DECCAN ENTERPRISES, MUMBAI v. ITO 19(3)(1), MUMBAI

ITA 3611/MUM/2013 | 2005-2006
Pronouncement Date: 15-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 361119914 RSA 2013
Assessee PAN AAAFD2751M
Bench Mumbai
Appeal Number ITA 3611/MUM/2013
Duration Of Justice 4 year(s) 6 month(s) 7 day(s)
Appellant DECCAN ENTERPRISES, MUMBAI
Respondent ITO 19(3)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 15-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 15-11-2017
Date Of Final Hearing 25-02-2015
Next Hearing Date 25-02-2015
First Hearing Date 25-02-2015
Assessment Year 2005-2006
Appeal Filed On 08-05-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH MUMBAI BEFORE SHRI P K BANSAL VICE PRESIDENT AND SHRI AMARJIT SINGH JUDICIAL MEMBER ITA NO.3611/MUM/2013 (ASSESSMENT YEAR: 2005-06) M/S. DECCAN ENTERPRISES VS. INCOME TAX OFFICER - 19(3)(1) FLAT NO. 1A HILL TOP SOCIETY PALI HILL ROAD BANDRA (W) MUMBAI 400050 PIRAMAL CHAMBERS LALBAUG MUMBAI 400012 PAN AAAFD2751M APPELLANT RESPONDENT ITA NO.3137/MUM/2013 (ASSESSMENT YEAR: 2005-06) INCOME TAX OFFICER - 19(3)(1) VS. M/S. DECCAN ENTERPRISES ROOM NO. 307 3 RD PIRAMAL CHAMBERS LALBAUG MUMBAI 400012 FLAT NO. 1A HILL TOP SOCIETY PALI HILL ROAD BANDRA (W) MUMBAI 400050 PAN AAAFD2751M APPELLANT RESPONDENT APPELLANT BY: SHRI K. GOPAL & MS. NEHA PARANJAPE RESPONDENT BY: SHRI PURSHOTTAM KUMAR DATE OF HEARING: 15.11.2017 DATE OF PRONOUNCEMENT: 15.11.2017 O R D E R PER P.K. BANSAL VICE PRESIDENT BOTH THESE CROSS APPEALS HAVE BEEN FILED BY THE ASS ESSEE AND REVENUE AGAINST THE ORDER OF THE CIT(A)-30 MUMBAI DATE DAT ED 19.02.2013. 2. THE ASSESSEE IN ITS APPEAL DID NOT PRESS GROUND NO. 1. THEREFORE THE ONLY GROUND SURVIVED FOR OUR ADJUDICATION IS GROUND NO. 2 WHICH READS AS UNDER: - 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) ERRED IN UPHOLDING THE ADDITION OF UNAPPROVE D LOANS OF RS.32 50 000/-. ITA NOS. 3611 & 3137/MUM/2013 M/S. DECCAN ENTERPRISES 2 REVENUE IN ITS APPEAL HAS TAKEN THE FOLLOWING GROUN DS: (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF AN AMOUNT OF RS. 1 11 61 500/- ON ACCOUNT OF SALE PROCEEDS OF THREE FLATS WITHOUT APPRECIATING THE FACTS THAT DURING THE COURSE OF AS SESSMENT PROCEEDINGS ASSESSEE FAILED TO AVAIL THE OPPORTUNI TIES PROVIDED FOR FURNISHING THE DETAILS ALONG WITH DOCUMENTARY E VIDENCES IN SUPPORT OF EXPENSES TO WORK OUT THE PROFIT AND AS S UCH THE ASSESSING OFFICER HAS CORRECTLY MADE ADDITION U/S 6 8 OF THE ACT. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS .43 20 645/- BEING PROFIT FROM BHAVANI SHANKAR PROJECT WITHOUT A PPRECIATING THE FACTS THAT THE ASSESSEE HIMSELF DURING THE COUR SE OF SURVEY ACTION AS ALSO DURING THE COURSE OF ASSESSMENT PROC EEDINGS IN THE STATEMENT GIVEN ON OATH STATED THAT THE SAID P ROFIT WAS FOR THE YEAR UNDER CONSIDERATION I.E. A.Y. 2005-06 AND HAS OFFERED THE SAME FOR TAXATION. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS . 47 42 331/- OUT OF INTEREST DEBITED TO PROFIT AND LOSS ACCOUNT WITHOUT APPRECIATING THE FACTS THAT DURING THE COURSE OF SU RVEY ACTION WHEN CONFRONTED WITH THIS ISSUE CONFIRMED THAT A R EVISED RETURN WILL BE FILED AND OFFER THE SAME FOR TAXATION. (4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITIO N TO RS. 32 50 000/- AS AGAINST OF RS. 2 35 95 000/- MADE BY THE A.O. ON ACCOUNT OF UNSECURED LOANS WITHOUT APPRECIATING THE FACTS THAT THE ASSESSEE FAILED TO FURNISH ANY DOCUMENTARY EVIDENCE OR CONFIRMATIONS IN RESPECT OF THE LOANS AND AS SUCH T HE ASSESSING OFFICER HAS CORRECTLY TREATED THE SAME AS IN-GENUIN E AND MADE ADDITION TO THAT EXTENT. 3. THE LEARNED D.R. AT THE OUTSET BROUGHT TO OUR KNOW LEDGE THAT THE REVENUE HAS TAKEN THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL: - 1) WHETHER CIT(A) WAS JUSTIFIED IN RELYING ON ADDI TIONAL EVIDENCE SUBMITTED BEFORE HIM WITHOUT FORMALLY ADMITTING THE SE DOCUMENT AS ADDITIONAL EVIDENCE AS PER RULE 46A OF THE INCOM E-TAX RULES 1962. 2) WHETHER CIT(A) WAS JUSTIFIED IN ADMITTING ADDITI ONAL EVIDENCE IN VIOLATION OF RULE 46A OF I.T. RULES WITHOUT GIVING OPPORTUNITY TO THE ASSESSING OFFICER BY WAY OF REMAND. 3) THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CI T (A) ON THE. ABOVE GROUNDS BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. ITA NOS. 3611 & 3137/MUM/2013 M/S. DECCAN ENTERPRISES 3 4) THE APPELLANT CRAVES LEAVE TO ADD DELETE ALTER AMEND AND MODIFY ANY OR ALL GROUNDS OF APPEAL. 4. WE THEREFORE HEARD BOTH THE PARTIES ON ADMISSION OF THE ADDITIONAL GROUNDS. AFTER HEARING THE RIVAL SUBMISSIONS WE ARE OF THE VIEW THAT THE ADDITIONAL GROUNDS TAKEN BY THE REVENUE ARE LEGAL G ROUNDS AND WE THEREFORE ADMIT THE SAME. THE ONLY ISSUE INVOLVED IN THE ADDITIONAL GROUND TAKEN BY THE REVENUE RELATES TO THE GRIEVANCES THAT THE CIT(A) WAS NOT JUSTIFIED IN ADMITTING THE ADDITIONAL EVIDENCES WIT HOUT GIVING AN OPPORTUNITY TO THE AO BY WAY OF REMAND. WE HEARD TH E RIVAL SUBMISSIONS ON THIS GROUND AND CAREFULLY CONSIDERED THE SAME. T HE LEARNED D.R. CARRIED US TO THE ORDER OF THE CIT(A) ESPECIALLY P ARAS 3.1 4.1 AS WELL AS PARAS 6 AND 8.2 OF THE ORDER OF THE CIT(A) WHICH WE PERUSED. ACCORDING TO THE LEARNED D.R. THE ASSESSEE HAS SUBMITTED ADDITIO NAL EVIDENCES BEFORE THE CIT(A) AND THE CIT(A) AFTER ADMITTING THOSE EVI DENCES WITHOUT GIVING OPPORTUNITY TO THE AO ALLOWED RELIEF TO THE ASSESS EE. SO FAR AS ACCEPTANCE OF ADDITIONAL EVIDENCE IN RESPECT OF GROUND NO. 1 WE NOTED THAT THE AO HAS MADE AN ADDITION IN THE INCOME OF THE ASSESSEE FOR A SUM OF ` 1 11 61 500/-. THE AO NOTED THAT THE ASSESSEE HAS F URNISHED THE FOLLOWING SALES DOCUMENTS: - SR. NO. FLAT NO. FLAT OWNER DATE OF POSSESSION VALUE OF THE FLAT 1. 604 6 TH FLOOR VIMLABEN D. SHAH NOVEMBER 2004 38 57 000 2. 605 6 TH FLOOR DAHYALAL L. SHAH NOVEMBER 2004 38 04 500 3 . 505 5 TH FLOOR HARESH MEHTA NOVEMBER 2004 35 00 000 TOTAL 1 11 61 500 THE AO ASKED THE ASSESSEE AS TO WHY THESE SALES MAD E DURING THE IMPUGNED ASSESSMENT YEAR SHOULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IN THE ABSENCE OF ANY REPLY FROM THE ASSE SSEE THE AO ADDED THE SAME IN THE TOTAL INCOME OF THE ASSESSEE UNDER SECT ION 68 OF THE INCOME TAX ACT. WHEN THE MATTER WENT BEFORE THE CIT(A) TH E CIT(A) ARGUED THAT THE ASSESSEE IS ACCOUNTING INCOME ON PROJECT COMPLE TION METHOD BASIS. ITA NOS. 3611 & 3137/MUM/2013 M/S. DECCAN ENTERPRISES 4 THE CIT(A) WE NOTED TOOK THE VIEW THAT THE PROJEC T HAS NOT EVEN BEEN COMPLETED TILL DATE AND THE INCOME FROM SALE OF THE SE THREE FLATS HAVE NOT BEEN OFFERED TO TAX IN ANY OF THE ASSESSMENT YEARS SUBSEQUENT TO A.Y. 2005-06. THE CIT(A) FURTHER DIRECTED THE AO TO ESTI MATE THE PROFIT ON SALE @10% AND REDUCED THE SAID ADDITION TO ` 11 16 150/- BY OBSERVING AS UNDER: - .. TAXABILITY OF INCOME CANNOT BE POSTPONED INDEF INITELY ONLY BECAUSE APPELLANT IS FOLLOWING A METHOD OF ACCOUNTI NG WHICH IS DONE TO DEFER THE TAXABILITY INDEFINITELY. THE ID. COUNS EL OF APPELLANT AGREED THAT THE AMOUNT MAY BE TAXED IN THE YEAR UNDER CONS IDERATION WITH REQUEST THAT ONLY THE PROFIT SHOULD BE CHARGED TO T AX. THIS REQUEST IS JUSTIFIED. ONCE PART SALE OF FLATS CONSTRUCTED IS B EING BROUGHT TO CHARGE OF TAX IT MEANS INCOME BEING TAXED ON YEAR TO YEAR BASIS WHICH REQUIRES PROFIT IN CONTRAST TO SALE TO BE CHARGED T O TAX. I FIND THAT IN THE EARLIER YEARS AO HAS APPLIED PROFIT RATE OF 10% ON THE AMOUNTS RECEIVED AS ADVANCES TO BE THE PROFIT ON THE PROJEC T. FOR INSTANCE IN THE YEAR OF ASSESSMENT FOR ASST. YEAR 2001-02 APPE AL FOR WHICH IS CONCURRENTLY BEING DECIDED BY ME. IN PARA NO. 13 OF THE ORDER DT. 11.02.04 THE RATE OF 10% HAD BEEN ADOPTED BY THE A O. THEREFORE SAME PERCENTAGE RATE IS DECIDED TO BE APPLIED ON TH E TOTAL SALE PROCEEDS OF FLATS GIVING A PROFIT OF RS. 11 16 I50/ - BEING 10% THE TOTAL SALE PROCEEDS ON RS.1 11 61 500/- IN RESPECT OF THR EE FLATS. THE ADDITION TO INCOME IS RESTRICTED TO RS.11 16 I50/-. APPELLANT GETS RELIEF OF BALANCE AMOUNT. 5. FROM THE ORDER OF THE CIT(A) WE NOTED THAT THE ASSE SSEE HAS NOT FILED ANY ADDITIONAL EVIDENCE SO THAT THE CIT(A) WAS REQU IRED TO ASK FOR THE REMAND REPORT FROM THE AO. ON THAT BASIS WE CANNOT SET ASIDE THE ORDER OF THE CIT(A) BUT AFTER HEARING FROM THE SUBMISSIONS O F BOTH THE SIDES WE NOTED THAT THIS ISSUE IS COVERED BY THE DECISION OF THIS TRIBUNAL IN THE CASE OF THE ASSESSEE IN ITA NO. 3193/MUM/2013 IN WHICH T HIS TRIBUNAL VIDE ORDER DATED 26.04.2017 WHILE DEALING WITH SIMILAR ISSUE RESTORED THE ISSUE TO THE FILE OF THE AO. WE THEREFORE IN THE INTERE STS OF JUSTICE AND FAIR PLAY TO BOTH THE PARTIES SET ASIDE THIS ISSUE AND RESTOR E IT TO THE FILE OF THE AO WITH THE DIRECTION THAT THE AO SHALL REDECIDE THIS ISSUE AFRESH AFTER GIVING PROPER OPPORTUNITY TO BOTH THE PARTIES AND DECIDE T HIS ISSUE ON THE BASIS OF THE METHOD OF ACCOUNTING CONSISTENTLY FOLLOWED BY T HE ASSESSEE. GROUND NO. 1 TAKEN BY THE REVENUE IS STATISTICALLY ALLOWED . ITA NOS. 3611 & 3137/MUM/2013 M/S. DECCAN ENTERPRISES 5 6. GROUND NO. 2 IN REVENUES APPEAL RELATES TO THE DEL ETION OF ADDITION OF ` 43 20 645/- BEING PROFIT FROM BHAVANI SHANKAR PROJE CT. AFTER HEARING THE RIVAL SUBMISSIONS AND GOING THROUGH THE ORDER OF TH E CIT(A) AS WELL AS THE ORDER OF THE AO WE NOTED THAT THE CIT(A) HAS GIVEN A FINDING OF FACT THAT THE ENTIRE PROFIT FROM THE SAID PROJECT HAS DULY BEEN D ISCLOSED BY THE ASSESSEE DURING A.Y. 2004-05 WHICH IS APPARENT FROM THE COPY OF THE PROFIT & LOSS ACCOUNT AND THE BALANCE SHEET PERTAINING TO A.Y. 20 04-05. SINCE THE ASSESSMENT FOR A.Y. 2004-05 HAS ALSO BEEN COMPLETED BY THE SAME AO THEREFORE THE PROFIT & LOSS ACCOUNT AND THE BALANC E SHEET RELATE TO A.Y. 2004- 05 CANNOT BE REGARDED TO BE ADDITIONAL EVIDENCE. WE THEREFORE CONFIRM THE ORDER OF THE CIT(A). THUS GROUND NO. 2 TAKEN BY THE REVENUE IS DISMISSED. 7. GROUND NO. 3 IN REVENUES APPEAL RELATES TO DELETIO N OF THE ADDITION OF ` 74 42 331/- OUT OF THE INTEREST DEBITED TO THE PRO FIT & LOSS ACCOUNT. AFTER HEARING THE RIVAL SUBMISSIONS AND GOING THROU GH THE ORDER OF THE CIT(A) WE NOTED THAT THE CIT(A) AFTER APPRECIATING THE PROFIT & LOSS ACCOUNT FOR THE IMPUGNED ASSESSMENT YEAR WHICH WAS ALSO AVAILABLE BEFORE T HE AO WHICH FACT IS APPARENT FROM THE ORD ER OF THE CIT(A) FOUND THAT THE ASSESSEE HAS NOT DEBITED INTEREST IN THE P ROFIT & LOSS ACCOUNT. WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDE R OF THE CIT(A) IN DELETING THE DISALLOWANCE ESPECIALLY WHEN THE ENTIRE INTERE ST HAS BEEN CAPITALISED BY THE ASSESSEE AS IS APPARENT FROM THE BALANCE SHE ET. THUS GROUND NO. 3 TAKEN BY THE REVENUE STANDS DISMISSED. 8. GROUND NO. 4 TAKEN BY THE REVENUE AS WELL AS THE ON LY GROUND TAKEN BY THE ASSESSEE RELATES TO THE COMMON ISSUE RELATIN G TO ADDITION IN RESPECT OF THE UNSECURED LOAN. AFTER HEARING THE RIVAL SUBM ISSIONS AND GROUND THROUGH THE ORDER OF THE TAX AUTHORITIES BELOW WE F OUND THAT THE AO HAS MADE AN ADDITION AMOUNTING TO ` 2 35 95 000/- ON THE BASIS OF THE BALANCE SHEET AVAILABLE WITH THE AO AS ON 31.03.2005. WHEN THE ASSESSEE SENT IN APPEAL BEFORE THE CIT(A) THE CIT(A) HAS GIVEN A FI NDING THAT THE ASSESSEE HAS RECEIVED FRESH LOANS DURING THE IMPUGNED ASSESS MENT YEAR ONLY TO THE EXTENT OF ` 32 50 000/-. THEREFORE HE SUSTAINED THE ADDITION T O ` 32 50 000/- AND REDUCED THE ADDITION BEING MADE IN RESPECT OF THE ITA NOS. 3611 & 3137/MUM/2013 M/S. DECCAN ENTERPRISES 6 OPENING BALANCE OF THE UNSECURED LOAN. WE NOTED THA T THE ASSESSEE HAS NOT GIVEN ANY DETAILS OR EVIDENCE BEFORE THE AO. THE AS SESSEE FOR THE FIRST TIME SUBMITTED THE DETAILS BEFORE THE CIT(A) AND CONTEND ED THAT THERE AS AN OPENING BALANCE TO THE TUNE OF ` 2 47 30 000/- AND THE FRESH LOANS RECEIVED WERE ONLY ` 32 50 000/- AND A SUM OF ` 43 85 000/- HAS BEEN PAID BACK DURING THE IMPUGNED ASSESSMENT YEAR. THE CIT(A) BEF ORE ACCEPTING THESE DETAILS HAS NOT GIVEN ANY OPPORTUNITY TO THE AO OR ANY REMAND REPORT ETC. HAD NOT BEEN CALLED FOR FROM THE AO AS ARGUED BY T HE LEARNED D.R. WE THEREFORE IN THE INTEREST OF JUSTICE AND FAIR PLAY TO BOTH THE PARTIES SET ASIDE THIS ISSUE AND RESTORE THIS ISSUE TO THE FILE OF THE AO WITH THE DIRECTION THAT THE AO SHALL REDECIDE THIS ISSUE AFR ESH AFTER GIVING PROPER AND SUFFICIENT OPPORTUNITY TO THE ASSESSEE. THE ASS ESSEE IS ALSO DIRECTED TO PRODUCE ALL THE NECESSARY DETAILS AND EVIDENCES BEF ORE THE AO WHATEVER HE FILED BEFORE THE CIT(A). HE MAY ALSO FURNISH ANY OT HER EVIDENCES ON WHICH HE MY RELY TO DISCHARGE HIS ONUS AS LAY ON HIM UNDE R SECTION 68 OF THE INCOME TAX ACT. THUS GROUND NO. 4 TAKEN BY REVENUE AS WELL AS GROUND NO. 2 TAKEN BY THE ASSESSEE ARE STATISTICALLY ALLOW ED. 9. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED WHILE THE APPEAL FILED BY THE ASSESSEE IS STATISTICALLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH NOVEMBER 2017. SD/ - SD/ - (AMARJIT SINGH) (P.K. BANSAL) JUDICIAL MEMBER VICE PRESIDENT MUMBAI DATED: 15 TH NOVEMBER 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -30 MUMBAI 4. THE CIT - 19 MUMBAI 5. THE DR D BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.