S. ChandraShekar, v. ACIT,

ITA 506/BANG/2013 | 2005-2006
Pronouncement Date: 31-07-2014 | Result: Allowed

Appeal Details

RSA Number 50621114 RSA 2013
Bench Bangalore
Appeal Number ITA 506/BANG/2013
Duration Of Justice 1 year(s) 3 month(s) 20 day(s)
Appellant S. ChandraShekar,
Respondent ACIT,
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 31-07-2014
Assessment Year 2005-2006
Appeal Filed On 10-04-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI JASON P. BOAZ ACCOUNTANT MEMBER I.T.A. NO . 506 / BANG /20 1 3 ( ASSESSMENT YEAR : 200 5 - 06 ) SHRI S. CHANDRASHEKAR NO.90 3 RD MAIN JHBCS LAYOUT 1 ST STAGE PADMANABHANAGAR BANGA LORE. . APPELLANT . VS. ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2(1) BA NGALORE . .. RESPONDENT. APPELLANT BY : SMT. PRATHIBHA ADVOCATE. RESPONDENT BY : SHRI CH. SURESH RAO CIT (DR) DATE OF H EARING : 11.6.2014. DATE OF P RONOUNCEMENT : 31.7 .2014. O R D E R PER S HRI JASON P. BOAZ A.M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - VI BANGALORE DT.22.2.2013 FOR ASSESSMENT YEAR 2005 - 06. 2. THE FACTS OF THE CASE BRIEFLY ARE AS UNDER: - 2.1 THE ASSESSEE IS A PARTNER IN M /S. MOOKAMBIKA ASSOCIATES M/S. MOOKAMBIKA PROMOTERS AND M/S. MOOKAMBIKA DEVELOPERS WHICH CARRY ON THE BUSINESS OF PURCHASING OF LANDS AND DEVELOPING IT INTO SITES FOR RESIDENTIAL PURPOSES. THE ASSESSEE IS ALSO INVOLVED IN CHEQUE 2 ITA 506 - BANG - 2014 DISCOUNTING BUSINESS THROU GH HIS PROPRIETARY CONCERN M /S. LG ENTERPRISES AND IS A PARTNER IN GANGA CEMENT CORPORATION. A SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF INCOME TAX ACT 1961 ( HEREINAFTER REFERRED TO AS 'THE ACT') WAS CARRIED OUT IN THE CASE OF THE ASSESSEE ON 6/1/2010. P URSUANT TO THE SEARCH ACTION THE ASSESSEE FILED HIS RETURN OF INCOME ON 15/9/2010 DECLARING TOTAL INCOME OF RS.5 80 670 AND AGRICULTURAL INCOME OF RS.82 500.THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) R.W.S 153A OF THE ACT BY ORDER DATED 30/12/2010 WHEREIN THE INCOME OF THE ASSESSEE WAS COMPUTED AT RS.15 49 654 AS AGAINST RETURNED INCOME OF RS.5 80 670 IN VIEW OF AN AD DITION OF RS.9 68 979 ON ACCOUNT OF DEFICIT IN CLOSING STOCK. AGRICULTURAL INCOME WAS DETERMINED AT RS.82 500 AS WAS DECL ARED BY THE ASSESSEE. 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2005 - 06 DATED 2010 THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS) VI BANGALORE WHO DISMISSED THE ASSESSEE'S APPEAL BY ORDER 22/2/2013. 3. AGGRIEVED BY TH E ORDER OF THE CIT(APPEALS) VI BANGALORE DATED 22/2/2013 FOR ASSESSMENT YEAR 2005 - 06 THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL RAISING THE FOLLOWING GROUNDS : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) ERRED IN PASSING THE ORDER IN THE MANNER WHICH SHE DID. 2. THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING AN ADDITION OF RS.9 68 979 TO THE INCOME DECLARED TOWARDS DEFICIT IN STOCK IGNORING THE FACT THAT WHEN A LAND IS FORMED INTO LAYOUTS IT IS THE SITAL AREA THAT IS TO BE CONSIDERED AND NOT THE TOTAL LAND AREA. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THE FACT THAT ON CONVERSION TO SITES THE TOTAL SITAL AREA IS 2 90 000 SQ. FT. ONLY AND THERE IS NO ERROR IN THE VALUATION OF STOCK BY THE APPELLAN T. 4. THE LEARNED CIT (APPEALS) OUGHT TO HAVE CONSIDERED THAT THE ASSESSING OFFICER ERRED IN MAKING ADDITION BEYOND THE SEIZED MATERIAL IGNORING THE FACT THAT THE ASSESSMENT IS CONSEQUENT TO ISSUE OF NOTICE UNDER SECTION 153A OF THE ACT IT WAS NOT OPEN ED FOR ASSESSING OFFICER TO QUANTIFY BEYOND THE EVIDENCES DURING THE COURSE OF SEARCH. 5. WITHOUT PREJUDICE THE DISALLOWANCE / ADDITION AS CONFIRMED ARE EXCESSIVE ARBITRARY AND UNREASONABLE AND OUGHT TO HAVE DELETED IN TOTO. 6. FOR THESE AND SUCH OTH ER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. 3 ITA 506 - BANG - 2014 4. THE GROUNDS RAISED AT S.NO.1 5& 6 ARE GENERAL IN NATURE AND THEREFORE NO ADJUDICATION IS CALLED FOR THEREON 5.0 ADD ITION TOWARDS DEFICIT STOCK :RS.9 68 979. 5.1 THE GROUNDS RAISED BY THE ASSESSEE AT S.NOS.2 TO 4 PERTAIN TO THE ADDITION OF RS.9 68 979 TOWARDS DEFICIT IN CLOSING STOCK. IT IS CONTENDED BY THE ASSESSEE THAT THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE AFORE SAID ADDITION BY THE ASSESSING OFFICER WITHOUT TAKING INTO ACCOUNT THE FACT THAT WHEN THE LAND IS FORMED INTO LAYOUTS IT IS THE SITAL AREA THAT IS TO BE CONSIDERED AND NOT THE TOTAL LAND AREA. IT IS FURTHER CONTENTED THAT THE LEARNED CIT (APPEALS) IGNORED THE FACT THAT ON CONVERSION OF LAND TO SITES THE TOTAL S ITAL AREA IS 2 90 000 SQ.FT ON LY AND THAT THERE WAS NO ERROR IN VALUATION OF CLOSING STOCK OF LAND BY THE ASSESSEE. 5.1.2 THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITS THAT THE ASSESSING OFFICER HAS QUANTIFIED THE CLOSING STOCK OF LAND ON THE BASIS THAT THE EXTENT O F LAND OF 9 ACRES 36 GUNTAS WHEN CONVERTED WORKS OUT TO 4 30 947 SQ.FT AND THAT HELD THAT THERE IS A DIFFERENCE IN EXTENT OF LAND SHOWN IN THE CLOSING STOCK AFTER CONSIDERING THE EXTENT OF LAND SOLD. IT IS SUBMITTED BY THE LEARNED AUTHORISED REPRESENTATIVE THAT IT IS EVIDENT FROM THE CRYPTIC ORDER OF ASSESSMENT THAT THE ASSESSEE WAS NEVER AFFORDED ANY OPPORTUNITY TO RECONCILE THE MATTER OR FURNISH ITS EXPLANATION BEFORE THE ASSESSING OFFICER. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITS THAT SAME POSITION PERSISTED IN THE APPELLATE PROCEEDINGS. NO OPPORTUNITY WAS AFFORDED TO THE ASSESSEE TO EXPLAIN THE FACTUAL POSITION IN RESPECT OF THE CLOSING STOCK OF THE LAND AND NO EXAMINATION WHATSOEVER OF THE FACTUAL POSITION WAS MADE BY THE LEARNED CIT (APPEALS) . 5 .1.3 THE LEARNED AUTHORISED REPRESENTATIVE SUBMITS THAT IF ADEQUATE OPPORTUNITY IS AFFORDED THE ASSESSEE WILL PRESENT THE FACTUAL POSITION IN RESPECT OF THE CLOSING STOCK OF LAND BEFORE THE AUTHORITIES BELOW. IT IS SUBMITTED THAT THE FACTS OF THE MA TTER ARE THAT 9 ACRES 36 GUNTAS WITH THE ASSESSEE REPRESENTS THE AREA OF UNDEVELOPED LAND. IT IS SUBMITTED THAT AFTER CONVERSION OF THE LAND INTO SITES AND DEVELOPING A PORTION OF THE SAME THE ASSESSEE SOLD 4 ITA 506 - BANG - 2014 SOME SITES. AFTER CONVERTING THE LAND TO SITES THE SALEABLE AREA OF LAND IS 2 90 000 SQ. FT. ONLY. IT IS OUT OF THIS DEVELOPED LAND MEASURING 2 90 000 SQ. FT. THAT THE ASSESSEE SOLD SITES OF MEASURING 1 07 400 SQ. FT. AND THE AREA OF SITES IN THE REMAINING PORTION IS 1 82 600 SQ. FT. ONLY. THIS P O SI TION IT IS SUBMITTED IS REFLECTED IN THE ASSESSEE'S BOOKS OF ACCOUNT AND FINANCIAL STATEMENTS AND THEREFORE THERE IS NO MISTAKE IN THE QUANTIFICATION OF CLOSING STOCK BY THE ASSESSEE. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITS THAT IN VIEW OF THE ABOVE FACTUAL POSITION THE ADDITION MADE B Y THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT (APPEALS) IS NOT WARRANTED AND OUGHT TO BE DELETED OR AT LEAST REMANDED BACK TO THE FILE OF THE AUTHORITIES BELOW FOR RECONSIDERATION. 5.2 THE LEARNED DEPARTMENTAL REPRESENTATIVE WAS HEARD AND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5.3.1 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. WE FIND THAT THE ASSESSING OFFICER HAS ADDRESSED THIS IS SUE VERY CRYPTICALLY IN HIS ORDER AS UNDER : IT IS SEEN THAT THE ASSESSEE HAS REFLECTED PURCHASE OF LAND AT DODDAKALASANDRA II PHASE MEASURING ABOUT 9 ACRES & 36 GUNTAS (OR 430947 SQ. FT.) BEING UNDEVELOPED LAND FOR RS.54 50 134. DURING THE YEA R THE ASSESSEE HAS SOLD THE LAND PARTIALLY TO THE EXTENT OF 107400 SQ. FT. THIS WORKS OUT TO A BALANCE OF 3 23 547 SQ. FT. OF LAND UNSOLD. HOWEVER IN THE CLOSING STOCK DETAILS AS ON 31.3.2005 THE ASSESSEE HAS SHOWN ONLY 1 82 600 SQ. FT. WHEN THE COST OF THE UNSOLD LAND IS CALCULATED THE ASSESSEE OUGHT TO HAVE SHOWN RS.40 91 859 AS THE CLOSING VALUE AS ON 31.3.2005 AS AGAINST RS.34 32 880. EVEN THE CLOSING STOCK VALUE OF RS.34 32 880 HAS BEEN CLARIFIED TO CONSIST OF SITE NOS.22 & 31 OF KOTHANUR VILLAG E AS CLARIFIED BY THE ASSESSEE IN HIS LETTER DT.3.12.2010 AND THE ACTUAL VALUE OF THE LAND AT DODDAKALASANDRA (UNDEVELOPED) IS ONLY 31 22 880. THUS DEFICIT IN CLOSING STOCK DECLARED IS ARRIVED RS.9 68 979 WHICH IS BROUGHT TO TAX AS UNDISCLOSED INCOME F OR ASSESSMENT YEAR 2005 - 06. FROM THE ORDER OF THE ASSESSING AUTHORITY (SUPRA) AND THE FACTS ON RECORD IT IS APPARENT AS CONTENDED BY THE LEARNED AUTHORISED REPRESENTATIVE THAT ASSESSING OFFICER HAS RENDERED HI S FINDING (SUPRA) WITHOUT CALLING FOR A NY EXPLANATION IN THE MATTER OR PROVIDING THE ASSESSEE WITH 5 ITA 506 - BANG - 2014 ADEQUATE OPPORTUNITY TO PUT FORTH ITS VIEWS ON THE FACTS OF THE MATTER OR TO REBUT THE ASSESSING OFFICER S VIEWS. 5.3.2 A PERUSAL OF THE LEARNED CIT (APPEALS) S ORDER IN THE MATTER ALSO CLEARLY SUPPORTS THE CONTENTION OF THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE THAT THE FACTUAL POSITION OF THE AREA OF THE LAND THE AREA OF THE SITES AFTER CONVERSION O F THE LAND THE PROVISION FOR ROADS CIVIC AMENITIES ETC. HAVE NOT BEEN CONSIDERED AND EXAMINED BY THE LEARNED CIT (APPEALS) WHILE DISMISSING THE ASSESSEE'S APPEAL. THIS IS EVIDENT WHEN WE PERUSE THE RELEVANT PORTION OF THE LEARNED CIT (APPEALS) S ORDER AT PARA 3 THEREOF WHICH IS EXTRACTED HEREUNDER : - THE ASSESSING OFFICER FOUND THAT THERE WAS A DISCREPANCY IN DECLARATION OF CLOSING STOCK FOR WHICH AN ADDITION OF RS.9 68 979 WAS MADE AS THE ASSESSING OFFICER FOUND THAT THE CLOSING STOCK SHOULD HAVE BEE N RS.40 91 859 AS AGAINST THE VALUE SHOWN AT RS.34 32 880 AS ON 31.3.2005 AS DETAILED IN THE ASSESSMENT ORDER. THE APPELLANT WAS UNABLE TO GIVE ANY EXPLANATION BEFORE THE ASSESSING OFFICER. DURING THE COURSE OF APPEAL ALSO THE APPELLANT HAS NOT BEEN AB LE TO SUBSTANTIATE THE VALUE OF CLOSING STOCK ADOPTED BY HIM AS AGAINST THAT ADOPTED BY THE ASSESSING OFFICER WHICH IS BASED ON A SCIENTIFIC WORKING OF THE VALUE OF UNSOLD LAND. AS SUCH I AM UNABLE TO DIFFER FROM THE CONCLUSION DRAWN BY THE ASSESSING OF FICER IN THE ASSESSMENT ORDER. THE SAME IS UPHELD. 5.3.3 ON PERUSAL AND APPRECIATION OF THE ORDERS OF THE AUTHORITIES BELOW IN THE CASE ON HAND WHICH HAVE BEEN EXTRACTED IN THIS ORDER (SUPRA) IT IS CLEAR THAT NEITHER OF THEM HAVE EXAMINED THE FAC TUAL POSITION OF THE AREA OF LAND IN ITS ENTIRETY WHILE DETERMINING THE CLOSING STOCK OF LAND. WE ALSO FIND THAT BOTH THE LOWER AUTHORITIES HAVE RENDERED THEIR DECISIONS WITHOUT AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD AND FURNISH HIS E XPLANATION I N THE MATTER OF DETERMINING OF LAND AREA AND VALUATION OF CLOSING STOCK WHICH IS IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. IN THIS VIEW OF THE MATTER WE IN THE INTEREST OF JUSTICE AND EQUITY ARE OF THE OPINION THAT THE MATTER OF QU ANTIFICATION OF THE AREA AND VALUATION OF CLOSING STOCK OF LAND BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH 6 ITA 506 - BANG - 2014 CONSIDERATION AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD AND TO FILE DETAILS REQUIRED BEFORE RENDERING ANY FINDING THEREON. IT IS ORDERED ACCORDINGLY. 6. IN THE RESULT THE ASSESSEE'S APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3 1 S T J U L Y 201 4 . S D / - S D / - ( RAJPAL YADAV ) ( JASON P BOAZ ) JUDICIAL MEMBER ACCOUNTANT MEMBER *REDDY GP COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE. (TRUE COPY) BY ORDER ASST. REGISTRAR ITAT BANGALORE