITION BY RELYING ON SUCH REJECTED BOOKS OF ACCOUNT. FOR THIS CONCLUSION THE LD. CIT (A) RELIED ON THE DECISION OF HONBLE ANDHRA PR ADESH HIGH COURT IN THE OF ITA NO. 3187/M/2010 A.Y 2005-2006 4 MADDI SUNDARAM OIL MILLS VS. CIT REPORTED IN 37 ITR 369 WHEREIN IT WAS HELD THAT WHEN THE AO REJECTS THE BOOKS OF ACCOUNT AND ESTIMATES THE INCOME OF THE ASSESSEE NO FURTHER ADDITION CAN BE MADE RELYING ON THE REJECTED BOOKS OF ACCOUNT. AGGRIEVED BY THE ORDER OF THE LD. CIT (A) THE REVENUE HAS PREFERRED THIS APPEAL BEFORE US. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE MATERIAL ON RECORD. IT IS OBSERVED THAT IN THE ABS ENCE OF COMPLETED BOOKS OF ACCOUNT EITHER FOUND AT THE TIME OF THE SURVEY OR P RODUCED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE IN COME OF RS.15 90 676/- RETURNED BY THE ASSESSEE WAS NOT ACC EPTED BY THE ASSESSING OFFICER. HE REJECTED THE BOOK RESULTS SHOWN BY THE ASSESSEE AND ESTIMATED THE INCOME OF THE ASSESSEE FROM HIS BUSINESS ON THE BASIS OF PROFIT OF 10% SURRENDERED BY THE ASSESSEE FROM THE GAGANDEEP PROJ ECT IN HIS STATEMENT RECORDED DURING THE COURSE OF SURVEY. THIS ESTIMAT ION AND BUSINESS INCOME OF THE ASSESSEE BY THE ASSESSING OFFICER RESULTED I N AN ADDITION OF RS. 13 91 667/- TO THE TOTAL INCOME OF THE ASSESSEE WHI CH HAS BEEN CONFIRMED BY THE LD. CIT (A) AFTER ALLOWING A SMALL RELIEF OF RS. 3 00 373/- WHICH HAS BEEN DECLARED BY THE ASSESSEE IN A.Y. 2007-08 AND T HE ASSESSEE AS INFORMED TO US AT THE TIME OF HEARING HAS NOT FILE D ANY APPEAL DISPUTING THE SAID ADDITION. THE TOTAL INCOME OF THE ASSESSEE TH US HAS BEEN FINALLY ASSESSED FOR THE YEAR UNDER CONSIDERATION ON ESTIMA TED BASIS AFTER REJECTING THE BOOKS OF ACCOUNT. IN THE CASE OF MADDI SUDARSA NAM OIL MILLS ( SUPRA) HONBLE ANDHRA PRADESH HIGH COURT HAS HELD THAT WHE N THE BOOKS OF ACCOUNT ARE REJECTED BY THE ASSESSING OFFICER AND T HE INCOME OF THE ASSESSEE ITA NO. 3187/M/2010 A.Y 2005-2006 5 IS DETERMINED ON ESTIMATED BASIS NO FURTHER ADDITI ON CAN BE MADE TO THE INCOME SO ESTIMATED BY RELYING ON THE REJECTED BOOK S OF ACCOUNT. TO THE SIMILAR EFFECT THE DECISION OF HONBLE MADHYA PRADE SH HIGH COURT IN THE CASE OF CIT VS. PURSHOTTAMALAL TAMRAKAR UCHEHRA REPORTED IN 270 ITR 314 REPORTED IN 270 ITR 84 (MP). KEEPING IN VIEW THE RA TIO LAID DOWN IN THESE JUDICIAL PRONOUNCEMENTS AND HAVING REGARD TO THE FA CTS OF THE PRESENT CASE WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF LD. C IT (A) DELETING THE VARIOUS ADDITIONS MADE BY THE AO RELYING ON THE BOOKS OF AC COUNT OF THE ASSESSEE WHEN THE INCOME OF THE ASSESSEE WAS COMPUTED ON EST IMATED BASIS AFTER REJECTING THE SAID BOOKS OF ACCOUNT. THE SAME IS T HEREFORE UPHELD AND THE APPEAL OF THE REVENUE IS DISMISSED. 5. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON THIS 15 TH DAY OF JULY 2011. SD/- SD/- ASHA VIJAYARAGHAVAN P.M. JAGTAP (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) MUMBAI DATED 15 TH JULY 2011. OKK* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- XXXV MUM BAI 4. COMMISSIONER OF INCOME TAX CONCERNED 5. DEPARTMENTAL REPRESENTATIVE BENCH F MUMBAI TRUE COPY BY ORDER ASSTT. REGISTRAR ITAT MUMBAI